Under heavy questioning at a late night Senate Estimates hearing, Senator Wong said it doesn't put every potential purchase it makes to affected communities and doing so would likely be in breach of the Government's commercial negotiations with willing sellers.

Officers from the Department of Environment confirmed the settlement for the $303 million buyback deal took place on Wednesday in what was described as an "all or nothing" offer by Twynam.

The Government confirmed it bought licences from five valleys with different classifications of entitlement, but largely general and supplementary security.

Officers said the rivers where water was bought were the Barwon-Darling, Gwydir, Lachlan, Murrumbidgee and Macquarie.

Senator Wong told the hearing she concedes there would be ramifications from the government "unashamedly removing water from irrigated agriculture for environmental use".

She said the recent sustainable yield studies in each of the regions mentioned proved that the environmental argument for purchasing the entitlements was "very strong".

When questioned on the impacts of the purchase on the communities where Twynam operates, Senator Wong said the advice she had been given was that in recent years the company had been moving away from extensive irrigation towards more dryland farming.

She said the impacts of drought and climate change had been far more significant on rural communities than any water buybacks.

NSW Nationals Senator, Fiona Nash, said the difference was the Government was permanently removing the capacity for those communities to access water in the future, while a drought only removed that access temporarily.

She said the Government could find ways to look at the permanent ramifications of the waters' removal on communities rather than making a decision without a real understanding of what the flow-on effects would be.