Within the Murray-Darling Basin lie Australia's most important water and land resources as well as some of the country's most serious resource management problems. This paper summarises the importance of the resource-based industries, especially agriculture. The major agricultural and water resource problems are outlined, with most attention being paid to salinity. Critical to the problems and their solution are the institutional arrangements for the management of this large interstate river basin. The River Murray Waters Agreement, dating from 1914, has had limited success in tackling the basin's problems, because of its limited geographical and functional scope, especially in the area of water quality. The growing severity of the latter problems, especially salinity, resulted in the 1987 signing of the Murray-Darling Basin Agreement to promote and coordinate the management of the basin's water, land and environmental resources. As it is concerned with the basin as a whole, its success is dependent on the full cooperation of the Commonwealth and three state governments involved.