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Environmental policy is often implemented using market instruments. In some cases, including carbon taxing, the links between financial products and the environmental objectives, are transparent. In other cases, including water markets, the links are less transparent. In Australia's Murray-Darling Basin (MDB), financial water products are known as 'entitlements', and are similar to traditional financial products, such as shares. The Australian water market includes 'Low Security' entitlements, which are similar to 'sub-prime' mortgage bonds because they are unlikely to yield an amount equal to their financial worth. Nearly half the water purchased under the Murray-Darling Basin Plan for environmental purposes is 'Low Security'. We suggest that the current portfolio of water held by the Australian Government for environmental purposes reflects the mortgage market in the lead-up to the global financial crisis. Banks assumed that the future value of the mortgage market would reflect past trends. Similarly, it is assumed that the future value of water products will reflect past trends, without considering climate change. Historic records of allocations to 'Low Security' entitlements in the MDB suggest that, in the context of climate change, the Basin Plan water portfolio may fall short of the target annual average yield of 2075 GL by 511 GL. We recommend adopting finance sector methods including 'hedging' 'Low Security' entitlements by purchasing an additional 322-2755 GL of 'Low Security', or 160-511 GL of 'High Security' entitlements. Securing reliable environmental water is a global problem. Finance economics present opportunities for increasing the reliability of environmental flows.

The terrestrial phase of the water cycle can be seriously impacted by water management and human water use behavior (e.g., reservoir operation, and irrigation withdrawals). Here we outline a method for assessing water availability in a changing climate, while explicitly considering anthropogenic water demand scenarios and water supply infrastructure designed to cope with climatic extremes. The framework brings a top-down and bottom-up approach to provide localized water assessment based on local water supply infrastructure and projected water demands. When our framework is applied to southeastern Australia we find that, for some combinations of climatic change and water demand, the region could experience water stress similar or worse than the epic Millennium Drought. We show considering only the influence of future climate on water supply, and neglecting future changes in water demand and water storage augmentation might lead to opposing perspectives on future water availability. While human water use can significantly exacerbate climate change impacts on water availability, if managed well, it allows societies to react and adapt to a changing climate. The methodology we present offers a unique avenue for linking climatic and hydrologic processes to water resource supply and demand management and other human interactions.

Gedney et al. attribute an increase in the twentieth-century continental runoff to the suppression of plant transpiration by CO2-induced stomatal closure, by replicating a continental runoff data set. However, we have concerns about this data set and the methods used to construct it, in addition to those already raised, which we believe may undermine their conclusions.