Mass conversion of native vegetation to agricultural land-use triggered secondary salinity, a hydrological imbalance, which has damaged more than 1.75 million ha of farmland in south-western Australia. Various types of reforestation have been proposed and tested to restore the hydrological balance, however the economic returns from these cannot compete with existing farm practice and land-holders thus have a reluctance to adopt. An alternative approach has been to reforest abandoned saline areas with salinity and/or water-logging tolerant trees to avoid displacement of farming activities. This reforestation approach is explicitly effective for carbon mitigation and thus finding appropriate tree species is essential. To select suitable tree species, three eucalypt species were planted adjacent to a salt scald in Wickepin, Western Australia, and their survival and growth on a site with saline soil and a shallow (< 1 m depth) saline ground water system. Survival and growth of Eucalyptus sargentii and E. salubris in the saline discharge areas were comparable to those in a non-saline area, and reforestation by these species can thus avoid land competition with farming activities and minimize opportunity costs. The biomass increment of E. sargentii was about three times higher than that of E. salubris in the saline areas (3.43 vs 1.12 Mg ha(-1) year(-1)) over a 9.25 years period, and therefore E. sargentii can sequester more carbon (6.3 vs 2.1 Mg-CO(2)e ha(-1) year(-1)) and mitigate hydrological imbalance within a much smaller reforestation area than E. salubris. Considering land use efficiency, cost-effectiveness and carbon mitigation efficiency, E. sargentii is the recommended tree species for reforestation to mitigate secondary salinity in Western Australia.