Water use by the native vegetation that existed in southern Australia prior to European settlement was largely in balance with rainfall. European settlers altered the landscape by clearing land to grow agricultural crops and pastures, and with the introduction of livestock to graze the partly cleared, native ecosystems. The aim of this review is to contrast the hydrology of grazed, partly cleared ecosystems, intact indigenous ecosystems, and entirely cleared agricultural systems in the intensive land-use zone (350'1000 mm annual rainfall zone) of southern Australia. Since European settlement, the areas of forests and woodlands in the Murray'Darling Basin have declined by approximately 64% to make way for agricultural enterprises. Modern-day vegetation surveys estimate between 52 and 58% of the intensive land-use zone of the Murray'Darling Basin has been entirely cleared, while about 40% is in the partly cleared state (disturbed ecosystems with canopy cover exceeding 5%). The replacement of native vegetation by agricultural crops and pastures has disturbed the water cycle that existed prior to European settlement, and has markedly elevated the amount of water leaking beyond the root zone of introduced species, and contributing to groundwater systems. Estimates of annual leakage beneath the root zone of annual crops range from 0 to 63 mm per annum; however, no estimates of leakage for partly cleared woodlands exist. Yet, because the groundwater beneath partly cleared woodlands rises considerably more slowly than under entirely cleared landscapes, it is likely that less water leaks beneath the roots of grazed woody ecosystem. However, aging of these systems by livestock grazing will reduce the numbers of woody individuals and will impact on groundwater recharge.