The counter-intuitive findings come from a Monash University team that modelled the impact of buying 1500 gigalitres of water entitlements from irrigators in the southern basin over eight years from 2009.

The results, published in the latest Economic Record, show buybacks on this scale would push up water prices dramatically, with the price five times higher by 2018.

This would result in the value of farm production in the southern basin falling by 1.3 per cent, or $112 million, by 2018.

But household consumption would rise by 0.34 per cent by 2018.

This is because the model predicts the extra income for farmers from selling water at higher prices more than outweighs the loss of production from smaller irrigated crops.

The study's authors, Peter Dixon, Maureen Rimmer and Glyn Wittwer, write that ''it was initially a surprise that our simulations gave a positive effect for household consumption in the southern MDB and most of its regions''.

''The explanation is that the buyback scheme is an additional demand for a [production] factor [water] that is owned by southern MDB residents,'' they say.

''This must make them better off: they will only sell their water rights if the market price exceeds the value to them of the water in production activities.''

In the model, farmers gain extra income both from selling water entitlements back to the government and from selling water allocations to other farmers with higher-value crops.

The federal government has committed up to $3.1 billion over 10 years to buy irrigators' water and return it to rivers, wetlands and floodplains.

By last June, it had purchased entitlements to 863 gigalitres at a cost of $1.37 billion, according to the Australian National Audit Office.

In a draft plan released in October, the Murray-Darling Basin Authority said irrigators' entitlements should be cut by 3000 to 4000 gigalitres a year to restore environmental health.