The agency yesterday absorbed the functions and 189 staff of the Murray-Darling Basin Commission, which then ceased to exist.

Mr Freeman believes the new authority can lead the world in delivering better water planning for the Murray Darling.

"No one has ever tried to work out environmentally sustainable limits on water extraction and then tried to maximise economic and social outcomes on top of that," Mr Freeman said.

"We looked for examples from around the world and cannot find planning exercises at this scale and complexity. However, I think it's achievable."

The Basin States – Queensland, New South Wales, Victoria and South Australia - recently passed legislation transferring certain powers to the Australian Government to allow it to amend its Water Act and to create a comprehensive Basin Plan.

The creation of the new, independent Authority means that for the first time a single agency will be responsible for planning the integrated management of water resources of the Murray-Darling Basin.

In addition to the Commission's former functions, the new Authority’s role will include:

• preparing a Basin Plan for adoption by the Minister Senator Penny Wong, including setting sustainable limits on water that can be taken from surface and groundwater systems across the Basin;

• advising the Minister on the accreditation of state water resource plans;

• developing a water rights information service which facilitates water trading across the Murray-Darling Basin;

• measuring and monitoring water resources in the Basin;

• gathering information and undertaking research; and

• engaging the community in the management of the Basin's resources.

Mr Freeman said that while he was optimistic for the Basin's future, he did not want to raise any false expectations.

"There is an opportunity to set a new limit on the water that is used in the Basin," he said.

"This new limit will be based on science and is adaptive to drought and climate change.

"Given the likely impacts of climate change on the Basin's water resources, we probably won't be able to restore all of the natural values in the Basin's unique rivers and wetlands."

The authority will release a concept statement in March/April 2009 which explains the contents of the Basin Plan, the timing for its development and the processes to involve interested parties and individuals.