In Australia, as in most countries throughout the world, there is a ban an financial incentives for live or cadaveric organ donations. Constrained supply and growing demand has led to an increasing supply gap of transplantable organs, in particular kidneys, resulting in Ionger organ waiting lists and consequently deaths. In the near future it is unlikely that demand-side options to reduce the supply gap are feasible and solutions to increase supply of cadaveric organs are ultimately constrained. Schemes that aim to increase donation through compensating live donors are more likely to be politically feasible and socially satiable as an option to increase donation rates in the near future. This paper discusses and outlines a proposal to compensate live donors. The compensation package includes a one-year-term life insurance policy, compensation for lost wages, compensation for travel and expenses related to donor evaluation and nephrectomy, a bonus for attending check-ups and a cash payment to compensate for inconvenience, pain and anxiety. The total value of this package is estimated at $12,776. This package would increase nurober of live transplants from a forecasted 2,708 to at least 4,676 between 2010 and 2015, generating over $240 million in benefits to the Australian health system. The practical and ethical problems surrounding financial incentives for live or cadaveric organ donation are investigated. From a practical economics perspective, increasing transplant rates are the most cost-effective and health enhancing solution to treating End-Stage Kidney Disease. Opponents of financial incentives argue that it will Iead to commodification of what it means to be human, exploitation of the paar and potential negative externalities. Policy makers must decide whether individuals have the capacity to rationally choose to donate an organ for compensation, given that in many circumstances governments intervene to ensure that individuals da not act contrary to rational intuitions and socially acceptable norms.