With the advent of water reform framework instigated by the Council of Australian Governments (COAG), water trading on a temporary and permanent basis has become a prominent feature in all major irrigation areas in Australia. Hydrologic network models, such as the Integrated Quantity and Quality Model (IQQM), although powerful in simulating entitlement-based water allocation at the catchment scale, are unable to deal with the water reallocation through trade driven by economic conditions such as crop and water price, variable production costs. To simulate water trading, linear programming techniques are used to maximize aggregate net return subject to land, water, and crop constraints. The volume of water traded is the difference between water allocated and water required for a given simulation period. The water trading model, known as WRAM, is coupled with IQQM for the Murrumbidgee basin. IQQM represents the irrigation area in the Murrumbidgee with 49 regulated irrigation nodes that grow a variety of summer, winter and perennial crops. The water trading model runs whenever a planting decision is required, taking into account water availability, crop growth stages, crop yield and price, variable production costs, fixed and variable water charges on the potential water movement through the distribution network. WRAM provides a dynamic link with IQQM in order to assess the impacts of water management policies at the whole-of-catchment scale. The result reported in this paper is part of a CRC Catchment Hydrology project on hydrologic and economic modelling for sustainable water allocation.