Scientists say the legally binding deal sets a new standard for environmental management.
"With this management agreement, we'll have the comfort of knowing what's in the water," said N.W.T. Premier Bob McLeod, who began negotiating the agreement 18 years ago when he was a territorial bureaucrat.
Alberta Premier Jim Prentice said it's crucial for governments to work together on water.
"We need to view the protection and management of water overall as a Canadian issue," he said. "How we take care of our water resource collectively will affect how it takes care of all of us."
The Mackenzie watershed is one of the world's largest and covers 20 per cent of Canada's land mass. More than 400 bird species nest there and its biodiversity is comparable to Africa's Serengeti plains. It exercises a powerful influence on Arctic sea ice, which some scientists believe is directly linked to southern weather patterns.
It's also home to almost every community in the N.W.T. and is a source of both physical and cultural sustenance.
Previous reports have suggested the watershed is threatened by climate change — occurring faster there than almost anywhere else on Earth — as well as by upstream development such as Alberta's oilsands or British Columbia's hydro dams.
Wednesday's deal is intended to answer concerns going back to 2009 from the territory's 33 communities, and makes water levels and quality the top priority.
No more than 1.9 per cent of the annual flow of the Slave River — the Mackenzie's main tributary from Alberta — can be withdrawn, said territorial Environment Minister Michael Miltenberger.
"The rest stays in the river," he said.
"There's nothing like it in any other water agreement, we think, in the world."
The agreement also includes a long list of contaminants that are to be measured. Communities along the river valley are to be responsible for monitoring. Aboriginal knowledge is to be considered.
Miltenberger and his Alberta counterpart, Kyle Fawcett, are confident their jurisdictions have enough monitoring facilities to meet requirements.
Bob Sandford, who holds the Epcor Water Security Research Chair hosted at Hamilton's McMaster University, called the agreement "one of the most important water deals we've seen in this young century" because it holds governments accountable for river management.
"There are established standards that are going to be very clear and very measurable ... and governments have agreed to meet those standards."
The deal goes beyond simply apportioning who gets how much of the Mackenzie's flow, he suggested.
"They deal with integrated watershed management. There are ecosystem elements in it."
Sandford warned it'll be important to ensure there will be enough resources to ensure those provisions are met.
"We need to back them up with monitoring, which requires a long-term commitment."
Miltenberger said the N.W.T. is already spending several million dollars a year on monitoring the Mackenzie. The $1.6 million a year that has been spent negotiating the agreement will be added.
Fawcett said Alberta's contribution will be announced in the provincial budget.
The N.W.T. is expected to sign similar deals shortly with British Columbia and Saskatchewan.
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