Water supply in Australia mainly relies on precipitation and, therefore, is highly dependent on climate variability and change. Coupled with reduced rainfall reliability, population and economic growth and increasing competition for water resources augment the concern over the existing water resources and put a strain on future water security. In fact, the upward trend of water demand has already been escalating the pressure on water resources. Clearly, the anticipation of decline in water supply requires the identification of more reliable, rainfall-independent supply alternatives. With this in mind, this paper discusses the role and value of desalination in water grids. For this purpose, we present a modelling framework using System Dynamics approach to incorporate a range of factors into a simulation of future water demand and supply in Queensland, Australia; and examine desalination schemes as long-term water security option in the portfolio of supply sources. In particular, the model is used to explore the sensitivity of long term planning of water resources with respect to two specific assumptions, the discount rate and the degree of water security. The proposed approach would help decision makers to develop sustainable water supply and efficient infrastructure strategies, and thus respond to water scarcity in a timely manner.