There is increasing demand for water due to rising world population and wealth. This, coupled with lower supplies of freshwater due to possible climate change, suggests further stress on an already over-allocated resource. Additionally, environmental concerns relating to low flow levels, and salinity may exacerbate the ability of irrigated agricultural regions to increase agricultural production. The objective of this research is to investigate the potential impacts of climate change induced water scarcity on irrigated agricultural productivity, water demand, and profitability. The extent to which output capacity is constrained by rising salinity levels and institutional regulating water trade are evaluated for a River Murray, Australia case study.