In view of the drive in policy circles to develop northern Australia and the concomitant dependence on water resources this will involve, this article argues that environmental and distributive justice considerations are critical to the sustainable development of the region’s water resources. Without appropriate provision to involve Aboriginal peoples in the planning, development and governance of water resources, northern Australia development will continue the historical exclusion of Aboriginal peoples’ rights to water in Australian water resources policy. This article also draws attention to the concerning absence in the current policy for northern Australia development of lessons learned from the experience in the Murray-Darling Basin reform process with respect to environmental water. It is essential that environmental values be embedded in strategic planning and governance of water resources in northern Australia. This involves creating legal rights to environmental water to protect existing ecological values, and establishing a system of governance to promote the effective and efficient use of environmental water. Addressing these issues now before water entitlements are allocated will avoid complications and considerable expense in the future.