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Australia’s food bowl is the Murray-Darling River Basin (MDRB) which is under great stress due to salination and drought. An agreed path for resolution of the concerns of specific regional and corporate interests along the whole Murray-Darling river system has not yet emerged. This paper focuses on agricultural production in a river basin and the ecosystem processes relating to climate change, water supply and carbon emissions. The simulation model presented is for a generic river basin as the first step. In the paper, this regulated river basin model is integrated with an existing macroeconomic model, the aim being to provide a rigorous instrument for planning and management. What is anticipated from the study is an evidence-based decision system for saving the MDRB from collapse, then identifying policies for the system to generate sustainable farming and grazing.JEL Codes: C15, E12, Q02, Q18, Q25, Q57