A project group has suggested reconfiguring Victoria's Broken River system

The key recommendation from the PSG, made up of government officials and seven entitlement holders, found water trading and carryover were being underutilised.

"We also believe that to deal with declining inflows in what is proving to be an over-committed system in dry years and to significantly improve its sustainability the system would require reconfiguration," the entitlement holders told Victorian water minister Harriet Shing.

"This would entail a formal investigation into the design of and demands on the system and the subsequent development of reconfiguration options."

They also suggested improving utilisation through education, new trading platforms and products, and setting up irrigation efficiency programs with the assistance of Goulburn-Murray Water and the Victorian Department of Land, Water and Planning.

"The challenges faced by water users in the Broken system will only worsen; implementing this recommendation will provide clear options for entitlement holders and governments to consider," the irrigators found.

The PSG found two key issues continued to pose fundamental challenges to the system's viability.

"Firstly, the Broken became an annual system after the closure of Lake Mokoan in 2008, leaving Lake Nillahcootie as a small storage with up to 60 per cent of its volume committed to covering losses," it said.

"With a catchment of only 5pc of the Broken Basin, and highly variable inflows, the system relies on contributions from unregulated flows downstream of the storage to help meet demands.

"Secondly, climate change is intensifying the impacts to this annual system, increasing variability between years and decreasing volumes of inflows in the catchment."

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The group found clear evidence many users in the system would struggle to remain sustainable without decisive action to address zero allocations, highly variable allocations and challenges gaining access to water for some domestic and stock licences.

The former water minister Lisa Neville announced a review of the regulated Broken River system in December 2019, recognising that inflows had declined and the need to consider how to manage the system in the future in a drying climate.

The Broken River is a tributary of the Goulburn River and also includes the catchment of the Broken Creek

The basin covers an area of approximately 7,724 square kilometres.

The regulated part of the Broken basin (the Broken system) is where the flow of waterways can be regulated through the operation of major storages or weirs to secure water supplies.

The Broken system includes the Broken River - from Lake Nillahcootie to where it flows into the Goulburn River at Shepparton - and the Upper Broken Creek, which extends from the Broken River confluence at Casey's Weir to Waggarandall Weir.