Water chapter 4

4.1 Water resources

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4.1 Water resources

After a period of protracted drought, widespread rains across New South Wales have increased river flows and the water available in storages. As of 2011–12, most major storages stood at over 90% capacity.

River flows have generally been higher than average in the major inland river valleys over the past two years and levels of extraction have been relatively low for the flow levels experienced.

The ongoing impacts of water extraction and flow regulation, together with the residual effects of the drought, remain significant pressures on the health of river systems.

Demand for the state's water resources is high and needs to be managed through water sharing plans to balance equity of access for users, while maintaining ecosystem health. Since 2004, a total of 63 water sharing plans have been implemented across NSW, covering about 95% of water use. Plans for the remaining water sources are being developed progressively with those for the Murray–Darling Basin to be completed in 2013 and for the rest of the state by 2014.

In June 2012, cumulative holdings of environmental water by the NSW Government stood at 357,141 megalitres (ML). In each of the past two years, just over a million ML (on average) of environmental water have been delivered to environmental assets, a substantial rise compared with the 123,000 ML delivered in 2009–10.

NSW indicators

Indicator and status


Information availability

Available water supply (in storage)



Proportion of water extraction covered by water sharing plans



Environmental share of available water



Notes: Terms and symbols used above are defined in About SoE 2012 at the front of the report.


Water resources are critical for many human needs, such as the supply of town water, and stock and domestic water, the irrigation of crops, and for mining and industry. Most of these needs are satisfied by water held in storages or extracted from rivers and groundwater. Rainfall runoff is also collected in farm dams and floodwater is harvested from river floodplains.

The need to maintain a healthy environment as well as securing water resources to enable future economic growth depends on an adequate supply of good quality water. Water resources are needed to preserve the health of riverine, estuarine and wetland ecosystems and maintain the food chains that support fish and other aquatic species. Floods and river flows enrich floodplain soils and provide connectivity between different aquatic habitats and ecosystems. The health of riverine ecosystems is discussed in Water 4.2, wetlands in Water 4.3 and estuaries and coastal lakes in Water 4.6.

Planning for water use to meet socioeconomic demands and environmental needs must be balanced and take into account the long-term variability in water availability due to the extremes of climate, such as droughts and floods. To address this, NSW is developing statutory water sharing plans under the state's Water Management Act 2000 to provide certainty for all users as well as the environment. These plans, which are discussed later in this section, aim to protect water for the environment and provide better security of entitlement for all water users.

Status and trends

Water use and sources of water in NSW

Long-term average water use in NSW is about 7000 gigalitres (GL) per year but use is quite variable and depends on rainfall and flow conditions. Around 80% of this water is extracted from regulated rivers, where flows are controlled by large rural water storages operated by the State Water Corporation. The remainder comes mainly from groundwater in the major inland alluvial systems (see Water 4.4), with the balance drawn from unregulated rivers.

Figure 4.1 shows how this water was used by different sectors in three individual years (2000–01, 2004–05 and 2008–09). Total water use varies considerably from year to year. In the three years depicted it fell by 33% from an estimated 8800 GL used in 2000–01 just at the start of the drought to around 6000 GL in 2004–05 and then a further 23% to around 4500 GL in 2008–09.

Figure 4.1: Water consumption in NSW by sector, 2000–01, 2004–05 and 2008–09

Figure 4.1

Download Data

Source: ABS 2006; ABS 2010

Notes: 'Water supply' includes sewerage and drainage, as well as the water lost through evaporation and leakage in the process of water supply.

In all three years agriculture was the largest user of bulk water, ranging from just under 80% during a period of relatively good water availability in 2000–01 to 44% towards the end of the drought in 2008–09. Water supply – which includes sewerage and drainage services, as well as water lost to evaporation and leakage during water delivery – was the next largest 'user'. It accounted for almost 10% of total water use during periods of higher water availability, but increased considerably in both absolute and relative terms during the drier years of the drought. By contrast, the next highest water use – domestic household use – decreased in absolute terms as conservation measures were implemented during the drought, although its relative share increased.

Water availability

The factors that most significantly influence water availability are climate (rainfall and temperature) and storage capacity. Water supply largely depends on the regulation and storage of river flows in large dams for human consumption as well as for agriculture and industry. The dams have the effect of 'smoothing' out the natural variability in water availability by storing large volumes during periods of high river flows and releasing water to meet demand and supplement periods of low rainfall or extended drought.

By contrast, much of the extraction on unregulated rivers tends to occur at low-flow levels as irrigators access water to supplement periods of low rainfall. This is particularly the case on the coast, tablelands and slopes. During high-flow periods in these areas, water demand and thus the volume pumped from a river tend to be lower. However, on the inland plains, where unregulated river flows are less reliable, users access higher flows and often pump water into off-river storages to meet needs through dry periods.

NSW has 19 major dams and storages. The largest dams are the Eucumbene, Hume, Warragamba, Blowering, Copeton, Wyangala and Burrendong. Menindee Lakes also operates as a major water storage through an interconnected lake system. Much of the public storage capacity was built between the mid-1950s and 1980. The combined capacity of these storages is over 18 million megalitres (ML) of water.

Table 4.1 summarises water levels in major NSW water storages between 2006 and 2011. As of 2011–12, most of the major storages stood at over 90% of capacity. Early in the 2010–11 water year, an extended drought was broken by substantial and widespread rainfall across much of NSW, resulting in major flooding in many river valleys. Most of the major storages filled and spilled for the first time in about a decade. This provided substantial improvements to water availability in NSW and full water allocations in most valleys. The flooding also caused substantial inundation of floodplains and the restoration of important wetlands.

Table 4.1: Storage levels at major public water storages managed by the State Water Corporation in NSW, 2006–11

Valley and storage

Storage volume (% of full capacity)







Selected inland water storages of the Murray–Darling Basin

Border Rivers: Glenlyon Dam







Border Rivers: Pindari Dam







Gwydir: Copeton Dam







Namoi: Keepit Dam







Namoi: Split Rock Dam







Macquarie: Burrendong Dam







Lachlan: Wyangala Dam







Lower Darling: Menindee Lakes







Murrumbidgee: Blowering Dam







Murrumbidgee: Burrinjuck Dam







Murray: Hume Dam







Coastal water storages

North Coast: Toonumbar Dam







Hunter: Glenbawn Dam







Hunter: Glennies Creek Dam







South Coast: Brogo Dam







Source: State Water Corporation data 2011

Notes: The total volume of water storage for NSW includes some storages not included in the table.
Storage volumes are as recorded at 1 July each year.

Water extraction

The major regulated river valleys in NSW are the Murray, Murrumbidgee, Lachlan, Macquarie, Border, Gwydir, Namoi and Hunter and these represent the bulk of water extraction in NSW. Significant extraction also occurs in the unregulated Barwon–Darling River. A large amount of water is also extracted from the Hawkesbury–Nepean for urban use in Sydney. Water from the Snowy River is stored and diverted inland to the Murray and Murrumbidgee rivers to supplement water extraction in those valleys.

The relative amount of water diverted by users from regulated rivers and the water available to the environment varies from year to year, depending on the prevailing weather conditions, water availability and the flow rules in water sharing plans (see 'Responses' below). At the beginning of each water accounting year and sometimes periodically throughout the year, water is allocated for consumption in the regulated river valleys, according to the security of entitlement and the water resources available. Water for town supply, major utilities, and domestic and stock use has the highest level of security over all other licensed purposes. Other high security licences receive allocations in all but the driest years and are typically used for irrigation of permanent plantings, such as horticulture and vines, as well as industries that require an assured supply of water.

Allocations to general security licences are more variable from year to year and are mostly used for irrigating annual crops, such as cereals, rice, cotton and pastures. Depending on water sharing plan rules, general security water can be carried over from year to year, if annual allocations are not fully used. Water that is not allocated for extraction each year is considered environmental water, along with that 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 is used to simulate flow behaviour in regulated rivers and the impact of water resource development on the natural flows of rivers. This modelling provides a basis for setting long-term diversion limits in water sharing plans.

The models are based on climate and flow data for the last 120 years. They describe the variation that can be expected in river flows and water extraction over the longer term and provide a context against which actual flows can be described and interpreted. As a general rule, the models show that the proportion of water remaining for the environment is higher during typical wet flows than during dry periods. By contrast, when flows are low, there is less water available in total and a greater proportion of it is allocated for consumption.

Current river flows and extractions

Up until 2010–11, water extractions over recent years have been substantially lower than average. Figure 4.2 shows that the overall quantity of water extracted from regulated rivers fell as the severity of drought conditions intensified up until 2009–10, and then rose in 2010–11 as the heavy rains across NSW increased surface water availability.

Figure 4.2: Water diverted by licensed users in major NSW regulated valleys, 1999–2000 to 2010–11

Figure 4.2

Download Data

Source: NSW Office of Water (NOW) data 2011

Notes: Observed diversions are metered general security, high security and supplementary diversions.

The proportion of water extracted and that remaining for the environment in the major regulated river valleys of NSW is shown in Figure 4.3. In all of the river valleys depicted over the 12 years shown, river flows only exceeded median flow levels in two years, except for the Macquarie (three years). In general terms, the higher flows were at either end of the 12-year period, with dry flow levels or worse being experienced in most of the intervening years.

Figure 4.3: Diversions and water remaining after extraction in the major NSW regulated valleys, 1999–2000 to 2010–11

Figure 4.3

Download Data

Source: NOW data 2011

Notes: Some of the 'water remaining' is lost to evaporation, seepage and other transmission losses. While it is in the system, it provides some benefit to the environment, depending on how long it remains and the volume and timing of the flow.
Observed diversions are metered general security, high security and supplementary diversions. Floodplain harvesting is not included and further reduces the volume of water remaining in the charts.
The data for each valley represents total water available and is taken from a representative gauging station downstream of major tributary inflows and upstream of major extractions.
Total flow and observed diversions in the Murrumbidgee Valley are influenced by water released from the Snowy Mountains Scheme. In percentage terms the influence is greatest in dry years. Development in the valley reflects this inter-valley transfer.
Wet, median and dry flow levels are sourced from long-term (110-year) hydrological modelling of conditions for water sharing plans.
The typical dry year is the 80th percentile of total water available, the typical median year the 50th percentile and the typical wet year the 20th percentile. Percentile is the proportion of time the flow volume is equalled or exceeded.

The period described (1999–2011) was exceptionally dry and the usual patterns of river flows and water usage did not apply, with water sharing plans being suspended in some river valleys. However, the proportion of water retained in river systems was relatively high during the isolated wet years. During most of the dry years, extraction levels fluctuated around 50% of water available, except for the Murrumbidgee, where extraction levels were consistently higher, and the Lachlan, where they were generally lower.

Floodplain harvesting is the collection, extraction, diversion or impoundment of water flowing across floodplains, a practice that further reduces the volume of the 'water remaining' shown in Figure 4.3. Extractions occurring through floodplain harvesting are not included in the extractions described in the figure as they have not yet been licensed. Floodplain harvesting is considered to be most significant in the valleys of the northern Murray–Darling Basin, including the Border, Gwydir and Namoi rivers.

Effects of water storage and river regulation

River flow regimes are characterised by the magnitude, timing and duration of various flow levels. How often a flow of a particular volume is likely to occur can be illustrated by a flow duration curve. A flow duration curve, such as shown in Figure 4.4, plots the volumes of flow (ML per day) against the percentage of days that such a flow will be equalled or exceeded. These curves can be used to illustrate the volumes of water typical for a given river for low flows, moderate flows, freshes and floods, as well as the changes to natural river flows (particularly volumes) that can occur as a consequence of building dams and regulating flows.

Figure 4.4: Hypothetical flow duration curve showing the potential effect of major dams on natural river flows

Figure 4.4

Dams generally have a minimal impact on large floods. During high flows or 'freshes' (flows that occur around 10% of the time), dams exert their greatest impact and flow levels can be significantly reduced. During moderate flows (median flows that occur 50% of the time), levels may be increased downstream of dams as operational releases for water supply to users lift flow levels. In regulated systems, low flows are increased artificially to maintain flows and continue providing water for users.

Individual river systems have differently shaped flow duration curves and experience varying impacts according to their own specific flow levels and patterns of extraction. The data in Figure 4.3 provides a better indication of the actual extent of extraction in a particular river valley and its potential level of impact on river systems.

Flow regulation has two additional effects on natural ecosystems. Firstly, it causes a dampening of the seasonal fluctuations and natural flow variability of rivers that result in the boom and bust cycles in response to which many of Australia's aquatic ecosystems have evolved. Secondly, and less apparent from the flow duration curve, regulation has the effect of reversing the seasonality of flows by storing water during high winter flows and releasing it in summer when flows are naturally low.

Environmental water

To offset the impact of water extraction and flow regulation and maintain the health of natural systems and water resources, a share of the water resource is set aside for environmental purposes. Two types of environmental water are recognised under the Water Management Act 2000 and provided for in water sharing plans for regulated rivers in NSW: planned environmental water and adaptive environmental water.

'Planned environmental water' is committed to the environment by environmental water rules in water sharing plans. This is done by limiting overall water extraction to ensure that an agreed amount of water remains in the river and applying specific environmental flow allocations or 'rules'.

'Adaptive environmental water' is water that is committed to the environment through water access licences. This is equivalent to the environmental water described as 'held water' under Commonwealth legislation. It is generally purchased in water markets from willing sellers or through investment in water savings measures that convert previous water losses into an equivalent licensed entitlement. Adaptive environmental water is actively managed for specific environmental outcomes and can be used to supplement planned environmental water.

Table 4.2 provides examples of some environmental water rules currently in use in the regulated river system.

Table 4.2: Examples of environmental flow rules under water sharing plans in NSW regulated rivers

flow rule


Valleys where rule applies

Diversion limits

Precludes increases in the total volume of water extracted

All regulated rivers

End-of-system flows

Requires a certain minimum flow to be retained at the downstream end of the river, below the areas where major extraction occurs

Hunter, Murrumbidgee, Namoi

Transparent dam releases

Requires all reservoir inflows occurring at certain times to be passed immediately downstream, as though no dam were present


Translucent dam releases

Requires part of a reservoir inflow to be passed immediately downstream

Lachlan, Macquarie

High flow access

Limits pumping and/or total extractions when reservoirs spill or high flows enter flow-regulated rivers from unregulated tributaries

Gwydir, Hunter, Lachlan, Namoi

Environmental allowances

Creates a 'bank' of reservoir water to be used for specific environmental purposes, such as flushing blue-green algal blooms, reducing salinity or supporting bird-breeding events

Gwydir, Hunter, Lachlan, Macquarie, Murray, Murrumbidgee

Source: Department of Environment, Climate Change and Water NSW 2009

Unregulated 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, rules set out an annual extraction limit and a low-flow 'cease-to-pump' level. This threshold – when pumping stops – is intended to minimise impacts on low flows and protect water for basic ecosystem health and riparian water users.

Environmental water delivery

Water purchased under programs such as The Living Murray and NSW RiverBank is used as adaptive environmental water and is additional to the planned environmental water protected through water sharing plans.

Table 4.3 presents the volumes of water that were released from storages in different river valleys through specific environmental allowances between 2009–10 and 2011–12 or as a result of adaptive environmental licences. It does not include water made available to the environment through fixed rules, such as prescribed end-of-system flows or dam transparency.

Table 4.3: Environmental water delivered, 2009–10 to 2011–12

Water source




Environmental water allowance

Adaptive environmental water

Environmental water allowance

Adaptive environmental water

Environmental water allowance

Adaptive environmental water
























Murray and Lower Darling













Total environmental water




Source: NSW Office of Environment and Heritage (OEH) data 2012

Notes: All values in megalitres
'Environmental water allowance' refers to water held in storage for release to assist in environmental watering.
'Adaptive environmental water' refers to water allocated to the environment under the conditions of water access licences and includes licences held by the Commonwealth Environmental Water Holder and water sourced through The Living Murray and coordinated by the Murray–Darling Basin Authority.

From the first purchase of water for environmental use in 2004 until June 2012, NSW has acquired the equivalent of 357,141 megalitres (ML) in water holdings across the Gwydir, Macquarie, Murrumbidgee and the NSW portion of the Lower Murray–Darling river systems. Table 4.3 shows the result of increased water availability after the above-average rainfall in 2010 following the extended drought conditions. Around 937,000 ML of environmental water were delivered to environmental assets during 2011–12 and 1,141,000 ML in 2010–11, substantially more than the 123,000 ML delivered in 2009–10.

These environmental water deliveries included nearly 200,000 ML of environmental water to the internationally important Macquarie Marshes and 400,000 ML to wetland systems in the Murrumbidgee, including the mid-Murrumbidgee wetlands and the Lowbidgee area of the lower Murrumbidgee floodplain. Delivery of this water after a decade of managing small amounts of environmental water to maintain core ecosystem processes produced significant ecological responses, including widespread and successful bird breeding events, and enabled the watering of large areas of highly stressed river red gum woodland.



Droughts occur naturally in Australia and aquatic ecosystems are adapted to periods of dryness. However, severe, extensive or prolonged drought can have major repercussions for all water users and the environment. The most recent drought was among the worst on record for some river valleys – the cumulative stress of reduced water availability over a number of years had severe environmental and socioeconomic impacts. In five river systems, it was necessary to suspend water sharing plans and contingency plans were implemented to meet critical water needs.

Water extraction

Maintaining high levels of water extraction relative to total river flows over an extended period places stress on river health. Scientific evidence now shows that the total volume of water extracted from rivers in NSW has affected the health of aquatic ecosystems. For example, the Macquarie Marshes Adaptive Environmental Management Plan (DECCW 2010a) shows the decline and/or loss of wetland communities that has resulted from water extraction, combined with the effects of river regulation and drought. This finding necessitated a formal notification by the Australian Government to the Ramsar Convention of a likely change to the ecological character of this Ramsar-listed wetland caused by human disturbance.

The Sustainable Yields Assessment Project for the Murray–Darling Basin (CSIRO 2008a) modelled rainfall runoff and inflows to river systems for a range of scenarios and levels of water resource development. These analyses found that water resource development has caused major changes in the flooding regimes that support important floodplain wetlands in the basin and that climate change could have additional effects on the seasonal patterns and overall availability of flows.

River regulation

Water storages and regulating structures have been built to provide greater security of supply, moderating the effects of variability in stream flows and enabling storage of water for release during dry periods, including the severe drought recently experienced. However, a consequence of river regulation is the modification of natural flow regimes, including reduced flow variability, altered seasonality of flows, and changes to river morphology.

Aquatic ecosystems, particularly inland rivers, are adapted to highly variable flow levels. To a significant extent, aquatic species are dependent on this variability to maintain or complete their life cycles. Over the longer term, modification of natural flow patterns contributes to a loss of biodiversity and declining health in aquatic ecosystems.

The Sustainable Yields Assessment Project assessed the degree of regulation of river flows due to water resource development in each valley of the Murray–Darling Basin, and the ratio of water releases to total water availability (CSIRO 2008a). The Murray, Murrumbidgee and Macquarie were found to be highly regulated; the Lachlan, Gwydir and Namoi moderately regulated; and the Border Rivers subject to low levels of flow regulation. The Paroo is the only entirely unregulated river valley in the Murray–Darling Basin that also has no significant water extraction. These results show a strong pattern of conformity with the overall river ecosystem health outcomes described in Table 4.5 and Map 4.1 in Water 4.2.

Climate change

Over the longer term, projected changes in rainfall due to climate change are expected to create risks for water availability (Climate Commission 2011; Vaze & Teng 2011). In addition, the frequency and intensity of heavy rainfall events is likely to increase as the climate continues to warm. A pattern of more severe droughts and intense rainfall events would increase the risk of severe flooding when rain does occur, particularly in low-lying areas, such as the Illawarra region (Climate Commission 2011). The impacts of climate change on rainfall events leading to flooding are likely to be different from the impacts on seasonal or average rainfalls (DECCW 2010b).

Analyses of modelled runoff projections indicate that a shift in the seasonality of patterns is virtually certain, with significantly more summer runoff (up to about 20% increase) and significantly less in winter (up to about 25% decrease). The projections also indicate some minor increases in autumn runoff and moderate to significant decreases in spring runoff. In northern NSW, which is dominated by summer rainfall and runoff, projections indicate a slight increase in mean annual runoff (DECCW 2010b; Vaze & Teng 2011). In the southern regions of the state, which currently experience winter-dominated rainfall and runoff, the projections indicate moderate to significant decreases in mean annual runoff (DECCW 2010b; Vaze & Teng 2011).

Water pollution

The quality of water affects its suitability for human use and may affect the health of aquatic ecosystems. To a significant extent, water quality reflects the state of vegetation cover and land management practices in river catchments. The condition of riverine water quality and the effects of catchment disturbance and diffuse runoff from agricultural activities and urban expansion are discussed in Water 4.2.


Established responses

NSW 2021

NSW 2021: A plan to make NSW number one (NSW Government 2011) is the Government's 10-year plan for NSW. Under Goal 22 – 'Protect our natural environment', the plan contains the following target: 'Improve the environmental health of wetlands and catchments through actively managing water for the environment by 2021'. This includes the strategic recovery and management of water for the environment to improve the health of the most stressed rivers and wetlands.

Priority actions to protect waterways include:

  • 'Completing the water sharing plans for surface and groundwater sources and reporting annually on environmental water use'
  • 'Driving the Commonwealth to ensure it delivers a plan for the Murray–Darling Basin that protects the environment and regional, social and economic outcomes through investment in strategic water recovery, water efficiency and river health measures'.

Progress on achieving NSW 2021 goals and targets is regularly reported on-line and through an annual report tabled in the NSW Parliament. NSW 2021 Performance Report 2012–13 (NSW Government 2012a) sets out baseline performance data for the goals and targets which provide the foundation for future performance monitoring and public reporting and the technical context for each NSW 2021 target.

Water reforms

Significant progress has been made in water reform in NSW including:

  • introduction and implementation of the Water Management Act 2000, which recognises the importance of transparent and controlled allocation of water to the environment and extractive uses
  • implementation of the Murray–Darling Basin cap on water extractions in the basin
  • establishment of environmental and water sharing rules in water sharing plans and of tradeable water property rights
  • development of 63 water sharing plans (including for groundwater), with seven more covering the remaining inland water sources to be completed by 2013, and the remaining plans for coastal water sources by 2014
  • implementation of the National Water Initiative and working in partnership with the Commonwealth Government to progress four State Priority Projects
  • acquisition of additional water for the environment through water savings and buyback of water licences to address historical over-extraction.

Water Management Act 2000

The Water Management Act 2000 provides for the sustainable and integrated management of the state's water through water sharing plans and rules for the trading of water in a particular water source. Since 2009, some amendments have been made to strengthen the Act's compliance and enforcement powers and comply with obligations imposed by market rules under the Commonwealth Water Act 2007.

National Water Initiative

The National Water Initiative (NWI) commits NSW to achieving sustainability in the use of its water resources. It facilitates the expansion of trade in water resources to promote the highest value uses of water and most cost-effective and flexible mechanisms of water recovery to achieve environmental outcomes. In tracking progress against the NWI, the National Water Commission has produced a report card assessing individual water sharing plans within each jurisdiction (NWC 2011).

Murray–Darling Basin Plan

A key role for the Murray–Darling Basin Authority (MDBA) is to prepare the Murray–Darling Basin Plan, a legislative instrument that will set a long-term sustainable limit on the use of both surface and groundwater in the basin. The MDBA released a draft basin plan for public comment in November 2011. NSW submitted a response to the draft (NSW Government 2012b) which outlined the state's position on the proposed plan as follows:

  • the plan should balance the needs of the environment, communities and the economy
  • unavoidable social and economic costs should be identified and mitigated through a Commonwealth structural adjustment package
  • water recovery should be equitably shared between basin states
  • water should be recovered through a combination of improved infrastructure, environmental works and measures, review of water rules, and strategic buyback.

Revised draft plans were subsequently produced by the MDBA in May and August 2012 (MDBA 2012) and provided to the Ministerial Council (which includes the NSW Minister) for a formal response by the council, both collectively and by individual members. The plan is now expected to be finalised in late 2012.

Murray–Darling Basin cap

An audit of water use in the Murray–Darling Basin in 1995 concluded that the high level of use was a major factor in the decline in river health. As a result, a limit ('cap') on surface water extractions in the basin was introduced to prevent further growth in extractions and these are monitored to ensure that the amount of water taken by licence holders remains below the cap.

Water sharing plans

Water sharing plans have been a significant development in improving the management of water resources in NSW. They can apply to rivers, groundwater (see Water 4.4) or a combination of water sources. These statutory plans provide a legislative basis for the sharing of water between the environment and extractive users. They bring certainty for both the environment and water users over their 10-year duration and provide the basis for the trading of water licences and water allocations.

Water sharing plans aim to:

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

Environmental flow rules, implemented through the water sharing plans for each river valley, enable the equitable sharing of water between users and the environment.

Since 2004, a total of 63 water sharing plans have been implemented across NSW, covering about 95% of the water used. Plans for the remaining water sources are being developed progressively with those for the Murray–Darling Basin to be completed by 2013 and the rest of the state by 2014. Over the long term, the plans for regulated rivers will return on average an additional 220,000 megalitres (ML) of water per year to the environment, over and above the requirement under the Murray–Darling Basin cap.

Additional constraints or requirements may be imposed in the Murray–Darling Basin Plan being developed by the MDBA. Long-term average annual extraction limits (LTAAEL) established in water sharing plans are generally lower than the Murray–Darling Basin cap. These LTAAELs will become the Baseline Diversion Limits under the basin plan, which will set new Sustainable Diversion Limits.

Although environmental flow rules have been introduced, it may take some time before the aquatic ecosystems receiving environmental water are restored to an acceptable environmental condition. Until recently, the severity of drought conditions in some regions of NSW has meant that insufficient water has been available for some water sharing plans to operate effectively.

Water sharing plans were suspended in the Lachlan from the time the plan commenced in 2004, and in the Murray and Murrumbidgee in September 2006, the Macquarie–Cudgegong in July 2007 and the Hunter Regulated Water Source in December 2006. During 2009–10, drought conditions eased and all plans have since been reactivated. While suspended, contingency arrangements were in place with the water available being prioritised for critical human uses, such as domestic requirements and high priority industry needs.

Rural floodplain management plans

Rural floodplain management plans have been developed for 17 floodplains covering approximately 20,800 square kilometres. Completion of another four plans will bring the total coverage to more than 24,300 square kilometres. Plans have been developed for the floodplains of the Namoi, Gwydir, Macquarie, Lachlan, Murrumbidgee and Murray rivers and the Liverpool Plains. The objective of the plans is to enhance the health of flood-dependent ecosystems by increasing floodplain connectivity while also managing the risk from flooding by controlling floodplain development likely to block or redistribute flows during floods.

Environmental water recovery

Water has been recovered for the environment in NSW through a number of programs including NSW RiverBank, the NSW Rivers Environmental Restoration Program, The Living Murray program (see Water 4.2), the NSW Wetland Recovery Program (see Water 4.3) and Water for Rivers. The cumulative total for all adaptive environmental water at June 2012 was 357,141 ML.

Table 4.4 summarises the amount of licensed water purchased collectively by NSW from these programs by river valley. However, it does not include water purchases by the Australian Government.

Table 4.4: Cumulative holdings of adaptive environmental water recovered to 30 June 2012 by program and valley (ML)

Regulated water source

NSW RiverBank

Rivers Environmental Restoration Program

NSW Wetland Recovery Program

The Living Murray

Subtotal per valley









































NSW Southern Murray–Darling Basin6



Subtotal per program












Cumulative total


Source: OEH 2011a; OEH data 2012; Water for the environment (water purchase programs)

Notes: The Rivers Environmental Restoration Program and NSW Wetland Recovery Program were jointly funded by the NSW and Australian Governments.
HS = High security – Shares are likely to receive close to 100% of their allocation in most years.
GS = General security – Allocation varies depending on inflows and storage levels.
SA = Supplementary access – is subject to event-based announcements
UR = Unregulated entitlement – Available water is not regulated by a major storage. For many valleys, water sharing plans for unregulated water sources have not yet been completed and licences are administered under the Water Act 1912.
LTCE = Long-term cap equivalent – Units of measure for entitlement purchased under The Living Murray (TLM) which approximates long-term water availability and includes all entitlement categories (HS, GS, SA, Conveyance). A breakdown of TLM water purchase and recovery is available at the website.
NSW Southern Murray–Darling Basin includes water recovered from the Murray, Murrumbidgee and Lower Darling valleys for the benefit of the Murray River (The Living Murray).

Adaptive environmental licences are also being created through water savings from infrastructure efficiency projects. These licences include over 93,000 ML of entitlement through Water for Rivers projects in NSW (see Water 4.2), as well as 63,000 ML from The Living Murray (TLM) in the state. For example, about 47,000 ML per year of water will be saved and committed as an adaptive environmental licence through TLM's Darling Anabranch Pipeline project.

Water recovery is also occurring under the following programs:

  • Pipeline NSW is a joint NSW and Commonwealth Government project to improve the efficiency of delivering rural stock and domestic water by substituting channels and dams with piped systems, tanks and troughs. The project is due for completion in 2012 and will recover about 5000 ML per year of water from reduced system and operational losses.
  • The Darling River Water Savings Project was established to improve the water supply and management of the entire Darling River system, in particular for the Menindee Lakes.
  • Sustaining the Murray–Darling Basin is a State Priority Project focused on improving water efficiency, particularly the investment in metering works in the basin.
  • Hawkesbury–Nepean River Recovery Program: The Hawkesbury–Nepean catchment is the most developed catchment for water use in coastal NSW. This program includes the following projects aimed at water efficiency: metering of water users; water-smart and nutrient-smart farms; water recycling; reducing water use from the tap; more efficient irrigation; and purchase of water licences.

Developing responses

Floodplain Harvesting Policy

Floodplain harvesting works and water extractions fall under the scope of the Water Management Act 2000. The NSW Office of Water (NOW) has released a draft NSW Floodplain Harvesting Policy for community consultation (NOW 2010). It foreshadows that all floodplain harvesting activities will require a water supply work approval and a water access licence to harvest water, both issued under the Act. Floodplain harvesting extractions will be managed within long-term average annual extraction limits under water sharing plans.

Future opportunities

Over the next few years, water sharing plans will be completed for all river valleys, floodplain management plans will be produced, and the harvesting of water from floodplains is likely to be regulated, all with the aim of enhancing the sustainable and equitable management of water resources in NSW.

The 2008 Intergovernmental Agreement on Murray–Darling Basin Reform established a framework for greater coordination and a whole-of-basin focus for the management of basin water resources. When finalised, the Murray–Darling Basin Plan will set a new sustainable diversion cap on water extractions for each valley and any water sharing plans developed after this will need to be consistent with the plan.

With the referral of powers relating to water management in the Murray–Darling Basin through the basin plan, the Commonwealth will play a more prominent role in determining water extraction levels, coordinating environmental water management and developing future initiatives to improve water resources and river health. The NSW Government will ensure that the Commonwealth delivers a plan that protects the environment as well as the social and economic wellbeing of regional communities.

Better information on the relationship between surface water and groundwater is desirable to facilitate more integrated and holistic management of all water resources.