The salt burden in a stream reflects the blend of salty and fresh flows from different soil areas in its catchment. Depending not only on long-run rainfall, water yields from a soil are also determined by land cover: lowest if the area is forested and greatest if cleared. Water yields under agro-forestry, lucerne pasture, perennial grass pasture, and annual pasture or cropping options span the range of water yields between the extremes of forested and cleared lands. This study explores quantitative approaches for connecting the hydrologic and economic consequences of farm-level decisions on land cover (productive land uses) to the costs of attaining different catchment level targets of water volumes and salt reaching downstream users; environmental, agricultural, domestic, commercial and industrial. This connection is critical for the resolution of the externality dilemma of meeting downstream demands for water volume and quality. New technology, new products and new markets will expand options for salinity abatement measures in the dryland farming areas of watershed catchments. The development of appropriate policy solutions to address demands for water volumes and quality depends on the possibility of inducing targeted land use change in those catchments or parts of catchments where decreased saline flows or increased fresh water flows can return the best value for money. This study provides such a link.