Alarm bells are sounding over further coal seam gas drilling in northern NSW’s vast Pilliga State Forest: dead animals and a toxic chain of ponds, along with the release this week of a damning ecological report.

In the laws that protect NSW forests, there's a loophole so big you could fit an open-cut coal mine through it.

Senator Bill Heffernan attacks a deal The Global Mail investigated, which could see the government pay $83 million to just 11 landholders in NSW.

One bitter dispute involving former friends and $83 million shows just how complicated it is to do the right thing with scarce water resources.