Urban Water Supply 2021

Climate change and more intense droughts are increasing risks to the water security of NSW cities and towns. Increasing the proportion of rainfall independent water supply and implementing programs to improve water efficiency and reduce system leakage are key strategies for improving the resilience of water systems and water security.

Why urban water supply systems are important

A sustainable supply of water to urban areas is fundamental to the health, wellbeing and economic growth of communities, and to maintaining the health of aquatic systems.

While households in NSW generally use 16% or less of all water consumed in the state (), the implications of failing to provide a secure supply of water to communities are significant.

Water supplies to urban areas are under constant pressure from growing populations and variable weather conditions, including droughts and flooding, which are being exacerbated by climate change. Urban water supply systems must be managed to ensure different and changing water needs for households, businesses, communities and the environment can be met now and in the future.

Status and Trends

For the last 10 years (2010–11 to 2019–20), the average volume of residential water supplied per connected property has been relatively stable for Sydney Water ranging between 189 kilolitres per property (kL/prop) and 215 kL/prop, and Hunter Water ranging between 156p and 181 kL/prop. For regional water utilities, the volume supplied has shown a greater variability over the same period, ranging between 167 and 238 kL/prop.

Overall demand for water decreased substantially during the Millennium Drought (from 2002–2009) in Greater Sydney. Subsequently, demand has slowly increased in line with the city's population growth, except for the period between mid-2019 to the end of 2020 when water restrictions were in place to manage water supplies during the drought period. Overall demand stayed relatively constant in the Lower Hunter and regional centres due to decreased consumption per person.

The 2017–20 drought saw water supplies across cities and towns under significant stress. The situation prompted State and local governments to rethink their approaches to water security and to escalate their investment in water infrastructure.

At the beginning of 2020, 100% of NSW was in drought, resulting in a drop in the average volume of residential water supplied per connected property compared to the previous year. There was a -5.5% drop for Sydney Water, -11% for Hunter Water and ‑14.5% for the median of all the local water utilities in regional NSW. Sydney’s residential water use was 12% lower in 2019–20 than in 2017–18 following the introduction of voluntary and enforced drought response measures between February 2019 and December 2020.

Spotlight figure 6 tracks the volumes of water taken from different sources since 2005–06, including:

• supply reservoirs
• in-stream sources
• groundwater aquifers
• recycled water schemes
• the Sydney desalination plant.

Pressures

Australia is the driest inhabited continent in the world and has a highly variable climate. It faces difficulties with changing rainfall patterns and drought as a result of natural climate variability and climate change. NSW is already experiencing trends of higher average temperatures and reduced cool season rainfall. There are indications from climate models that drought conditions may become more frequent and severe.

The recent drought has highlighted the vulnerability of metropolitan and regional water supplies across NSW. Between July 2017 and February 2020, Greater Sydney’s water storages were impacted by one of the worst droughts on record. Sydney’s water storages declined rapidly over two and a half years, reducing dam levels to around 40% of capacity. Some inland storage levels fell to as low as 10%. This rate of decline in water storages had not been experienced in the historical record and was not anticipated in the 2017 Metropolitan Water Plan which was prepared to secure water for Greater Sydney. It demonstrated that storages can deplete rapidly in a severe drought and highlighted the risks associated with relying mainly on dam levels to trigger key decisions and drought response measures.

Poor water quality affects its suitability for human use, increases the cost of treatment for supply and may affect the health of aquatic ecosystems. Stormwater runoff, wastewater discharge and development in catchment areas are a significant risk to water quality and can alter habitats for species and ecological communities that depend on healthy water. Bushfires in catchments also pose a risk to water quality and impact on water supplies. Dry periods followed by extreme wet weather and high flows bring additional hazards to catchments.

Responses

The NSW Government has developed a 20‑year NSW Water Strategy as part of a suite of long-term strategies being developed to maintain the resilience of the state’s water services and resources over the coming decades. This statewide, high-level strategy works with 12 regional water strategies and two metropolitan water strategies, the Greater Sydney Water Strategy and the Lower Hunter Water Security Plan.

These strategies are setting the direction for and informing the best mix of water-related policy, planning and infrastructure investment decisions over the next 20 to 40 years. They aim to balance different and changing water needs and make sure that households, businesses, towns and cities, communities and the environment have access to the right amount of water for the right purpose at the right times.

Related topics: | | | |

To provide a sustainable supply of water to urban areas, water managers must ensure water resources:

• are secured for human use
• support economic growth
• maintain healthy aquatic systems.

To ensure that community needs are met over the longer term, water managers must also plan for key challenges, including population growth and future climate change.

Structures to store and regulate water flow are built to provide greater security of urban water supply, yet these structures also moderate the natural variability of stream flows. By changing flow volumes and timing, extraction of water to supply high-density urban areas can have enduring effects on river health. When river health is affected this can, in turn, affect water quality in waterways. Compounding these challenges, urban stormwater and wastewater discharges can also impact these waterways. Water managers need to consider how infrastructure and water supply decisions influence the natural environment.

See the and topics for more details.

Sydney Water and Hunter Water are NSW's two major urban water supply utilities. Water NSW manages bulk water supply and the drinking water catchments supplying Greater Sydney. Elsewhere in NSW, including the Central Coast, 92 local water utilities (LWU) operate and provide water supply and sewage services. Out of these, 84 LWUs supply drinking water. Most of these are operated by local government councils or county councils.

The NSW Government endorses the Australian Drinking Water Guidelines 6 () as the water quality benchmark for providing water to the State’s population. These guidelines include the Framework for Management of Drinking Water Quality. This framework sets out a preventative risk management approach for drinking water quality that encompasses the whole supply system, from catchment to household.

In 2019–20, drinking water monitoring in NSW's metropolitan areas and its regional cities and towns showed 100% compliance with these guidelines. However, the guidelines allow a small proportion of samples not to meet specified criteria. Monitoring results reported for all the regional LWUs () showed that of all samples tested:

• less than 4% of samples did not achieve 100% compliance, but did comply with guideline criteria for Escherichia coli (E. Coli)
• less than 5% of samples did not achieve 100% compliance, but did comply with guideline criteria for chemicals
• less than 2% of samples did not achieve 100% compliance, but did comply with guideline physical criteria.

Extensive sampling is one way utilities comply with the risk management framework. However, this monitoring by itself does not protect against contamination. From time to time, incidents and alerts do occur. Occasionally incidents may include changing source water conditions such as operational problems, detection of Escherichia coli bacteria and/or blooms of cyanobacteria (blue-green algae) (). These events highlight the need for a preventive approach, achieved by implementing a risk-based drinking water management system.

In NSW cities and large towns, surface water is the main water supply source. Across NSW's western slopes and plains, and in larger coastal catchments, groundwater is also important for water supply.

Each year, utilities vary the proportion of water they draw from each water source. This is because different conditions, mainly weather conditions, affect how much surface water is available and held in reservoirs. Sydney Water, using bulk water supplied by WaterNSW, is the largest supply utility by water volume and dominates these trends, both in terms of total demand growth and total water recycling volume in NSW.

Over the last 15 years to 2019–20, data shows that total state-wide annual water use for urban supply varied from 731 to 1,019 gigalitres (GL) () - see Spotlight figure 6.

Prior to the 2017–20 drought, the trend was showing an increase in urban water use, generally tracking population growth. In the past three years, since 2017–18, use has trended downwards since the peak of 1,019 GL, most likely as a result of water restrictions, water efficiency measures and behavioural change amongst users.

See the topic for more details about population growth.

Recycled water is treated sewage effluent, including water from sewer mining. It may be potable (suitable for drinking) or non-potable (use in toilets, laundry, gardening and irrigation) and excludes urban stormwater.

Recycled water for drinking is not currently supplied by any public or private water utility in NSW. Since 2005–06, the use of recycled water has increased in areas serviced by local water utilities, with the total recycled water used reaching up to 40 GL in the recent years. In 2020–21, recycled water schemes saw Sydney Water produce 37.7 GL of recycled water which contributed to a reduction in drinking water demand of 12.8 GL. Hunter Water's recycled water schemes produced 3.2 GL contributing to a 2.2 GL reduction in drinking water demand.

Recycled water represents a small but growing portion of total water supplied by local utilities. In 2019–20, effluent was recycled by 43 local water utilities including the Central Coast Council as compared to 39 in 2015–16 ().

NSW now also has 22 private recycled water schemes licensed under the Water Industry Competition Act 2006. These schemes service 6,745 drinking water customers, 9,845 recycled water customers, and 8,977 sewerage customers. In the year to June 2020, they supplied 4,988 million litres of recycled water ().

Key drivers of water demand are the economy, environment and demographics. In turn, these high-level drivers affect other factors that influence demand, such as:

• people's attitude to water (for example, water use behaviour, appliance choices and rainwater use)
• the price of water
• development and adoption of new technology or practices (for example, recycled water, water-efficient appliances, water source substitution)
• investment in and uptake of water efficiency programs
• housing density, household size, and extent of outdoor water use
• change in non-residential water use:
  • changes in industry type
  • efficiencies.

State-wide residential use consumes the largest share of potable water, at 65–75% of the total used.

Over the last 10 years, residential water consumption per property has remained relatively stable in Greater Sydney and regional NSW and has declined in the Lower Hunter.

While hotter, drier weather conditions generally result in higher water use, water restrictions were used to manage water use in 2019–20.

In Greater Sydney, the 365-day moving average of observed demand per capita at 30 June 2020 was 276 litres per day (LPD). The result for 2019–20 was a weather corrected demand of 270 litres per person per day (Figure 6.2b). Despite restrictions being in place, the hotter weather conditions meant that around 5 litres more water was used per person per day than if the weather had been ‘average’. Water demand in 2019–20 was lower than forecast, but within the bounds of the typical variation from the ‘base case’ due to weather. Known short term effects on demand included:

• hotter and drier than average weather conditions throughout the year
• higher than expected leakage, also influenced by the drier weather conditions
• water efficiency media campaigns and restrictions savings ().

Since 2005–06, water use (kL per property) has declined (see Figure 6.1), particularly in regional NSW which saw the biggest decrease (43%) as a result of water efficiency measures that were introduced during recent droughts.

Sydney

In 2020–21, Sydney's potable water use (excluding recycled water use) was about 525 GL, including use in the Illawarra and Blue Mountains (Figure 6.2a). Residential demand accounts for 67% whereas non-residential uses on industrial, commercial and Government properties accounts for 21% of potable water use in Sydney. The balance 12%, is consumed for non‑metered water including leakage ().

Total demand for drinking water (litres per person per day) continues to remain lower than pre-Millennium Drought (2003–09) levels despite population increasing by around 1.2 million people over the same period (Figure 6.2b).

Sydney’s water supplies were managed effectively through the drought by a combination of water restrictions, water wise campaigns and additional water supplied by the Sydney Desalination Plant which began operating in January 2019 when dam storage levels dropped to 60%.

Had the drought continued with the same intensity, there would not have been enough time to build contingent ‘drought triggered’ water supplies to prevent system failure even with severe water restrictions. Without taking steps to respond to severe droughts, if this did occur, it could result in negative social and economic impacts for NSW.

Lower Hunter

Over the 15 years to 2019–20, Hunter Water supplied between 63–73 GL of potable water per year to customers in the Lower Hunter. Residential demand accounts for around 60%, whereas non-residential uses including industrial, businesses and municipal uses account for 30%. The remaining 10% is water lost due to leaks from the water supply network, water used for firefighting or Hunter Water operations and theft ().

While the population of the region has grown significantly over recent decades, total water use over the same period has decreased. The population receiving water services from Hunter Water increased by 28% between 1991 and 2021 however, demand for water decreased over that time. Water demand remained relatively constant between 2012 and 2019 while a 7% population increase was observed (Figure 6.3). This is due to factors that include changes in the size and type of industrial and commercial water customers, more water-efficient appliances and behaviours and an increase in higher-density, multi-unit dwellings. The 365-day moving average of observed demand per capita for 2019-20 was 292 litres per day per person, with a weather corrected demand of 283 litres per person per day (Figure 6.3b).

The Lower Hunter water supply system is vulnerable to drought due to the relatively small size of water storage. Storage levels can fall from typical operating levels (above 70%) to empty in three years in a severe drought, which makes it difficult to implement emergency supply measures (such as construction of a desalination plant) in the required timeframe. In the recent drought total water storage levels reached just over 50%.

Local water utilities (LWUs) in regional NSW

In regional NSW, more than 1.9 million people in over 500 country towns receive water and sewerage services from local water utilities. The NSW Government sets the regulatory framework and provides support to local water utilities with an aim to protect public health and water security and deliver better environmental and social outcomes.

During the recent 2017–20 drought, most major regional dam storages were depleted, with some storages effectively empty and others dangerously low, representing a significant risk to water security. At the end of 2019, almost 50 town or city water supplies were at a high risk of failure, facing the risk of ‘zero’ water supply within six to 12 months. In some towns when rainfall broke the drought in early 2020, the water supply was declared unsafe as water quality parameters exceeded Australian Drinking Water Guidelines (). In the first few months of 2021 most valleys in the north-west and far west were still experiencing low storage levels and flows. However, by April 2021 overall rural storage capacity had improved to over 50% with widespread rainfall and inflows across the state ().

In regional NSW, residential use accounts for two-thirds of total urban potable water consumed. Figure 6.4 shows that while the total number of connected (serviced) properties has remained fairly constant, the total annual urban water demand has varied between 250 GL and 315 GL in regional NSW in the past 10 years. Per capita demand has remained stable over the past 10 years with median average demand being 220 litres per person per day in 2008–09 and 212 litres per person per day in 2019–20.

Water restrictions are one of the measures that local water utilities use to manage the water demand. For example, during the 2019–20 report year, 25% of the regional local water utilities had water restrictions in place for the whole year.

Weather has a major effect on water demand. Deviation from average weather conditions can increase or decrease annual water consumption by up to 6% ().

Prolonged extreme weather events such as heatwaves can cause more variation, particularly in the short-term. Weather strongly influences customers' water use levels, mainly by affecting residential outdoor and cooling tower use.

In densely populated areas, water extraction for urban supply has ongoing impacts on river flows, putting the health of some river systems under pressure. Higher demand from a growing population, alongside reductions in supply, will increase water scarcity, putting further pressure on all users, including the environment ().

Residential customers' water use follows seasonal patterns: higher use over summer and lower use in cooler months. However, the disparity in summer and winter water use levels has diminished because people have maintained behaviours established during drought restrictions and because less water is used outdoors due to high density housing.

From around 2015–16 urban water demand across Greater Sydney, the Lower Hunter and regional areas was increasing, partly in response to drier than average weather conditions setting in from 2017. Since 2018–19 onwards urban water demand has fallen due to efforts to reduce demand in response to drought conditions including the introduction of water restrictions in 2019 in the major urban centres of Greater Sydney and the Lower Hunter.

A significant risk to water quality is the cumulative impacts on the waterway from developments and operations within the catchment. Cumulative impacts are the result of incremental, sustained and combined effects of these actions. The assessment and management of cumulative impacts is critical to protect water quality in a sustainable way.

In the Sydney drinking water catchment, a range of developments and operations can impact water quality including coal mines, collieries, agriculture and sewage treatment plants. The EPA regulates many of these activities through environment protection licences and has included conditions and programs for improving water quality over time. The State Environment Planning Policy (Sydney Drinking Water Catchment) 2011 ensures that consent authorities only allow proposed developments that have a neutral or beneficial effect on water quality. In 2021, the Independent Planning Commission refused consent for the extension of the Dendrobium Coal mine due the proposal risking long-term and irreversible damage to Greater Sydney and the Illawarra’s drinking water catchment including degradation of 25 watercourses and swamps, detrimental impacts to biodiversity and threatened ecological communities such as upland swamps.

Across Sydney, there is a significant amount of development occurring including expansion and construction of social and transport infrastructure. The cumulative impacts of this development needs to be considered holistically to ensure that the urban waterways and their ecosystems are appropriately protected from sediment and other pollutants. New planning approaches are in the process of being developed including the proposed Design & Place State Environmental Planning Policy to better address these cumulative impacts, however, it will be some time before their effectiveness can be assessed.

See the topic for more details about catchment disturbances.

Changes in global and regional climate patterns are affecting water availability for communities and the environment of NSW. Climate change is a complex process because many of the effects are uncertain, and the timeframes are unclear.

Most climatic projections suggest an increase in the frequency and severity of drought in NSW. Conversely, heavy rainfall and flooding is also predicted to increase ().

The volume of water held in storages varies with climatic conditions. Natural variability in rainfall and evaporation, and changing patterns of demand, will affect storage levels and water availability. Climate change will impact the reliability of storages in providing water as a result of changes to rainfall and evapo-transpiration, which will lead to changes in the volume and patterns of runoff.

As a result of climate change, demand for water will also change, additional water will be required to overcome hotter drier conditions, and patterns of industry may adjust to cope with climatic changes. In towns, water use may also increase as garden demands increase and evaporative coolers are used more in response to hotter, drier conditions.

The recent drought highlighted many vulnerabilities in metropolitan and regional water services in NSW. These vulnerabilities indicate that NSW needs much better long-term strategic water planning for its cities and towns and to fundamentally rethink and improve how water is used and managed ().

There is potential for the resilience of some regional cities and towns to be at risk if LWU’s fail to rise to emerging challenges. Currently, there are significant service risks across the sector, particularly in relation to water quality and security, and risk management and performance is variable. If not addressed, these risks could have substantial health and economic impacts on regional communities. We need to ensure that we improve organisational arrangements to support regional utilities and regional communities.

In June 2020, although coastal regions had received rain, the drought in many regions across NSW was officially declared the worst on record. Water quality issues were experienced in some rivers and storages with algal blooms. Coastal storage levels were at 78%; however due to prolonged long-term below average rainfall, some inland storage levels were as low as 10% ().

Between July 2017 and February 2020, Greater Sydney’s water storages experienced one of the worst drought sequences on record. Sydney’s storages declined rapidly by over 50% in two and a half years (Figure 6.5), reducing dam levels to a low level of 40%. This rate of depletion had not been experienced in the historical record and was not anticipated in the 2017 Metropolitan Water Plan. If Sydney experiences future droughts of the same intensity, without taking steps to respond effectively to prevent system failure, it is likely to result in negative environmental, social and economic outcomes.

The Lower Hunter water supply system is vulnerable to drought due to the relatively small size of water storage. Storage levels can fall from typical operating levels (above 70%) to empty in around three years in a severe drought. In the recent drought, in February 2020, total water storage levels reached just over 52%.

During the same period, most major regional dam storages were depleted, with some storages effectively empty and others dangerously low— representing a significant risk to water security. At the end of 2019, almost 50 town or city water supplies were at a high risk of failure, facing the risk of ‘zero’ water supply within six to 12 months. In some towns when rainfall came in early 2020, water was declared unsafe as water quality parameters exceeded Australian Drinking Water Guidelines ().

The NSW Government is working to better understand past and future climate risk. Water management in NSW has previously relied on analysis of 130 years of historical climate data, however, it is recognised that 130 years of records is not enough to understand the likelihood of future extreme events, especially long-term droughts. To better understand the variability of the climatic system a new method has been developed bringing together multiple sources of evidence, where the historical climate records are combined with 500 years of paleoclimate data (reconstructed from sources such as tree rings, cave deposits and coral growth) using a statistical method known as stochastic analysis.

The stochastic modelling method can then be used to help quantify climate variability. This type of modelling tells us much more about possible climatic extremes and the natural variability in the climate. The NSW Government’s climate projections can be applied to this new data set to understand the impacts if climate change scenarios eventuate ().

See the topic for more information.

Poor water quality affects its suitability for human use, increases the cost of treatment for supply and may affect the health of aquatic ecosystems. The following have important effects on water quality:

• vegetation cover
• land management practices in river catchments
• land overlying aquifer recharge zones
• stormwater runoff (in urban areas)
• wastewater discharge (in urban areas)
• fallout (ash from fires) in reservoirs.

In addition, safe and reliable drinking water can be more challenging and costly to supply to regional and remote communities than to major cities. Drought, bushfires and COVID-19 have brought service delivery issues into sharp relief, including water security challenges in regional New South Wales, and drinking water quality issues in some remote communities ().

See the and topics for more detail.

NSW Water Strategy

The NSW Water Strategy, launched in September 2021, is the first 20-year water strategy for all of NSW, that puts water on the same footing as other essential state resources and services, such as transport ().

Across NSW, there are opportunities to increase the resilience of our cities and towns to greater climate variability and change, and to resource constraints, while generating significant economic, employment and social benefits.

A range of water sources will need to be drawn upon to service regional centres and urban communities, including surface water, groundwater, recycled and manufactured water (desalination and purified recycled water), as well as ongoing demand management and water conservation practices. Retaining water in the urban landscape - including through stormwater management, recycling and integrating water bodies into urban design - will enable our cities and towns to maintain the amenity of green spaces and tree canopy during drought conditions, sustain recreational areas and contribute to urban cooling.

Key actions that the NSW Government has committed to deliver in the NSW Water Strategy, designed to improve the water security, resilience and liveability of cities and towns, are:

• continuing to work collaboratively with local water utilities to improve organisational arrangements and reduce risks to town water supply service provision
• delivering a new two-year Town Water Risk Reduction Program
• investing over $500 million over the next eight years to support local water utilities reduce risks in urban water systems through the Safe and Secure Water Program
• working with suppliers of drinking water to effectively manage drinking water quality and safety
• implementing a new statewide Water Efficiency Framework and Program
• proactively supporting water utilities to diversify sources of water including groundwater, stormwater harvesting and recycling.

Greater Sydney Water Strategy

The Greater Sydney Water Strategy (GSWS) will set the NSW Government’s strategic direction for ensuring the security and sustainability of Greater Sydney’s water supply and wastewater systems over the next twenty years (). Following the public consultation process, the GSWS is expected to be finalised in 2022.

Secure and sustainable water services are essential to support communities, urban environments, jobs and a strong economy, to deliver the Government’s vision for a more liveable Sydney () and to realise the Premier’s priority for greening our city with increased tree canopy and green cover across Greater Sydney.

The strategy seeks to address five significant and inter-related issues:

• service a growing population
• build resilience to drought and a changing climate
• support the economy and jobs
• improve water management outcomes for Aboriginal people.

It is intended to develop strategies to ensure that water systems can respond to growth, while also being resilient to drought conditions that could be more frequent and severe in the future than we have seen in recent history.

Lower Hunter Water Security Plan

The Lower Hunter Water Security Plan (LHWSP) is being developed as a collaboration between the NSW Government and Hunter Water. The plan’s goal is to provide a resilient and sustainable water future that contributes to regional health and prosperity and is supported by the community.

The draft LHWSP sets out a program of supply and demand actions that will ensure the region has a resilient system for the future and a response plan for drought. The final Plan is expected to be released in 2022.

The key actions in the draft LHWSP include:

• safe drinking water, including investment in catchment management and protection and maintaining a multi-barrier approach to the supply of safe drinking water
• ongoing investment in water conservation and leak reduction
• increasing recycled water use in industry, open space irrigation and residential developments and building a demonstration plant for purified recycled water for drinking to support engagement with the community
• continuing to share water with the Central Coast through the Hunter-Central Coast connection.
• building a permanent desalination plant to increase rainfall independent supply and doing readiness for additional desalination if needed in a severe drought
• a Hunter Water connection to the proposed Glennies-Lostock pipeline scheme
• a range of policy and planning initiatives related to improving First Nations and Aboriginal Peoples water values and participation in strategic planning processes and better integration of land use and water planning to contribute to liveable communities.

The draft LHWSP recognises the need to plan differently so that a secure supply of water is available during drought, the need to act now to be prepared for the next drought and the importance of remaining adaptive to respond to risks and opportunities of the future.

Drinking water quality management

The Public Health Act 2010 and Public Health Regulation 2012 require all water suppliers to establish and adhere to the NSW Guidelines for Drinking Water Management Systems.

NSW Health records water quality monitoring compliance data, which is incorporated into the NSW performance monitoring and benchmarking system.

The National Water Quality Management Strategy () aims to assist water resource managers to understand and protect (which could be to maintain or improve) water quality so that it is ‘fit for purpose’, that is, water that is suitable for the desired values and uses and the specific local conditions.

Pricing of water

Strong and efficient water pricing signals accurately reflect the value of water and cost of maintaining water supply at defined service standards. This allows customers to assess the value of their usage and adjust it to an efficient level based on the price.

In regional NSW there has been no significant water pricing reform in recent years. The primary guidance on water pricing is contained within the Best Practice Management of Water Supply and Sewerage Guidelines (). Some LWUs are considering introducing smart meters to assist with monitoring and targeting water use.

The Independent Pricing and Regulatory Tribunal (IPART) regulates prices for Sydney Water, Hunter Water, Essential Energy and Central Coast Council. IPART regularly assess new regulatory tools to deliver efficient prices and strong price signals. This includes introducing drought pricing for Sydney Water and Hunter Water as an uplift to prices during drought to reflect the additional costs faced by Sydney Water and Hunter Water during drought.

Median LWU water bills have fluctuated since 2013–14 and fallen to $614 in 2019–20 (from a high of $688 in 2017–18). However, LWU bills vary widely across NSW from $355 in Shoalhaven to $1346 in Bogan.

Bills for a typical residential customer in Lower Hunter (189kl/yr) and Greater Sydney (200kl/yr) fell as part of IPART’s 2019–20 price reviews. However, this was largely driven by market forces (lower cost of capital) as expenditure for Sydney Water and Hunter Water over the 2020–24 price path is expected to exceed expenditure during the 2016–20 price path.

At current levels of demand per connected property, the median water supply bill for the typical NSW residence was $653 in 2019–20. This represents only a 19% increase over the past 10 years.

Water Sharing Plans

Under the Water Management Act 2000, statutory water sharing plans were developed to help secure long-term potable water supplies for regional towns and cities. By setting the rules for how water is allocated, water sharing plans provide better security of entitlement for all water users and ensure water is available for the environment.

In NSW, most regional water use is now covered by a water sharing plan. There are also plans for the Greater Sydney Metropolitan Region, the Hunter Region and the Central Coast.

See the topic for more details.

National programs

National Water Initiative

The National Water Initiative (NWI) is a shared commitment by governments across Australia to increase water use efficiency. NSW's implementation plan for the NWI lays out specific actions for the initiative's eight key elements (NSW Government 2006). All 32 eligible NSW urban water utilities have met the national auditing requirements of the initiative. Information is published annually by the Australian Government through National performance reports (NPR).

In May 2019, in response to the Productivity Commission’s 2017 inquiry on national water reform, the Australian Government agreed to renew the NWI and, in partnership with State and Territory Governments, has commenced the process of policy renewal. The next report (due late 2021) will provide practical advice on future directions for national water reform.

National Australian Built Environment Rating System

The National Australian Built Environment Rating System (NABERS) is a national program that measures and rates the environmental impacts of Australian buildings, including water efficiency, using a 6-star scale. NABERS rates the operational water efficiency of a range of existing commercial buildings on a scale of 1–6 stars. Since 2006, almost 20,000,000 kL () of water has been saved by rated office buildings alone (based on the water intensity of a building’s first rating and subsequent ratings).

Buildings able to be rated by NABERS for water efficiency are:

• offices
• shopping centres
• hotels
• aged care buildings
• common areas of retirement living precincts
• common areas of apartment buildings.

NABERS is currently developing water ratings for schools, warehouses and cold stores, as well as supermarkets and retail stores. NABERS has driven substantial water efficiency gains for offices, hotels and shopping centres (). Overall, as of 30 June 2020, 19 billion litres of water have been saved from buildings since the program began in 1999.

Labelling standards

The national Water Efficiency Labelling and Standards (WELS) scheme mandates registration and water efficiency labelling for household washing machines, (including washer-dryers), dishwashers, taps, showers, toilets, urinals and flow controllers. In 2021, the WELS scheme is predicted to be saving NSW 47GL of water of 150GL nationally, and 0.75 Mt CO2-e GHG emissions from reduced demand for heated water ().

The WELS scheme is administered by the Australian Government and is enforced in NSW under complimentary NSW legislation. The NSW Government has made WELS compliance mandatory for plumbing fixtures in rental properties and for water-using appliances in residential complexes. WELS is incorporated into the Building Sustainability Index (BASIX) scheme in NSW.

The Australian Government engaged an independent reviewer to conduct a five-yearly review of the effectiveness of the WELS scheme in 2020. The review report is due to be presented to the Government in late 2021.

State programs

Building Sustainability Index (BASIX)

NSW's Building Sustainability Index for new homes was introduced in 2004 to ensure homes are designed to use up to 40% less urban water compared to pre-BASIX levels. This can be achieved by installing more water-efficient appliances and fixtures, or by using alternative water sources such as by installing a rainwater tank, installing a grey water reuse system or using recycled water (if the home is in a recycled water scheme supply area). More than half a million NSW homes now meet BASIX’s water saving targets. Those homes are collectively estimated to have saved 340 billion litres of potable water.

To meet the BASIX water savings requirements, 86% of new dwellings in 2017–18, excluding units, opted for a rainwater tank, usually in addition to mains water use.

Efficiency and recycling initiatives

Water recycling schemes reduce the need to discharge wastewater and can also improve nutrient levels that affect the health of streams and rivers. By making water use more efficient, these schemes free up water supply, which dams can instead release for environmental flows, improving downstream river health. In 2019–20, Sydney Water operated recycled water schemes that produced 47 billion litres of recycled water, offsetting drinking water demand by 13 billion litres (). In Hunter Water’s area of operations recycled water schemes produced nearly 6 billion litres of recycled water in 2019–20, offsetting the use of 5.5 billion litres of drinking water (). The schemes were operated by Sydney Water, Hunter Water, local councils and private schemes ().

In 2019–20, Sydney Water and Hunter Water estimated daily water leakage at 85L and 69L per connected property respectively ().

Sydney Water and Hunter Water actively look for and repair leaks. Under its Water Conservation Plan, Sydney Water expects leak detection and other programs to meet its economic level of leakage of 108ML/d (). On 1 September each year Sydney Water submits its Water Conservation Report to IPART outlining its water efficiency and recycling programs and expenditure carried out in the previous financial year.

Hunter Water is expecting to reduce demand for drinking water by nearly 18 billion litres between 2020 and 2025 through the implementation of a variety of water conservation projects and programs ().

Although the regional NSW Water Loss Management Program was completed in 2011, most local water utilities continue to build on the program with further water loss management activities. In 2019–20 the weighted median of real water loss was 59L daily per connected property for the regional local water utilities ().

Water Wise Guidelines

Water conservation measures adopted during droughts over the last decade have been replaced by simpler, common-sense Water Wise Guidelines for Sydney, the Blue Mountains and the Illawarra (see Figure 6.3). These permanent rules aim to save water by embedding good practice among all water users. In the Lower Hunter these permanent water conservation measures are termed Smart Water Choices.

Present water consumption remains well below levels seen prior to the previous drought. However, obtaining the level of water use reduction achieved during times of water restrictions, and maintaining them, is yet to be accomplished.

Safe and Secure Water Program

The Safe and Secure Water Program is the NSW Government’s flagship water infrastructure program for local water utilities. The $1 billion program co-funds water and sewerage projects that will improve public health (water quality), water security and environmental outcomes for communities in regional NSW.

Since the establishment of the Program, $745 million funding has been approved for 177 projects, including the Wentworth to Broken Hill Pipeline. It follows the NSW Government’s long-term investment in local government water utilities through the Water Security for Regions Program and Country Towns Water Supply and Sewerage Program.

The Program was redesigned in 2018 and now prioritises funding to regional communities facing the highest priority risks. The Program’s central risk-based prioritisation framework was co-developed by Department of Planning, Industry and Environment (DPIE) and NSW Health.

All systems in regional NSW were assessed for water quality, water security and environmental risk, resulting in over 1,000 assessed risks.

Active leak detection program

In 2020–21, Sydney Water invested over $43 million in programs that contributed to the reduction of the rolling 12-month leakage result by 12.1 ML/d to 112.5 ML/d by repairing leaks, breaks and corresponding restoration works as well as proactive detection initiatives. Over 12,000 kms of water mains were inspected which identified 4,872 leaks. The program has led to:

• a reduction in leakage by prioritising repairs to reported leaks
• early lifecycle projects initiated including a working Springer Spaniel dog trained to detect drinking water leaks
• public education campaigns about the importance of water conservation
• building data and analytics capability to improve targeting of active leak detection.

In 2020–21 Hunter Water investment in leakage management programs resulted in water loss from the distribution network being reduced by more than 7%. The benchmarking indicator for water loss, the Infrastructure Leakage Index (ILI), decreased from 1.01 to 0.93 and real losses from 69 to 64 litres per service connection per day. The Active Leakage Control program surveyed 6,423km of mains across the water network.

Town Water Risk Reduction Program

Over a two-year period during 2021 and 2022, the NSW Government will work in partnership with the local water utilities sector on the Town Water Risk Reduction Program. The purpose of the Program is to reduce water service risks in town water systems in regional NSW by mitigating the fundamental barriers to performance. The fundamental barriers include:

• scale and remoteness
• skills shortages
• sub-optimal strategic planning
• inadequate regulatory and support mechanisms.

A key objective of this program is the implementation of a new approach of working together that enables local water utilities to manage risks in town water systems more strategically and effectively and, as a result, reduce water quality, water security and environmental risks in regional NSW. A focus of the program will be on designing systems and mechanisms to:

• enhance LWUs and their partners capabilities
• better support and coordinate with LWUs
• regulate LWUs more effectively
• fund them more appropriately.

Greater Sydney Drought Response Plan

Sydney Water and WaterNSW are developing a Drought Response Plan for Greater Sydney to be more operationally prepared for the next drought. Planning is underway to make decisions on future system augmentations to improve Sydney’s preparedness for drought.

Aboriginal Communities Water and Sewerage Program

The Aboriginal Communities Water and Sewerage Program aims to improve water supply and sewerage services in Aboriginal communities in New South Wales. The program began in December 2008 and is a joint initiative of the NSW Government and the NSW Aboriginal Land Council (NSWALC).

Together, the NSW Government and the NSWALC are investing more than $200 million over a 25-year period to provide funding for the maintenance, operation and repair of water supply and sewerage systems in 63 eligible Aboriginal communities.

The program is primarily focused on operations and maintenance but also involves capital works to improve services. The program features involvement and employment of local aboriginal communities and land councils as well as delivery of services primarily by local water utilities. The program has already led to marked improvements to water quality and reliability of water services in aboriginal communities.

Since 2020, the NSW Government has progressively released the NSW Water Strategy, Greater Sydney Water Strategy, Lower Hunter Water Security Plan and the NSW regional water strategies, which contain a wide range of actions designed to improve urban water management and make NSW cities and towns more liveable and more resilient to drought and changing climate. Some of the key opportunities for the future these strategies point to include:

• As NSW cities and towns continue to grow, one of the major opportunities is to better integrate water sensitive design into new developments, precincts and suburbs as they are built, as well as improving existing urban areas as they are renewed or re-developed. Water-sensitive urban design aims to integrate the water cycle and the built environment. This planning approach for cities, towns, suburbs and even high-rise buildings is already a longstanding requirement for new developments in many local government areas. In particular, as Sydney grows, opportunities to apply water-sensitive urban design will expand, producing exemplars of best practice that can then be applied elsewhere in NSW.
• Fostering a circular economy in cities and towns through innovative urban water management approaches that improve resource efficiency and recovery and contribute to achieving a net zero emissions future. In its vision for Greater Sydney, A Metropolis of Three Cities, the Greater Sydney Commission explicitly aims to capture and re-use energy and water flows ().
• Improving catchment management and integrating catchment protection with development processes will be critical to ensuring that existing water resources are maintained.
• The development of planning policies will support achieving liveability and place-based outcomes through better integration of land use planning and water cycle management decisions ().
• New technologies and innovation will continue to drive water conservation through improved water efficiency in homes and businesses, identification of ways to reduce evaporation, and better network monitoring and metering. Continued collaboration with research and industry partners will only open more opportunities in the future.
• It is recognised that there are systemic issues that need to be addressed at a statewide level to better enable the exercise of Aboriginal rights and access to water. Increasing access to water for cultural purposes and strengthening the role of First Nations in water planning, governance and decision-making will be required as part the future management of water across NSW, in cities and towns ().

In addition, in its 2021 white paper Rebooting the Economy, the NSW Productivity Commission recommended a number of areas for future work in improving urban water management in NSW ():

• Ongoing investment in knowledge generation/water-related research will provide a foundation for evidence-based decision making, innovation, continuous improvement and the development of community water literacy to, for example, support water planning, inform decisions about the use of environmental water and help utilities meet growing water and service demands.
• Improving the effectiveness of community engagement through enhancing water information accessibility and comprehensibility.
• A stronger focus on best-practice planning would improve water services and contribute to liveability and urban amenity, as well as avoid poor choices that would impose unnecessary costs on customers or fail to secure an adequate level of service.
• A stronger focus on best-practice planning would improve water services and contribute to liveability and urban amenity, as well as avoid poor choices that would impose unnecessary costs on customers or fail to secure an adequate level of service.