Another summer is heating up Down Under, and the forecast looks as worrisome and as potentially deadly as last summer's. A decade of drought is parching landscapes, devastating farmers, killing gum trees, and forcing a new definition of conservation into the continental nation's colorful lexicon. Could Australia see a day when a bottle of water is worth more than a bottle of Shiraz?

They just might. "This is literally a country running out of water," says author–activist Maude Barlow, senior advisor on water to the United Nations. Barlow recently witnessed the reality of Australia's water woes firsthand, from a helicopter above the Murray–Darling river system. "We flew over this dead zone," she recalls. "There was nothing left. No trees. The river's gone."

The Earth's driest inhabited continent is at the forefront of a global crisis. Its adaptations and maladaptations to dwindling supplies of freshwater offer useful lessons to many parts of the world—from the Middle East to Africa to the U.S. Southwest—where dire water trends seem to be following close behind. Global populations grew threefold and water use rose sevenfold in the 20th century, Barlow notes. Meanwhile, climate change continues to drive up temperatures, melt away glaciers and alter rainfall patterns. This, she says, is a "recipe for disaster."

Every threatened region has its own variations of the recipe, including how long the issue will sit in the oven before it is put on the table. Last week, California Gov. Arnold Schwarzenegger signed what has been called "historic" water legislation in his drought-burdened state. California decided its water infrastructure and ecosystems are cooked enough, although there is debate on whether or not the new series of bills—with goals that include restoring the fragile Sacramento–San Joaquin River Delta and reducing per capita water use—will be enough to keep residents, fisheries and industries from running out of water.

Half a world and a hemisphere away the situation is severer. The Murray–Darling Basin covers a seventh of Australia, supporting about three million people and 40 percent of the continent's agricultural production. But it is drying up; the Murray River no longer reaches the sea and 90 percent of the basin's wetlands have been drained. Where is the water going?

The answer is complicated. For starters, the Mediterranean-like landscape and climate of southern Australia is particularly vulnerable to climate change. Lacking a substantial mountain range and abutted by the cold Antarctic waters of the Southern Ocean, precious little moisture fills its air without the help of variable atmospheric circulation patterns—predicted to provide less precipitation to the region as global temperatures rise.

Add to this decades of overextractions for dams, irrigation and urban use, and a devastating natural cycle is spun: Less water means more desiccated vegetation, leading to more bushfires that reduce the land's ability to store water, creating ever more kindling. As Justin Brookes, founding committee member of the University of Adelaide Water Research Center, explains, a 10 to 15 percent decrease in rainfall actually translates to a 50 percent drop in runoff given these compounding factors. Worse still, the water that remains contains more concentrated contamination.

"The issues have been on the radar for a long time, but we've been slow to act," Brookes says. "Nothing spurs activity like disaster."

Australia's adaptation strategies aim to recycle water, use it more efficiently, and find new supplies. Certain approaches are proving more successful than others, as exemplified by two cities at the terminus of the Murray–Darling Basin: Adelaide has enlisted hard technological solutions such as desalination; smaller Salisbury focuses primarily on recycling waste and storm water and utilizing natural filtration systems such as wetlands and lagoons. The latter "softer" options, according to the U.N.'s Barlow, are cheaper, less energy intensive, and have lower environmental impacts.

But she also thinks solutions must run deeper, socially and economically: "We have to start living within our water footprint." Golf courses, swimming pools and green lawns are not sustainable—especially in the desert. Also outside that footprint falls the continual pumping of water from elsewhere and its virtual export through agricultural products, a mainstay of Australia's economy.

"I don't think California has adequately learned the lessons from Australia that it ought to," says Peter Gleick, president of the Pacific Institute in Oakland, Calif. He thinks Sacramento's new watered-down legislation "doesn't go far enough to prepare us for the real water crisis that is coming."

In many ways, Southern California is looking more and more like a densely populated southern Australia. (Los Angeles is already home to more people than all of Australia, and growing.) Scientists predict the snowpack in the Sierra Nevada could shrink by as much as 90 percent by century's end. And the U.S.'s most populous state is no stranger to wildfires (record numbers have swept through its forests in the past decade) or the pressures of an agricultural economy—80 percent of the Golden State's water is used for irrigation. Like Australia, a substantial portion is dedicated to turning water into wine.

But the new bills set no direct limits on agricultural water use, a target that also is missing in Australia, Gleick notes. At the same time, much of California's legislation reflects Australia's strategy of hard fixes, including new dams and pumps.

Like Barlow, Gleick advocates the softer path, which starts with measuring water footprints before they are shrunk. "We don't even know who is using how much water to do what," he says. "We have to get better at using water more efficiently. That's true for the Murray–Darling; that's true for California; that's true everywhere."