Australian Murray-Darling Basin Authority on Friday released a report to call for a cut by almost half of the water consumption from some of the basin's river systems, in order to secure the river system's future.
After decades of over-allocation of water licenses, and almost 10 years of drought, the authority has released a guide on how the basin's 19 catchments need to be managed to balance environmental and economic needs.
The report recommended an overall cut of up to 37 percent across the basin including groundwater collection, and some catchment areas will face much higher cuts of up to 45 percent.
The report has predicted that, if implemented, the reductions in water allocations may result in between losses of at least 800 million dollars (787 million U.S. dollars) a year to irrigated agriculture production, 800 job losses and significant social impacts.
According to ABC News, billed by some as the biggest change to water management in Australia since the Snowy hydro scheme, the plan has already ignited anger from some communities, which fear the cuts will decimate their towns if producers sell their water allocations and move away.
Authority chair Mike Taylor on Friday described the plan as "extraordinary" and a world's first, but said it was not a "done deal."
"The guide provides an opportunity for Australians to contribute to one of the most significant water reforms in our history," Taylor told ABC News on Friday, adding that if the cuts were implemented, industries such as cotton and dairy would likely be the hardest hit, and all catchments would suffer in the short and medium-term.
According to Taylor, the governments will then need to consider assistance that can help communities create new industries and jobs, and transitional arrangements will be needed to help people adjust.
During the Aug. 21 general election campaign, Prime Minister Julia Gillard has pledged to do whatever the authority recommended in its basin plan.
After the release of proposal, Gillard said there will be plenty of opportunity for people to raise their concerns about what is being proposed.
"(Federal Water Minister) Tony Burke will then lead a consultation process where everybody will get to have their say about what is in the report," Gillard told reporters in Canberra.
"So I would say to anybody who is concerned, there will be a process of dialogue and consultation and they'll be able to have their voice heard."
Meanwhile, the Greens supported the Murray-Darling Basin proposal, saying that it is the best chance to save the river system.
"Now we desperately need reform to reduce the amount of water we take out of the system, and return it to the river," Greens senator Sarah Hanson-Young said in a statement on Friday.
"To do that, we can't afford to have the recommendations watered down.
"If we want to save the river, this is what we have to do, otherwise everyone loses."
Irrigators in the New South Wales town of Griffith has opposed the plan, and said significant irrigation cuts could lead to civil unrest, wreaking havoc across regional Australia and sending food prices soaring.
Gillian Kirkup, the chairwoman of Murrumbidgee Irrigation which represents more than 2,500 farmers growing food and fibre crops, said stress levels are high and it is not just among irrigators.
"I actually think there could be riots in the streets, and by that I mean it's not just the farmers," she told ABC News on Friday.
"The community here are desperate. We have lots of diversity but it's all built around water. You take a third of the water away, there is no livelihood for a lot of people."
"Playing with people's lives just doesn't work. People are passionate, they are desperate. Remember we've just come out of 10 years of drought."
The series of public consultations about the guide's recommendations will be held over the next four months before being finalized next year.