The Latrobe River originates on the Mount Baw Baw Plateau and flows into Lake Wellington, the westernmost point of the Gippsland Lakes. The upper Latrobe River is relatively intact, but the lower Latrobe River that flows through the Latrobe Valley is degraded due to historic river management practices. Most snags have been removed from the river and many sections have been artificially straightened. This reduces the diversity of habitat that aquatic plants and animals depend on.
Environmental water is supplied from Blue Rock Reservoir on the Tanjil River. The reservoir also supplies water for other entitlement holders (such as the electricity generators in the Latrobe Valley).
The Latrobe River from Rosedale to the Thomson River confluence (reach 5 – see below) is the priority for environmental watering because it contains endangered plant communities that have good potential for recovery. With an appropriate water regime it is possible to improve the quality of riparian vegetation. This in turn stabilises the river banks and provides improved habitat that has been lost due to historic efforts to straighten the channel and remove snags.