Graphic of trees, hill and river

Environmental water share

2,482 GL

in 201617, a 50-fold increase from 10 years ago

3 water drops graphic

Water sharing plans


now developed, covering all NSW water sources

Following high flows in most rivers during 2016–17, conditions have become drier. However, greater amounts of environmental water are now available and being directed to benefit the aquatic environment.

After three years of variability, NSW climatic conditions and surface water availability have now entered a significantly drier climate phase.

Water extraction and flow regulation alter river flows and continue to put pressure on the health of inland river systems.

Demand for the State’s water resources remains high, but this demand is being managed through water sharing plans. These plans balance equity of access and productivity for users, while maintaining aquatic ecosystem health.

Water sharing plans have been developed for all water sources in NSW, with a total of 58 water sharing plans commenced by the end of 2018.

The NSW Government’s cumulative holdings of environmental water total about 868,000 megalitres (ML) within regulated rivers and about 24,000ML in unregulated rivers. The Commonwealth Government has also recovered substantial volumes of environmental water in the Murray-Darling Basin in NSW with current holdings of about 1,545,000ML in regulated rivers and 46,000ML in unregulated rivers.

During the three years 2014–15 to 2016–17, significant volumes of environmental water were delivered to locations across inland NSW. Volumes ranged from about 506,000ML to 1,420,000ML a year. Substantial releases, averaging 157,000ML a year, have also been made to the Snowy River.

Related topics: River Health | Wetlands | Groundwater | Coastal, Estaurine and Marine Ecosystems

NSW Indicators

* You may need to scroll to the right to see the full content, or switch to landscape orientation.

Indicator and status Environmental
Proportion of water extraction covered by water sharing plans
Stable ✔✔✔
Environmental share of available water
Getting better ✔✔


Terms and symbols used above are defined in How to use this report.


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.

Water resources are also vital to conserve the health of aquatic ecosystems in rivers, estuaries and wetlands. (See the River Health, Wetlands, and Coastal, Estuarine and Marine Ecosystems topics.)

An adequate supply of good quality water is vital:

  • for a healthy environment
  • to secure water resources for human use
  • to enable economic growth.

Water use planners must balance water supplies to meet social, economic, cultural and environmental needs. At the same time, they must account for long-term changes in water availability due to climate extremes, such as droughts and floods.

To address these needs, the NSW Government sets out rules in statutory water sharing plans (WSPs). 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 Commonwealth Government to implement the Murray-Darling Basin Plan (MDBA 2011). 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 and meet the needs of communities reliant on the basin's water, while making sufficient provision to protect the health of the aquatic environment and river and groundwater systems.

Surface water resources are explored in this topic; for groundwater resources, see the Groundwater topic.


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

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 (MDBA 2011) commenced, the total volume of water extracted from the basin’s rivers had affected aquatic ecosystem health.

The Water Act 2007 (Cwth) 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 requires a long-term average annual volume of 2,750GL to be recovered and returned to the environment.

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
  • change river morphology.

However, 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. Changes to natural river flow patterns have, over the longer term, contributed to biodiversity loss and declining health in aquatic ecosystems (NSW OEH 2013).

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.

Water management across NSW relies on a picture of long-term water availability based on climate data collected since the late 19th century. There is some confidence these arrangements adequately address near-term climate change risks to water security for economic use and environmental flows. However, to ensure plans are resilient in the medium to long term, further analysis will probably be needed. Challenges include representing the increasing natural variability in water supply more completely and simulating future water availability under a range of potential climate change scenarios.

Approaches to incorporate climate change risk are being developed. These use a decision framework that:

  • better accommodates increased natural variability
  • incorporates changes and outcomes for which there is confidence
  • assesses the resilience of existing planning arrangements to such potential changes
  • tests alternative arrangements to improve water-related outcomes.

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, and diffuse runoff from agricultural activities and urban expansion.


Legislative and policy changes, along with a range of intergovernmental agreements, have made significant progress to enhance the settings for water management in NSW.

Water Reform Action Plan

In December 2017, the NSW Government announced the Water Reform Action Plan. This plan is 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.

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.

Other progress under the Water Reform Action Plan includes new policy positions designed to implement the changes required under the plan. The NSW Government is finalising these draft policies, which include a more robust metering network, increased transparency in water management and better management of environmental water, especially in the northern Murray-Darling Basin.

In March and April 2018, road shows throughout key regional areas ensured communities could comment and have input into this water reform policy development. More actions under the Water Reform Action Plan will continue during 2019.

The Water Management Amendment Bill

The recently passed Water Management Amendment Bill 2018 amends the Water Management Act 2000 to ensure it complies with the Water Act 2007 (Cwth) and the Murray-Darling Basin Plan (MDBA 2011).

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.

After the National Water Commission was abolished in June 2015, the Productivity Commission assumed the role of tracking progress towards NWI objectives; this includes an evaluation every three years. The most recent evaluation, the National Water Reform Inquiry Report (Productivity Commission 2017a, 2017b) found generally good progress on NWI implementation. The Productivity Commission reported that water reforms have delivered substantial benefits to water users and the broader community. It also provided recommendations on further work and reform priorities.

Murray-Darling Basin Plan

A fundamental role of the Murray-Darling Basin Authority is to oversee implementation of the Basin Plan (MDBA 2011), scheduled for completion in 2024. This plan is a Commonwealth legislative instrument that sets sustainable diversion limits (SDLs) for both surface and groundwater use in the Murray-Darling Basin, with a target to recover an additional 2,750GL of water to return to the environment. The Commonwealth has committed to bridge the gap to the lower SDLs required by the Basin Plan target by investing in water recovery; these lower SDLs must be met by 2019.

A water recovery program has commenced across the basin, including buy-backs and water savings initiatives. So far, more than 2,100GL of water (about 75% of the 2,750GL target) has been recovered. NSW’s share of this target is 1,312GL, of which 950GL has been recovered.

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

Floodplain Harvesting Policy

In floodplain harvesting, water flowing across floodplains is collected or diverted. Floodplain harvesting works and water extractions fall under the scope of the Water Management Act 2000. However, historically these diversions have not been considered extractions because they are yet to be licensed.

The NSW Government's Floodplain Harvesting Policy, introduced in 2013, signalled important reform in floodplain water management. The policy provides a framework to license and actively manage floodplain harvesting extractions within the long-term average annual extraction limits of water sharing plans. The policy applies across NSW.  Work to implement it, as part of the broader NSW healthy floodplains project, is well underway in the five northern valleys where floodplain harvesting is most prevalent:

  • Border Rivers
  • Gwydir
  • Namoi
  • Barwon–Darling
  • Macquarie.

Planning assumptions

In 2015, State and Commonwealth ministers from the Murray-Darling Basin initiated a process to set out the key planning assumptions they will use to develop their water resource plans under the Basin Plan. 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 SDLs, and therefore comply with the Basin Plan.  

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 new 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. This policy does not extend to flood management, which falls under separate policy and regulatory frameworks.

Plantations policy

NSW is developing a new policy to manage interception of water by forestry plantations. At their current levels of development and growth, forestry plantations pose negligible risk to water sources. However, the policy includes a process to establish formal growth triggers, at which stage water managers would need to intervene. The policy outlines work to scope the legislative amendments required, and how to bring forestry plantations within the NSW water licensing system should thresholds of growth be exceeded. 

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.

Water sharing plans

Water sharing plans significantly improve water resource management in NSW. They can apply to rivers, groundwater or a combination of water sources (see the Groundwater 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.

Since 2004, water sharing plans have been progressively implemented across NSW.  By the end of 2018, a total of 58 plans had commenced, covering all water used in the State.

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.

The Department of Industry partners with the Office of Environment and Heritage to prepare these plans. Gwydir and Barwon-Darling floodplain management plans are now complete; Upper Namoi, Lower Namoi, Border Rivers and Macquarie valley floodplain management plans are being prepared.

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

Twenty local floodplain management plans already in force were prepared under the Water Act 1912 (NSW) and Water Management Act 2000. These local plans will be superseded by the whole-of valley plans in the Gwydir, Barwon-Darling, Upper Namoi, Lower Namoi, Border Rivers and Macquarie valleys prepared under the NSW healthy floodplains project.

Environmental water recovery

NSW and the Commonwealth programs have recovered substantial volumes of water for the environment. The Commonwealth will continue this recovery to achieve the Basin Plan’s sustainable diversion limits. The Basin Plan’s initial water recovery target is a long-term average of 2,750GL per year. As at 31 May 2018 the Commonwealth Environmental Water Office held 2,697GL of entitlement across the basin; expressed as a long-term average, this amounts to 1,852GL of the 2,750GL target (Commonwealth Government 2018), or around 67% of the target.

Water resource plans

The Murray–Darling Basin covers almost all of inland NSW and the Basin Plan 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. NSW continues to invest substantial effort in this water planning, working collaboratively with the Murray-Darling Basin Authority.

Each plan will have:

  • the relevant state water sharing plan
  • a long-term environmental water plan
  • a risk assessment
  • a water quality management plan
  • an incident response guide to deal with periods of drought and poor water quality.

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 will take into account Aboriginal people’s water-dependent cultural values and uses.

Those developing water resource plans have consulted extensively with a range of stakeholders, including nation-by-nation consultation with First Nations of inland NSW.

Sustainable diversion limit adjustment mechanism

By 2015 the Commonwealth Government had invested more than $5 billion to achieve 71% of the 2,750GL target for environmental water recovery required under the Murray-Darling Basin Plan. Just under half of this spend was for purchasing water licences; the remainder was spent on more efficient infrastructure projects.

Remaining Commonwealth Government investment will prioritise more efficient infrastructure, to bridge the remaining gap between current water use and the sustainable diversion limits (SDLs) 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.

The Commonwealth Government has approved a package of projects developed by NSW (and other Murray-Darling Basin states), as part of the Basin Plan’s sustainable diversion limit adjustment mechanism. These projects are designed to allow NSW to deliver the required environmental outcomes using less water, allowing valuable water to stay in productive use. NSW’s work with our communities to design and deliver these projects will continue, including in-depth consultation and detailed environmental assessments.

Northern Basin Review

The Northern Basin Review is 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. It also included 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.


ABS 2017, Water Account Australia 2015–16, catalogue no. 4610.0, Data Cubes spreadsheet downloads for Physical Water Supply and Use by Water Type New South Wales (2008/09 to 2015/16), Australian Bureau of Statistics, Canberra []

DEE 2018, Environmental Water Holdings, Commonwealth Department of the Environment and Energy, Canberra []

DoI 2017, Securing our water: NSW Government water reform action plan, December 2017, Department of Industry [ (PDF 0.8MB)]

DoI Water 2018, Environmental Water Register, Department of Industry – Water, Sydney []

Matthews K 2017, Independent investigation into NSW water management and compliance: Final report, final report by Ken Matthews AO, NSW Department of Industry, December 2017, Sydney [ (PDF 0.5MB)]

MDBA 2011, Plain English summary of the proposed Basin Plan – including explanatory notes, Publication no. 173/11, November 2011, Murray-Darling Basin Authority, Canberra [ (PDF 5.8MB)]

MDBA 2017, The Murray-Darling Basin Water Compliance Review, Publication no. 44/17, November 2017, Murray-Darling Basin Authority, Canberra [ (PDF 1.2MB)]

NOW 2013, NSW Floodplain Harvesting Policy, NSW Department of Primary Industries, NSW Office of Water, Sydney []

NSW Ombudsman 2017, Investigation into water compliance and enforcement 2007–17, November 2017, NSW Ombudsman, Sydney [ (PDF 0.6MB)]

NSW Ombudsman 2018, Correcting the Record: Investigation into Water Compliance and Enforcement 2007–17, March 2018, NSW Ombudsman, Sydney [ (PDF 0.3MB)]

OEH 2013, Alterations to the natural flow regimes of rivers, streams, floodplains and wetlands: Key threatening process listing NSW Scientific Committee – Final determination, Office of Environment & Heritage []

OEH 2018, Current water holdings, Office of Environment & Heritage []

Productivity Commission 2017a, National Water Reform, Productivity Commission Inquiry Report, Report no. 87, 19 December 2017, Productivity Commission, Canberra [ (PDF 3.9MB)]

Productivity Commission 2017b, National Water Reform, Productivity Commission Inquiry Report Overview and Recommendations, Report no. 87, 19 December 2017, Productivity Commission, Canberra [ (PDF 0.4MB)]

Water NSW 2017, Annual Report 2016–17, Water NSW, Sydney [ (PDF 2.9MB)]

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