Conjunctive use of groundwater is a common irrigation response to limited surface water availability. In the late 1970s, under a "one resource policy", the New South Wales (NSW) government of Australia began issuing a form of conjunctive licence to irrigators with access to both surface water and groundwater. These licences were intended to provide the licence owners with the water supply security offered by conjunctive use. Institutional separation of groundwater and surface water prevented accounting across the resources. As a result, the licences contributed towards over-allocation of groundwater. Conjunctive licences were subsequently discontinued and separated into surface water and groundwater components in the late 1990s. This paper explores the NSW experience of conjunctive licences in light of Australia's 2004 national agreement to manage connected surface water and groundwater as one resource. The conclusion is that fl ow systems cannot be allocated as "one resource" if managed through independent groundwater and surface water planning institutions. Some implications and options for allocation across local water resources with hydraulic connectivity are considered. Â© Institution of Engineers Australia, 2009.