Although the Sydney Catchment Authority (SCA) largely controls the quality of water entering the Sydney catchments, it has limited jurisdiction over the majority of activities undertaken on private land, where much of the non-point source pollution originates. The current governance model reflects a traditional ‘command and control’, government-centred philosophy limiting the economic opportunities for landholders. Using six case studies from other jurisdictions we explore the potential for market-based schemes to better enable the SCA to meet its statutory objectives. A contemporary payments for watershed services scheme could better address issues of non-point pollution in more efficient and fairer ways than the present model. Under such a scheme, the SCA would rely more upon negotiated service arrangements pursuing a ‘least cost of supply’ for a defined water quality output, with the costs of these arrangements being reflected in the price of water to consumers. Funds are likely to be applied more strategically to secure water quality outcomes at the least public and private cost while maximizing the value of non-water ecological services from the same lands. These findings are relevant and can be applied to many other drinking water catchments within Australian and other jurisdictions.

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