Victoria and the Australian Capital Territory have become the first two administrations to sign up to the Murray Darling Basin plan, committing both governments to replenish water to the key river system.

In return for becoming the first state to put its name to the intergovernmental agreement (IGA), Victoria will receive $14.3m over the next three years from the federal government to create offsetting projects that will reduce the amount of water taken from farmers’ water entitlements.

A further $47.4m will be handed to the state to implement the plan over the next eight years. This money comes on top of existing federal assistance, worth more than $1bn, to help revamp irrigation infrastructure in the state.

Details of the ACT’s deal with the federal government have yet to be released, although the territory has committed fully to the IGA.

The plan, which was first drafted in October 2010 and has attracted ire from farmers and conservationists since, was passed into law in November last year.

The initial draft plan was supplemented by a federal government pledge in October to increase the amount of water returned to the environment from the agreed 2,750 gigalitres to 3,200 gigalitres by 2024.

Across the entire Murray-Darling Basin, which spans an area equivalent to France and Spain combined, and supplies around 90% of Australia’s fresh food, $10bn will be spent on improving water irrigation efficiency and voluntary water “buybacks” from farmers.

Some farmers and rural communities have criticised the plan for depriving them of water and endangering their livelihoods. State political leaders have also been sceptical, with the New South Wales government saying last year that the plan was “not acceptable”.

Conservation groups have welcomed the late increase in the amount of water returned to the river system but say this did not go far enough, claiming around 5,000 gigalitres is neededto ensure it didn’t die “from the bottom up” at its South Australian mouth.

Peter Walsh, Victoria’s water minister, who previously attacked the revised plan for risking widespread flooding , said he was now satisfied with the IGA.

“While consensus on the agreements has taken some months to achieve, it was very important for Victoria that all of our key concerns were addressed,” he said.

“The IGA and the funding agreement were the next important steps for an agreed approach to securing the health of the Murray Darling Basin in a way which also ensures a future for basin communities.

“Victoria has always maintained that a healthy basin can be achieved alongside sustainable, productive and modern irrigation, and we are committed to supporting regional communities and the industries they rely on for their livelihoods.”

Tony Burke, the federal water minister, said he was hopeful that other states would follow Victoria’s lead before the September election. In total, six state and federal governments oversee the basin area.

“The plan restores our rivers to health, supports strong regional communities and ensures sustainable food production,” he said.

“Once the IGA is concluded with all states, there is nothing left but implementation.”

“Victoria signing on means there are four jurisdictions to go and I’m optimistic about the coming weeks.”

“I thank Victoria for being the first state to sign on. All basin states have a lot at stake and the engagement has been constructive and professional.”