Agricultural water markets can facilitate adjustments to water scarcity and competition and enhance economic efficiency, but markets cannot automatically balance efficiency, equity and environmental sustainability goals. The consequences of water trading on soil salinity in irrigation areas are not yet fully understood, but recognized as an issue that needs to be analysed. This paper explores the nexus between water trading and groundwater-induced soil salinity in a selected irrigated area in the Murray-Darling Basin. Results show that minimum irrigation intensities must be met to flush salts out of the root zone especially in shallow water table/high salinity impact areas. Such minimum irrigation intensities are helpful but not necessarily in deep water table/low salinity impact areas. Should water markets lead to permanent water transfers out of mature irrigation areas, minimum irrigation intensity needs might not be met in high salinity impact areas, causing substantial negative impacts on resource quality and agricultural productivity. Water trading that adds to salinity cannot be economically viable in the long run. The tradeoffs between water trading and environmental and equity goals need to be determined. This work contributes to the wider debate on Australian water policy aimed at achieving water security through water trading in the Murray-Darling Basin.