Water (re-) allocation is increasingly recognised and modelled as a coupled social-hydrological system with an emphasis on the role of human agency. However, there is no systemic synthesis of these studies, especially on how to incorporate the human decision-making system into models, compromising our capability to develop a commonly agreed-upon modelling approach. This paper evaluated the current development of the coupled models of water allocation in the literature. It was found that 1) there was no consistent and systemic definition of the fundamental processes that drive human decision-making, 2) including closed feedback loops between human and natural dynamics remains a significant challenge with the fast and slow variables often linked in a one-way fashion, and 3) there is limited understanding of the long-term dynamic processes of adaptive decisionmaking models due to lack of data and measures. We proposed a conceptual framework for the systemic representation of human agency in adaptive allocation decision-making from the structure-process-function perspective of human agency. The findings from this review and our recommendations will assist in developing a commonly agreed-upon modelling approach to strategic water allocation decision-making for improving water governance in arid and semi-arid countries such as Australia.