States and territory governments will be able to bid for loans to fund dam projects.
The federal government announced a 10-year $2 billion national water infrastructure concessional loan scheme in Tuesday's federal budget.
Deputy Prime Minister Barnaby Joyce says the money will be available from July to help get high-priority projects off the ground.
"Where there is water there is wealth and dams are a bank," he said.
States and territories will have 25 years to pay back the money.