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1. In dryland environments, freshwater ecosystems often suffer extensive degradation through habitat modification and water regime changes. The Macquarie Marshes are located in the Murray-Darling Basin in south-eastern Australia. They are an example of an ecosystem that has experienced significant degradation in recent decades owing to upstream water diversions. Recent reforms of water management in the Murray-Darling Basin have attempted to balance environmental needs against consumptive uses of water.

2. This paper examines the role a protected area has played in conserving the Macquarie Marshes freshwater ecosystem and discusses how Murray-Darling Basin water reform, together with social expectations of public land managers, have had impacts on the management of the Macquarie Marshes Nature Reserve.

3. Protected areas may limit adverse impacts on habitat associated with local-scale agricultural production but struggle without formal water management arrangements to protect water-dependent ecosystems from threats operating at a catchment scale. Protected area managers balance demands from stakeholders to address local issues, such as fire management and geomorphic changes, against contributing to the achievement of environmental goals in a water planning system that operates at the catchment scale.

4. European settlement and water resource development has marginalized local Aboriginal people from any role in land and water management activities. The water reforms have given them more opportunities for involvement in decision-making processes, but opportunities for increased access to water for cultural and spiritual purposes remain limited. Protected areas offer a means of providing greater access for Aboriginal people to their ancestral lands.

5. The strategies and processes developed to maintain and enhance the Macquarie Marshes exemplify the evolution in understanding of freshwater ecosystem protection in Australia, and are relevant globally to water resource management in complex social-ecological systems. Copyright (C) 2016 John Wiley & Sons, Ltd.