New information about the hydrogeology of Australia’s agricultural regions has profound implications for the economics of salinity management and the design of policy. This paper reviews a broad range of information relevant to the salinity problem in order to critically evaluate existing and prospective policy responses. It brings together issues of hydrogeology, farmer perceptions and preferences, farm-level economics of salinity management practices, external benefits and costs from salinity management, and politics. The technical challenge of preventing salinity is far greater than previously recognised. The farm-level economics of currently available management practices for salinity prevention are adverse in many situations. The off-site benefits from these on-farm practices are often small and long delayed. A conclusion of the paper is that past national salinity policies have been seriously flawed, and that the 2000 National Action Plan has positive elements but has not sufficiently escaped from the past. The two most important broad areas of change identified in this review are better targeting and more rigorous analyses of proposed public investments and a greater emphasis on the development of improved technologies, both for salinity prevention and for adaptation to a saline environment.
