Water Resources

The period from 2018 to 2020 encompassed some of the most extreme weather ever experienced in NSW, including one of the worst droughts on record, followed by severe bushfires along the eastern seaboard. Water extraction fell quickly during this period and significantly less environmental water was delivered into inland rivers.

Why managing water resources is important

Water is a vital resource and effective management is necessary to balance competing human needs, maintain healthy and resilient aquatic environments, and protect river and groundwater systems.

A robust water resources management framework is important as it provides greater certainty about the water available for extraction, establishes rules for sharing water supplies between different types of uses, and allows for return of flows to the environment. NSW moves between extremes of weather, with abundant water quickly becoming scarce, making management and regulation of water resources both complex and critical.

This topic explores surface water resources, see the topic for information on those resources.

Status and Trends

After three years of severe drought, NSW climatic conditions and surface water availability improved after mid-2020. Water extraction and regulation alter river flows and continue to put pressure on the health of inland river systems. The impacts may be less severe during intermittent flooding events and periods of above-average rainfall.

About 80% of water used comes from regulated rivers, where flows are controlled by large water storages, while about 11% comes from groundwater and the balance is drawn from unregulated rivers. The amount of water extracted for use and the amount remaining in stream for environmental purposes differs significantly depending on annual rainfall and flow conditions.

Spotlight figure 16 shows water use by licensed users from 1999–00 to 2019–20 in all six major NSW inland regulated river valleys. All were quickly impacted by the extreme temperatures and very low rainfall experienced during the drought that occurred between 2018 and 2020.

The NSW Government’s cumulative holdings of environmental water total about 902,400 megalitres (ML) within regulated rivers and about 27,500ML in unregulated rivers. The Australian Government has also recovered substantial volumes of environmental water in the Murray–Darling Basin in NSW with current holdings of about 1,576,300ML in regulated rivers and 46,800ML in unregulated rivers. This gives a total of 2,553,000ML of licensed environmental water for NSW.

During the three years 2017–18 to 2019–20, the volume of environmental water delivered back to locations across inland NSW was significantly less than in the previous three years. Volumes ranged from approximately 850,000ML (2017–18) to 278,000ML (2019–20), the lowest amount in a decade, and significantly less than the 1,396,000ML peak in 2016–17. This highlights the impact of the recent drought and record-breaking high temperatures on water availability.

Pressures

Climate variability, periods of drought, above-average temperatures and low rainfall, and the increasing impact of climate change related extreme weather events are significant pressures on water resources in NSW. More frequent drought conditions with only short periods of good rainfall in between dry periods reduce the ability of river systems and water storages to recover sufficiently.

Other pressures on water resources are the result of human intervention and activity. Water extraction can reduce total river flows and, particularly in times of reduced rainfall, these water diversions can affect water quality and ecosystem health.

The natural variability of river flows is also impacted by the regulation of rivers through structures that store or divert water such as dams and weirs. Although aquatic ecosystems in NSW are adapted to variable flow levels, changes to natural flow patterns and water temperatures, have contributed to biodiversity loss and declining aquatic health over time.

Another pressure on water resources is water pollution from catchment disturbances, land management practices and land-use changes including agriculture and urban expansion.

Responses

The state’s water resources are managed through a framework of legislative instruments, strategies, policies and plans which aim to address and mitigate the pressures on water resources. Central to the management and control of demand are water sharing plans which are in force for all water sources in NSW. These plans provide a clear framework and rules for managing inland NSW basin water resources and coastal water resources and provide the basis for sharing water between the environment and extractive users.

Water sharing plans play an important part in supporting water markets and enabling water trading for both commercial and environmental purposes. Water markets can help water managers to flexibly adapt to changing conditions and manage risk.

Water sharing plans are also an important component of regional water strategies which are currently being developed in NSW to understand how much water a region will need to meet future demand and identify the challenges and choices involved. Based on this, the plans will set out actions to manage risks to water security and reliability. They aim to consider the pressures on water resources in a region and bring together the latest climate evidence and a range of tools and solutions to plan and manage each region’s water needs over the next 20 to 40 years.

Water sharing plans, with risk assessments, underpin 20 water resource plans developed by the NSW Government for both surface water and groundwater sources as part of its responsibilities for improving water resource management under the Murray–Darling Basin Plan.

The NSW Water Strategy was released by the NSW Government in September 2021 to draw the various water strategies and plans together into a strategic and integrated framework to better manage the state’s water resources.

Related topics: | | |

Water resources are critical for many human needs, including supplies for towns, household use, stock watering, crop irrigation, and mining and industry. Most of these needs are satisfied by water held in storage or extracted from rivers and groundwater.

This topic explores surface water resources; for groundwater resources, see the topic.

Water resources are also vital to conserve the health of aquatic ecosystems in rivers, estuaries and wetlands. See , and topics.

An adequate supply of good quality water is vital to:

• providing a healthy environment
• securing water resources for human use
• supporting cultural outcomes
• enabling economic growth.

To address these needs, the NSW Government sets out rules in statutory water sharing plans (WSPs for both coastal and inland regions. These rules aim to protect water for the environment and provide security of entitlement for all water users.

NSW has also committed to work with the Australian Government to implement the Murray–Darling Basin Plan 2012. The Basin Plan sets sustainable diversion limits (SDLs) for both surface water and groundwater sources. These determine how much water can be used in the basin to meet the needs of communities reliant on its water, while making sufficient provision to protect the health of the aquatic environment and river and groundwater systems.

In September 2021, the NSW Government released the NSW Water Strategy a 20-year, strategy to improve the security, reliability and quality of the state’s water resources over the coming decades. The strategy aims to address key challenges and opportunities for water management and service delivery across the state and set the strategic direction for the NSW water sector over the long-term.

The period 2018 to early 2020 saw some of the most extreme weather events ever experienced in NSW, including one of the worst droughts on record followed by severe bushfires along the eastern seaboard from September 2019 to February 2020.

The warmest and driest years on record for NSW, 2018 and 2019, resulted in low surface water availability in the state. Rainfall in most of the Murray Darling Basin was substantially below average in 2017, 2018 and 2019, something not previously seen in rainfall records. In the northern Murray–Darling Basin rainfall was 52% below average for the two years 2018−2019, and in the southern basin, rainfall was 41% below average, the lowest on record across the basin ().

In 2019, mean annual maximum and minimum temperatures were above average across NSW. Heatwaves in January and in December saw a number of sites in the eastern half of the state experiencing their highest temperature on record. The northeast and far west of the state were particularly dry in 2019. Total rainfall for NSW was the lowest on record at 55% below average, with falls in some parts of northern NSW 70% to 80% below average ().

2020 started with a significant heatwave in eastern NSW and bushfires continued to burn in many coastal areas, followed in February to April by widespread rain across the interior of NSW including in the Murray–Darling Basin. While temperatures during the year were still above average, so too was rainfall for large parts of the state, with falls spread across the year - during February to April, August to October, and in December. Water storages in the southern Murray–Darling Basin saw increases during 2020, while the northern Basin water storage levels remained low.

In February and July 2020 most of the NSW coast experienced storms that caused hazardous conditions, flooding and erosion but also resulted in significant increases in water catchments and urban water supplies in coastal NSW.

In stark contrast to the previous year, the summer of 2020–21 was the coolest and wettest in 10 years and storms caused heavy rain and flooding, mainly in the Northern Rivers region. Further rain events in March 2021, over multiple days, resulted in significant flooding across a number of inland, and most coastal, catchments. In general, NSW experienced a mostly warm and wet winter in 2021 with above-average temperatures and good rainfall over the Central and Northern Tablelands, western slopes and other inland areas in June–July 2021 ().

The NSW Department of Planning Industry and Environment (DPIE) website summarises water availability and allocations for each of NSW's major regulated river systems. These are rivers in which water is stored or flow levels are controlled through the use of structures, usually dams or weirs, which can release water for users.

For inland NSW, nine water sharing plans cover the regulated river areas of:

• NSW Murray and Lower Darling
• Murrumbidgee
• Lachlan
• Belubula
• Macquarie and Cudgegong
• Namoi
• Peel
• Gwydir
• NSW Border Rivers.

On the coast, four WSPs cover the regulated river areas of:

• Bega and Brogo
• Hunter
• Paterson
• Richmond.

The website also provides detailed reports on basins and catchments, including their climate, hydrology, environmental aspects, land use, water resources, regulating structures and water resource management.

In NSW, the long-term average for annual water use is about 7,000 gigalitres (GL). However, the actual amount of water used each year varies considerably, depending on rainfall and flow conditions.

About 80% of this water comes from regulated rivers, where flows are controlled by large water storages operated by WaterNSW. Of the remainder, about 11% comes from groundwater (see the topic), with the balance drawn from unregulated rivers. These estimates of water use include water licensed for consumption and for the environment.

Agriculture is the largest user of bulk water and also the most variable. Agriculture consumes an average of about 60% of total water used, but this ranges from about 70% when water availability is high, to around 45% when availability is low. These percentages were calculated based on averages for the eight-year period 2008–16 using ABS data ().

Bulk water for urban water and sewerage services, the second largest user, accounts for about 20% of total water used, on average, including water lost to evaporation and leakage during water delivery. Households are large users, consuming about 10%, on average. Industries such as forestry, mining and manufacturing account for the remaining 10% of total water use.

Most water extracted in NSW comes from eight major regulated river valleys:

• Murray
• Murrumbidgee
• Lachlan
• Macquarie
• Namoi
• Gwydir
• Border Rivers
• Hunter.

Significant volumes of water are also extracted in sections of the Barwon–Darling River system, which is unregulated.

Runoff from the Snowy Mountains is captured and diverted to the Murray and Murrumbidgee rivers through the Snowy Mountains Scheme. This diverted water flow generates electricity and augments water availability in these inland valleys.

Water is also extracted from the Hawkesbury-Nepean River system. This water is used in agriculture for irrigation; by the tourism, fishing and oyster industries; for various recreational uses; and for urban use in the Greater Sydney metropolitan area. Diversions from the Shoalhaven River system supplement the Greater Sydney urban water supply and parts of southern Sydney are supplied from the Woronora River Catchment. Water sales to supply Greater Sydney were 608GL in 2018, 563GL in 2019 and 467GL in 2020 (). See also the topic.

Each year, water is allocated to licences in the regulated river valleys on 1 July, the beginning of each water year, and also periodically throughout the year. The quantity allocated reflects the water resources available and the security of the entitlement. The DPIE website details the various types of water access licences.

Water licensed for town supply, major utilities, and household and stock use has the highest security of supply. Other high-security licences also receive a high proportion of their water allocations in all but the driest years. These are typically licences for water to irrigate permanent plantings, such as orchards and vines, and for use by industries with a level of investment that warrants assured water supply.

Water allocated to general security licences varies more from year to year; it is mostly used to irrigate annual crops, such as cereals, rice, cotton and pastures. Rules of some water sharing plans permit unused allocations of general-security water to be carried over from year to year.

Water not allocated for extraction each year is considered to be environmental water. Other water is allocated specifically to the environment through the environmental flow rules of water sharing plans and environmental water licences.

Long-term modelling of river flows and extractions

Long-term modelling of river flows provides a basis to set long-term diversion limits for water sharing plans. These models are based on 120 years of historical climate and flow data. They simulate the flow behaviour of river systems, and the impact of water resource development on natural river flows.

The models provide a baseline and context against which to compare actual river flows each year. They generally show the proportion of water remaining for the environment is higher during wetter periods than drier periods. By contrast, when river flows are low, less water is available in total, and proportionally more of it is allocated for consumption. See the DPIE website for more on groundwater and water modelling.

Current river flows and extractions

Yearly rainfall and river flows drive water availability, and directly affect the volumes extracted. Over the decade prior to 2010–11, water extractions gradually fell due to severe, extended drought conditions. The quantity of water extracted from the six major regulated rivers shown in Spotlight figure 16 above rose sharply from 2010–11 as surface water availability increased due to widespread heavy rains. Extractions fell again during another dry period after 2012–13. Water extraction increased again in 2016-17 as an outcome of higher than average, widespread rainfall across NSW, and then fell quickly again due to the impact of the extreme drought conditions experienced from 2017 to 2020.

Figures 16.1(a–e) show water extracted from each of five major NSW inland regulated river valleys in terms of both the gigalitre quantity extracted, and, as a proportion (%) of the total available water. Estimates of water remaining in-stream for the environment are also shown. In wetter years (2010–11 and 2011–12, and 2016–17), the graphs show how a higher percentage of water is typically retained in river systems (and available to the environment) than in drier years.

The graphs also show the difference that can occur in water availability in these five river valleys, over the same period, due to uneven rainfall across the state. In 2016–17, the Macquarie (16.1c), Lachlan (16.1d) and Murrumbidgee (16.1e) experienced higher than usual rainfall while the Gwydir (16.1a) and Namoi (16.1b) experienced median rainfall. Due to this a lower proportion of water remained in-stream for the environment in these two valleys. Despite good rainfall in 2016–17, all five river valleys were quickly impacted by the extreme temperatures and very low rainfall experienced during the drought that occurred between 2018 and 2020, and each fell to below dry flow levels by the end of 2018.

Environmental flows are protected under water sharing plans, which include rules for low flows. However, as Figures 16.1(a-e) show, in median and dry years the relative proportion of available water used for consumptive purposes increases, even when actual water volume decreases. Under the Basin Plan, water recovery for the environment is intended to reduce this trend and produce closer to 50% of river flow for the environment in dry years in most inland regulated river valleys.

To offset the impact of water extraction and structures that regulate river flows, a share of the water resource is set aside for environmental purposes to maintain the health of natural systems and water sources. The Water Management Act 2000 recognises and provides for two types of environmental water in the water sharing plans for NSW's regulated rivers:

• planned environmental water
• licensed (or held) environmental water.

Planned environmental water (PEW) is committed to the environment through rules in water sharing plans. The plans limit overall water extraction to ensure an agreed amount of water remains in the water source. The plans also apply specific environmental flow rules.

Planned environmental water rules are either:

• fixed rules that prescribe ‘automatic’ actions to release water from storage, such as transparent and translucent releases, and limits on extraction
• discretionary rules that set aside water into environmental water allowances, based on specified trigger conditions.

Environmental water managers are able to actively manage discretionary water by ordering releases from environmental water allowances. This gives managers the flexibility to determine when and how watering actions should occur, so they can optimise environmental outcomes.

In unregulated rivers, water sharing plans generally rely on rules that limit extraction of river flows to protect a share of water for the environment. In most cases, these rules set an annual extraction limit and a low-flow cease-to-pump level. This threshold is intended to minimise impacts during low flows and protect water for basic ecosystem health and riparian water uses.

Licensed or Held environmental water (HEW) is committed to the environment through water access licences. It is generally purchased through entitlements of willing sellers or created through water savings. In the latter case, investment in projects or measures can yield more efficient water use, which can be converted into an equivalent licensed entitlement. Held environmental water is actively managed by the NSW Government to achieve specific environmental outcomes. This management includes collaboration on the delivery of water held by the Commonwealth Environment Water Holder (CEWH). Often different sources of environmental water (NSW HEW, CEWH HEW, PEW) are combined to enable releases of water for specific environmental objectives.

Environmental water holdings

Water recovery programs funded by the Australian and NSW governments have purchased or recovered water for NSW’s environment. This licensed water contributes to the total environmental water holdings. The cumulative total for all NSW licensed environmental water is 2,478,812 shares or megalitres (ML) entitlement for regulated rivers and 74,362ML in unregulated rivers (see Table 16.1 and Table 16.2), giving a total of 2,553,184ML (2,553GL). This represents an increase of over 1,000GL since 2010-11 (see Figure 16.2).

Table 16.1 summarises the collective amount of water held by NSW from water recovery programs for seven river valleys or programs.

Figure 16.2 shows the growth in the volume of NSW environmental water shares from 2005–06 to 2020–21 due to water licence purchases and the creation of new entitlements through water savings infrastructure projects.

Environmental water delivery

The amount of water available for release into the environment depends on annual allocations available for the different types of entitlement. Managers allocate the water according to the priority of these entitlements, while also considering seasonal water availability.

For supplementary flows and unregulated licences, full water allocation is made at the start of each year. However, this water can only be physically diverted if rivers have sufficient flow in the river reaches identified for supplementary access. In that sense access is weather-dependent – opportunistic and not guaranteed.

In NSW, annual and long-term water plans are developed by the DPIE. Annual plans outline the priorities for use of water for the environment in the coming year, depending on climatic factors and water availability as conditions change. Long-term water plans guide the management of water for the environment over the longer term – up to 20-years – and also provide directions for annual and event-based water management for environmental outcomes in each valley.

Table 16.3 shows how volumes of environmental water released from storages of different regulated river valleys in inland NSW decreased between 2017–18 and 2019–20 due to the severity of the drought. These numbers are for releases made through specific environmental allowances, or as a result of licensed environmental water. They do not include water made available to the environment through non-discretionary fixed rules in water sharing plans, such as prescribed end-of-system flows or transparent and translucent releases from storages.

The 2017–18 year was the start of a period of the hottest temperatures and lowest rainfall on record in NSW. In July 2017, the water year began with reasonable reserves of water due to widespread rain in 2016. Through active management, around 850,000ML of environmental water was delivered to environmental assets in inland NSW. In the Murray catchment a total of 310,500ML (in conjunction with Victorian water for the environment) was delivered to the Murray River, connected Millewa Wetlands, and the Edward-Wakool river system. Promoting native fish breeding and movement, the connectivity boosted food production, recharged groundwater reserves, supported a myriad of wetland plants and provided important habitat that helped sustain bird breeding events, including colonial-nesting ibis, spoonbills, cormorants, darters and the threatened Australasian bittern.

The following 2018–19 water year, the State, Commonwealth and The Living Murray accounts together delivered just over 628,000ML of water for the environment to key sites across the state. In catchments particularly affected by dry conditions, refuge sites were targeted, with native fish, waterbirds and other wildlife congregating in and around the remaining pockets of water. In the Gwydir catchment, more than 28,000ML of water for the environment was released from Copeton Dam as part of the Northern Fish Flow event, boosting available habitat and food for native fish and the opportunity for them to move within the river system. This event also provided important social and cultural outcomes for communities in the Gwydir and further downstream.

Water availability across the state come under drought operations during the 2019–20 water year. Approximately 278,000 ML was delivered across 40 watering events providing a mosaic of drought refuge sites to support key populations of native fish, waterbirds, plants and other water-dependent wildlife. In the Lachlan catchment over 31,000ML was delivered to 9 separate wetland sites with many sites inundated for at least 4 to 8 months, and deeper wetlands, such as the Cumbung, retaining water to provide an ongoing drought refuge into 2020–21.

As droughts are a natural feature of Australia’s climate, aquatic ecosystems are adapted to periods of dryness and water managers and water users plan for dry conditions. However, extensive or prolonged drought can have major repercussions for all water users and the environment.

Climate change is predicted to increase the length, severity and frequency of droughts. The cumulative impact of more frequent and intense drought on rivers, major storages and groundwater could be significant if the long-term trend is towards reduced rainfall.

In NSW, river valleys are managed under the drought stages in the Extreme Events Policy.

When water extraction levels are high relative to total river flow, and of extended duration, river health is stressed. Before the Murray–Darling Basin Plan commenced in 2012, the total volume of water extracted from the basin’s rivers had affected aquatic ecosystem health ().

The Water Act 2007 (Cth) provided for the Basin Plan, with its strategy to restore water diversion to within sustainable levels and safeguard the long-term health of rivers and water-dependent ecosystems. The Basin Plan originally required a long-term average annual volume of 2,750GL to be recovered and returned to the environment, adjusted in 2018 to 2,075GL.

Structures to store and regulate water are built to increase security of supply. However, their use can also moderate the natural variability of streamflows. This is because these structures can capture and reduce large natural flows and release stored water during naturally dry periods. By regulating rivers, these structures:

• modify natural river flow regimes
• reduce flow variability
• change the seasonality of flows
• alter the natural water temperature of downstream river systems
• reduce connectivity between rivers and their wetlands and floodplains
• reduce connectivity between catchments
• change river morphology.

Aquatic ecosystems, particularly around inland Australian rivers, are adapted to highly variable flow levels. Aquatic species may even depend on this variability to maintain or complete their life cycles. However, changes to natural river flow patterns and water temperatures (cold water pollution) have, over the longer term, contributed to biodiversity loss and declining health in aquatic ecosystems (; ).

With a much larger portfolio of environmental water now being actively managed, this water can be used to overcome some of these adverse impacts of river regulation, particularly as scientific knowledge in this area continues to grow.

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, including the possibility of both more frequent prolonged droughts and more frequent short, sharp droughts similar to conditions experienced over 2017–20. Conversely heavy rainfall is also expected to increase. Changes in some types of natural hazards have already been observed. For example, there have been increases in the frequency and intensity of heat waves and in heavy precipitation.

Depending on the region, recent analysis by DPIE has predicted that climate variability and future climate change could result in: changed rainfall patterns, higher evapotranspiration, higher temperatures, more hot days and dry spells, a decrease in the number of cool nights, increased intensity of extreme events, rising mean sea level, and harsher fire weather ().

These changes place additional pressure on the volume, reliability, and quality of water resources and supporting infrastructure in NSW.

Water management across NSW used to rely on a picture of long-term water availability based on climate data collected since the late 19th century. In 2020, the NSW Government invested in new climate datasets and modelling to develop a more sophisticated depiction of past and future climatic conditions. These improved datasets integrate recorded historical data with paleoclimate data (data reconstructed from before instrumental records began) to give a modelling tool that generates 10,000 years of synthetic climate data. NSW is also leading the development of NARCliM (NSW and ACT Regional Climate Modelling), a partnership which provides high resolution climate change projections across NSW.

When combined with NARCLiM’s climate change projections, the modelling assists with the analysis of natural climate variability, including the probability of wet and dry periods in each region of NSW, and estimating risks to future water availability. This improved modelling improves decision making by providing a more accurate understanding of the length and frequency of past wet and dry periods.

The probability of future climate characteristics, such as the frequency, length and distribution of droughts and floods in each region, can now be better understood. This improves consideration of mitigation measures to address risks and the assessment of the possible benefits of medium and long-term solutions.

The new climate datasets and modelling have been used to inform the development of 12 Regional Water Strategies.

Water quality affects its suitability for human use and the health of aquatic ecosystems. A river catchment’s vegetation cover and land management practices significantly affect its water quality. Local, naturally occurring features, such as saltwater intrusion, also play a part. The River Health topic covers river water quality, the effects of catchment disturbance, cold water pollution, and diffuse runoff from agricultural activities and urban expansion.

Legislation and policy, along with a range of intergovernmental agreements, provide a strong foundation for water management in NSW.

NSW Water Strategy

The NSW Water Strategy () takes a strategic and integrated approach to looking after the state’s water. This strategy is the first 20-year water strategy for all of NSW and aims to improve the security, reliability, quality and resilience of our water resources over the long term. It sets the priorities and outlines the implementation plan to deliver on these outcomes.

The strategy sets the overarching vision for 12 regional and two metropolitan water strategies tailored to the individual needs of each region in NSW. Together, the strategies will improve the resilience of NSW’s water services and resources.

The strategies link with water sharing plans which remain the legal instruments for managing water resources in NSW under the NSW Water Management Act 2000. These plans are an important component of water resource plans that the NSW Government has developed as part of its obligations under the Murray–Darling Basin Plan.

See below for further information on regional water strategies, water resource plans and water sharing plans.

Water Reform Action Plan

In December 2017, the NSW Government announced the Water Reform Action Plan, a response to recommendations by compliance reviews, including those of the Matthews Investigation, the Murray–Darling Basin Water Compliance Review and the NSW Ombudsman. The plan’s ambitious water reform program aims to improve compliance and enforcement, increase transparency of water use, and bring about better environmental water management in NSW especially in the northern Murray-Darling Basin.

In April 2018, a new independent regulator commenced oversight of the compliance and enforcement of NSW’s water law. Called the Natural Resources Access Regulator (NRAR), it aims to act independently as a firm but fair regulator to improve public confidence in water compliance and enforcement. To strengthen joint compliance in the Murray–Darling Basin, NRAR has signed a memorandum of understanding on compliance cooperation with the Murray–Darling Basin Authority.

There are a number of important improvements that have been delivered under the plan including the development of Water Resource Plans, commencement of non-urban real time water metering, and improved transparency and the provision of comprehensive information about how water is managed and shared in NSW through the WaterInsights public website.

Amendment of the Water Management Act

The Water Management Amendment Act 2018 amended the Water Management Act 2000 to ensure its compliance with the Water Act 2007 (Cth) and the Murray–Darling Basin Plan 2012. The amendments were introduced to ensure improved monitoring and enforcement measures, such as more significant penalties and tougher metering requirements, and better management of environmental water while allowing more flexibility and control for the NSW Government in managing the State’s water resources. Subsequently, amendments were made to supporting statutory instruments, in particular the Water Management (General) Regulation 2018.

National Water Initiative

The National Water Initiative (NWI) commits NSW to sustainable use of its water resources. To achieve environmental outcomes, it facilitates expanded trade in water resources to promote the highest-value water uses and the most cost-effective and flexible mechanisms of water recovery.

The Productivity Commission has responsibility for tracking progress towards NWI objectives; this includes an evaluation every three years. The most recent evaluation, the National Water Reform 2020 Inquiry Report found there had been good progress on the NWI reform agenda and that jurisdictions had mostly achieved their NWI commitments. The Productivity Commission reported that, while the water reforms had delivered sizeable benefits to water users and the broader community, the case for further reform is compelling. It provided recommendations and renewal advice on further work and reform priorities ().

Murray–Darling Basin Plan

The Murray–Darling Basin Plan 2012 is a Commonwealth legislative instrument that sets sustainable diversion limits (SDLs) for both surface and groundwater use in the Murray-Darling Basin. The Murray-Darling is the largest and most complex river system in Australia covering one million square kilometres of south-eastern Australia, across New South Wales, Queensland, South Australia, Victoria and the Australian Capital Territory.

Originally a target to recover an additional 2,750GL of water to return to the environment was set as part of the plan, this has since been amended to 2,075GL per year, plus 450GL/year of efficiency measures, and up to 605GL of offsets through the Sustainable Diversion Limit Adjustment Mechanism (SDLAM). The role of the Murray–Darling Basin Authority (MDBA) is to oversee implementation of the Basin Plan and the targets, scheduled for completion in 2024.

The Australian Government has committed to bridge the gap to the lower SDLs required by the Basin Plan target by investing in water recovery.

A water recovery program has commenced across the basin, including buy-backs and water savings initiatives. The Murray–Darling Basin Authority estimates that the contracted surface water recovery in the Murray–Darling Basin, as at 30 September 2021, was 2,106.9GL per year (). NSW’s share of the target is 1,276GL, of which approximately 1,000GL has been recovered, with an additional 286GL scheduled to be offset through the SDLAM.

As part of the Basin Plan’s mechanism to adjust SDLs, the Australian Government has approved a package of projects, developed by NSW, to deliver environmental outcomes using less water.

From 5 August 2021, the Inspector-General of Water Compliance (IGWC), became responsible for enforcing compliance with the Basin Plan. This was previously the responsibility of the MDBA. The IGWC has oversight of water management in the Basin and inquiry powers to investigate the implementation of the Water Act, the Basin Plan and intergovernmental agreements, including the Murray–Darling Basin Agreement. Further information on the IGWC.

Floodplain Harvesting Policy

Floodplain harvesting is the collection, extraction or impoundment of water flowing across floodplains, including rainfall runoff and overbank flow. In 2013, the NSW Government endorsed the Floodplain Harvesting Policy for the purpose of:

• managing floodplain water extractions more effectively in order to protect the environment and the reliability of water supply for downstream users
• ensuring compliance with the requirements of the Water Management Act 2000
• meeting the objectives of the National Water Initiative.

The policy sets out the process for bringing floodplain harvesting into the water licensing framework. This involves creating new work approvals, licences, rules and ways of measuring floodplain harvesting.

Through the Healthy Floodplains Project the policy is currently being implemented in five valleys in the northern Murray–Darling Basin:

• Border Rivers
• Gwydir
• Upper Namoi and Lower Namoi
• Barwon–Darling
• Macquarie.

Since floodplain harvesting to date has been unregulated, in some areas it has increased so much that the statutory extraction limits set out in NSW water sharing plans and the Basin Plan have been exceeded. Licensing floodplain harvesting would allow the NSW Government to reduce extractions where necessary to comply with statutory limits.

Extreme events policy

Extreme events with particular relevance for water management are times of severe water shortage (drought), or times when the quality of available water renders it unfit for use. NSW has developed a policy to manage water during extreme events. The policy’s principles and processes apply in the lead-up to or during an extreme event. They are underpinned by incident response guides for each water source. These propose a suite of management options to give effect to access priorities in the Water Management Act and the Murray‑Darling Basin Plan. More information

The extreme events policy does not extend to flood management, which falls under separate policy and regulatory frameworks. Collecting and sharing data plays an important role in water management activities across the state. During flood events this role becomes even more critical for flood forecasting and flood management. WaterNSW manages over 700 telemetered water monitoring sites. This network is a critical element in decision making by key agencies such as Bureau of Meteorology and the NSW State Emergency Services.

Water trading

Water markets help to ensure scarce water resources are efficiently re-distributed. Markets have proven crucial in times of shortage when there is not enough water for all farms to produce a viable crop. With trade, some farmers can buy sufficient water for their crop, while others receive cash flows to support their economic survival.

Water markets also provide incentives to use this resource efficiently; they tend to shift water use towards activities with higher economic returns. Water markets allow users, including environmental water managers, to flexibly adapt to changing conditions and manage risk, making these markets an important management tool.

The Water Management Act 2000 and water sharing plans enable water trading. The plans establish rules to ensure efficient trade can occur, while also protecting the environment and avoiding impacts to non-trading water users (third-party impacts). Trade has grown substantially from modest levels in 2004 when most water sharing plans were enacted, to annual peaks of over 100GL of (permanent) entitlement trade and several hundred gigalitres of (temporary) allocation trade.

In March 2021, the Australian Competition and Consumer Commission (ACCC) released a report into water markets in the Murray-Darling Basin. The report examined markets for tradeable water rights in the Basin and identified significant deficiencies in current water trading arrangements. The NSW Government is working with the Australian Government and other basin states to prepare a response to a number of recommendations to enhance markets for tradeable water rights, including their operation, transparency, regulation, competitiveness and efficiency ().

Regional water strategies

Water resources in NSW are under pressure from a number of causes including changing industry and employment patterns, and a more variable climate. This requires decisions to be made about how to balance the different demands for this critical resource and manage water efficiently and sustainably into the future.

The NSW Government has commenced development of comprehensive regional water strategies that will bring together the latest climate evidence with a wide range of tools and solutions to plan and manage each region’s water needs over the next 20 to 40 years. They are being developed in partnership with water service providers, local councils, Aboriginal peak bodies, communities and other stakeholders over 2020, 2021 and 2022.

In partnership with water service providers, local councils, Aboriginal peak bodies, communities and other stakeholders the NSW Government is developing 12 regional water strategies and two metropolitan strategies for NSW.

The strategies are being developed to understand how much water each region will need to meet future demand, identify the challenges and choices involved in meeting needs, and set out actions to manage risks to water security and reliability. Through this improved strategic planning, the NSW Government aims to support safe and secure water for towns and communities, support regional industries, boost economic prosperity and safeguard and enhance the environment. The strategies will also recognise and protect Aboriginal cultural values, rights and assets.

The strategies are being developed to be adaptive, with inbuilt review processes to ensure each region has an effective and relevant strategy in place for future water management. They will align with other NSW Government programs including the NSW Water Strategy, the whole of government drought response, long-term land use plans for regional NSW, water resource plans, watering sharing plans and the Safe and Secure Water Program.

Inland water resource plans

The Murray–Darling Basin covers almost all of inland NSW and the Basin Plan 2012 requires the development of water resource plans for both surface water and groundwater sources. NSW is responsible for 20 of the 33 water resource plans required across the entire Basin.

In early 2018, NSW and the Murray-Darling Basin Authority agreed on a range of planning assumptions to underpin NSW water resource plans. Managers use these planning assumptions when they determine how much water to divert under water resource plans. The assumptions inform assessments of whether such plans comply with sustainable diversion limits (SDLs), and therefore comply with the Basin Plan.

Following three years of public consultation and discussion with stakeholders and the community the NSW government has developed 20 water resource plans and is working with the MDBA to have them accredited, as required of all plans across the Basin.

Each plan has:

• the relevant state water sharing plan
• a Long-Term Water Plan
• a risk assessment
• a water quality management plan
• an incident response guide to deal with periods of drought and poor water quality.

Water resource plans reflect the NSW arrangements in water sharing plans for sharing water for consumptive use. They also reflect the NSW rules to meet environmental and water quality objectives and will consider potential and emerging risks to water resources. The water resource plans will also demonstrate how to assess and maintain compliance with the sustainable diversion limit, as prescribed in the Basin Plan. The plans take into account Aboriginal people’s water-dependent cultural values and use.

Risk assessments have been undertaken in accordance with Chapter 10 of the Basin Plan and also risk management strategies listed in Chapter 4.

Water sharing plans

Water sharing plans significantly improve water resource management in NSW. They provide a clear framework and rules for managing both inland NSW Basin water resources and coastal water resources. This benefits regional communities and water dependent industries and contributes to healthy and resilient water ecosystems. The aim of improved water resource management in NSW is to achieve the right balance of community, environmental, economic and cultural outcomes.

Water sharing plans can apply to rivers, groundwater or a combination of water sources (see the topic). As statutory plans, they provide a legislative basis to share water between the environment and extractive users. Over their 10-year lifespan, they bring certainty to both the environment and water users. They also provide the basis for trading water licences and water allocations.

These plans aim to:

• protect the fundamental health of the water source
• ensure sustainable use of the water source over the longer term
• provide water users with long-term certainty about access rules.

Extraction limits in water sharing plans ensure a proportion of the water available is protected for the health of the water source. Explicit environmental flow rules also ensure environmental outcomes are delivered.

Water sharing plans underpin 20 water resource plans that have been developed to meet NSW’s obligations under the Murray-Darling Basin Plan. A total of 59 water sharing plans, developed for all NSW water sources, are now in place. The plans are reviewed every 10 years, at which time they are either remade or renewed.

Long-Term Water Plans

Long-term water plans draw together local, traditional and scientific knowledge to guide the management of water for the environment over the longer term.

The plans aim to improve the way water is managed to maximise river and wetland health outcomes from all available water within and between catchments. Objectives, targets and watering requirements are set through the plans for key plants, waterbirds, fish and system functions over 5-, 10- and 20-year timeframes. They also include detailed descriptions of ecologically important river flows and risks to water for the environment.

Long-term water plans have been finalised for nine river catchments in NSW. They provide directions for annual and event-based water management for environmental outcomes in each valley and inform the delivery of water for the environment over the long term.

Coastal Risk Assessments

In 2020 the NSW Government commenced development of risk assessment documents for coastal water sharing plan (WSP) areas. The documents evaluate risks to water dependent ecosystems (surface and groundwater) and other uses.

To manage NSW coastal water resources, it is important to identify risks to the volume and quality of the resource, and subsequent risks to the users and the environment that rely on the resource. Risk assessment is a well understood and accepted approach for managing natural resources. The consequences of impacts on natural resources are often hard to predict, therefore risk assessment relies on the probabilities of impacts occurring.

Causes have the potential to induce a threat to various extents, depending upon the characteristics of the water resource. The causes, threats and impacts considered in this assessment are summarised in Table 16.4.

Floodplain management plans

Prepared under the Water Management Act 2000, floodplain management plans help implement the NSW Healthy Floodplains Project. They provide a whole-of-valley framework to assess and determine flood work applications.

As statutory plans, they address risks to life and property from flooding. Some features on floodplains with ecological and cultural significance depend on flooding and these plans must also provide connectivity to and from these flood-dependent assets on the floodplain.

Whole-of valley plans have been developed under the NSW Healthy Floodplains Project for the Gwydir, Barwon-Darling, Upper Namoi, Lower Namoi, Border Rivers and Macquarie valleys. Previously there were twenty-two local floodplain management plans, prepared under the Water Act 1912 (NSW) and Water Management Act 2000. Most of these local plans have been superseded by the whole-of valley plans, 10 remain in force.

Environmental water recovery - Commonwealth

NSW and the Commonwealth programs have recovered substantial volumes of water for the environment and will continue this recovery to achieve the Basin Plan’s sustainable diversion limits. The Basin Plan’s overall target for water recovery, as revised in 2018, is 2,075GL per year (GL/y) plus 450GL/y of efficiency measures and up to 605GL of offsets by 2024. As at 28 February 2021 the Commonwealth Environmental Water Office held 2,876GL of entitlement across the basin, expressed as a long-term average, this amounts to 1,989GL of the target.

Northern Basin Review

The Northern Basin Review was an integral part of the Murray–Darling Basin Plan. This two‑year review entailed wide-ranging stakeholder engagement to ensure all perspectives were captured and understood and resulted in recommendations to implement a range of toolkit measures designed to improve water management and deliver positive outcomes for the environment and communities in northern NSW ().

The Australian Government has invested $180 million to June 2024 as part of the Northern Basin Toolkit in environmental projects that aim to improve ecological health of the northern Basin. Potential projects were assessed by an independent expert panel to determine which would have the greatest ecological benefits.

In March 2021, the Australian Government announced that 10 environmental projects would be funded through the Northern Basin Toolkit. Of these, three are constraints measures projects in the Gwydir catchment that aim to improve river management and the delivery of water for the environment, with the remaining seven projects focussing on environmental works designed to promote fish movement and habitat throughout the northern Basin.

Sustainable diversion limit adjustment mechanism

The Commonwealth Government has invested significant funds (more than $5 billion by 2015) to achieve the environmental water recovery target required under the Basin Plan. Just under half of this spend was for purchasing water licences; the remainder was spent on more efficient infrastructure projects with further funds identified for similar projects to help bridge the remaining gap between current water use and the sustainable diversion limits required to meet the target.

A mechanism to adjust SDLs aims to ensure all water is used efficiently, to its full effect. This sustainable diversion limit adjustment mechanism achieves this through:

• supply measures – projects that achieve the Basin Plan’s environmental outcomes with less water, thereby reducing the volume of water that needs to be recovered
• efficiency measures – projects that increase the efficiency of water delivery systems for irrigation, so more water may be recovered for the environment
• constraints measures – projects that make environmental water delivery more effective in the future by addressing physical, policy or operational barriers to the delivery of water for the environment, thereby improving wetland and floodplain connectivity. Constraints measures are also supply measures, potentially reducing the volume of water that needs to be recovered.

More information on NSW sustainable diversion limit projects.

Reconnecting River Country program

The Reconnecting River Country program was launched in August 2021. The program focuses on relaxing or removing some of the constraints or physical barriers impacting the delivery of water for the environment in the Murray and Murrumbidgee catchments. The program aims to achieve a balance of economic, social, cultural and environmental outcomes across southern NSW by improving wetland and floodplain connectivity and focusing on local community benefits. The NSW Government will work with the community to meet local needs and use the most recent science and modelling to inform options, evaluation and future implementation.

Better Bidgee and Better Baaka Programs program

The NSW Government has initiated the development and delivery of key water infrastructure projects and programs across the state including the Better Bidgee and Better Baaka Programs.

The Better Bidgee program is investigating a range of initiatives, including new and improved infrastructure along the Murrumbidgee River system. A key focus for the program is improving native fish access to more than 1,000 km of the Murrumbidgee system by installing fishways at key sites where fish movement is impeded, addressing cold water pollution discharges from large dams, and installing screens on pumps and diversions to save tens of millions of fish annually. Amended operating rules are being considered to make the management of the Murrumbidgee River system more flexible so the ecological function of its rivers and floodplains can be maintained and improved, and sustainable local communities, agriculture and industries supported.

The Better Baaka program is investigating a range of infrastructure initiatives to deliver outcomes for the Darling–Baaka river system. The program will revise the previous Menindee Lakes Sustainable Diversion Limits Adjustment Mechanism (SDLAM) project, and include other complementary measures to improve river health, connectivity, and provide positive outcomes for Aboriginal communities. A range of initiatives are currently being explored including the survey and assessments for possible changes and modifications to weirs, improvements to and construction of fish passageway, and building new recreational facilities, new amenities and roadworks to deliver better outcomes to communities along the river system.