California and Victoria, Australia, are both drought-prone states that face major challenges in managing freshwater-dependent ecosystems and native species during dry times. Both states have experienced intense controversy over balancing water for environmental needs and agricultural and urban uses. But while California’s environment has suffered greatly during its latest drought—with many species pushed to the brink of extinction—Victoria avoided serious biological losses during an even longer drought. Equally important, Victoria enacted a suite of policy changes that improved water management for all sectors, not just the environment, and reduced conflict.