Climate change and population growth threaten Victoria’s water security, with less water to support more people. A trend towards lower annual rainfalls is expected to continue as a result of climate change. Natural flows of river systems have been affected by water being harvested for farms, households and industry. This has degraded many of Victoria’s river systems in Victoria.

The science evidence that informed this assessment is available for free download in this Water Resources chapter 

What the indicators tell us

Most indicators of water resources and supply are fair and stable, but several are poor. Victorians are getting better at water recycling, but runoffs and flow regimes are deteriorating. Some indicators, such as groundwater quality, vary around the state.

The Water Resources Indicator Report Card provides an assessment summary of all indicators in this chapter  

Themes and indicators: How does Victoria measure up?

Water resources

Flow regimes

A flow regime is a specific combination of the timing, size and duration of river flow events. It is a key driver of river and floodplain wetland ecosystems. Each river has its own flow regime, which influences river morphology, biodiversity and the processes that sustain aquatic ecosystems.

A history of works to rivers and large streams, designed to store, drain and change the direction and speed of water as it moves through the landscape, has altered Victorian flow regimes and reduced the volume of water available to the environment. With less rainfall predicted under climate change, reduced average streamflows will impact the health and condition of all rivers, streams and associated tributaries, and reduce water availability for resource use.

Water consumption

Water recycling


Victoria remains heavily reliant on surface-water sources, although groundwater and recycled water are becoming increasingly important resources. Water recycling uses surface water harvested for consumptive use and wastewater obtained from water recovery projects, such as wastewater treatment plants and irrigation systems. This recycled water is often used for non-human consumptive activities – for example, by councils to water parks, reserves and roadside trees.



More detail


Water is used for a variety of purposes, including domestic use, primary production (particularly irrigation), power generation and industry. The quality of Victoria’s water resources is vital for human health and wellbeing and for accommodating its anticipated population growth. Victoria’s Traditional Owners and Aboriginal Victorians have managed water sustainability over thousands of generations.

In 2016, the Victorian Government released its water plan, Water for Victoria, which sets out strategic directions and proposed actions to meet the water security challenges facing Victoria – principally those arising from climate change and population growth. The plan outlines the significant challenge posed by rapid population growth, coupled with a reducing water supply associated with climate change. Figure WR.1 shows that under the median climate change scenario, we will need to add to Melbourne’s supplies by 2035. Figure WR.2 displays the water supply mix in 2015 and the potential diverse mix of supplies needed in 2050.

Continuing these concerning predictions, a report released by Melbourne Water in 2017 suggested that a rapid-change scenario (higher growth in water demands and ‘high’ climate change) would lead to water resource shortfalls in Melbourne from as early as 2028.

Chart of Projected water supply and demand for Melbourne

Figure WR.1 Projected water supply and demand for Melbourne.

Chart of current (2015) and potential (2050) water supply mix for Melbourne

Figure WR.2 Current (2015) and potential (2050) water supply mix for Melbourne.

The availability and quality of water is important for economic prosperity, especially for primary production industries. Victoria’s total food and fibre exports were valued at $12.8 billion in 2016–17 and irrigated agriculture is the largest water user in the state, with a net worth of $4.2 billion in 2016–17., Victoria’s total water consumption increased over the past century, peaking in the 1990s, then dropping in response to water restrictions imposed during the millennium drought of 1996 to 2010. The severity of water shortages was particularly marked in central and western Victoria, where some storages held less than 10% of capacity at the end of the drought. Since the millennium drought, rainfall reductions have continued during Victoria’s cooler months. This trend is expected to continue, leading to an overall reduction in average annual rainfall.

The availability and quality of surface and groundwater resources is mainly determined by streamflow and rainfall, as well as impacts of land-use on catchment hydrology. There has been an overall decrease in streamflow of approximately 50% over the past 20 years. Streamflow in Victoria is highly variable, with most basins receiving only a fraction of their average flow in most years this century. Generally dry conditions are punctuated by wet years with flows well in excess of the average, replenishing storages and river systems. This was seen during 2016, when Victoria experienced its wettest year since 2011, with rainfall 19% above average. This caused flooding across western and northern Victoria.

The effects of climate change are already influencing the frequency of extreme weather events, as discussed in CC:12 (Occurrence and impacts of extreme weather). Extreme weather events create an annual level of uncertainty for streamflow, water quality and resource availability. However, the overall long-term projection for streamflow is that it will decrease by a greater proportion than rainfall, due to the interaction between rainfall and catchment hydrology.

In some rivers, up to half of the water that would have naturally flowed is removed each year to provide water for farms, homes and industries. Almost all Victorian catchments, rivers and larger streams have been modified to some degree, with inland waters being transformed into a complex and extensive system for harvesting, transporting and controlling the movement of water. There are 134 declared water supply catchments across Victoria and about 52 major storages, with at least one major on-stream storage constructed in 19 of Victoria’s 29 river basins. In addition, there are about 450,000 farm dams in Victoria. As a result, many river systems in Victoria are now environmentally degraded because of impacts on natural flow regimes.

As demand for water has increased in Victoria, especially during periods of hot weather, the use of groundwater to complement surface-water sources has increased. Groundwater is now an important resource for agriculture, industry and domestic use. Groundwater resources are used across 70 Victorian cities and towns as either a supplementary or primary water supply. In some regional areas, groundwater is the sole source of water. Groundwater is an increasingly valuable water resource as surface water becomes scarcer.

Water resources, use and consumption (including entitlements and trade) are overseen by the Victorian Government. Decision-making and management is delegated to the water sector, comprised of urban, regional and rural water corporations, Catchment Management Authorities (CMAs) and the Victorian Environmental Water Holder (VEWH). The Victorian water sector provides approximately 6,000 jobs across the state and is responsible for the largest proportion of government CO2-e emissions, with almost 1 million tonnes emitted per annum. The largest proportion of these emissions originates from sewage treatment – a service that will need to increase in-line with Victoria’s projected population growth.

Critical challenges facing Victoria’s water resources now and in the future include:

  • meeting the water consumption needs of Victoria’s growing population, projected to reach 10.1 million by 2051. Water demand for Melbourne is projected to increase by approximately 50% by 2065,, increasing pressures on assets, infrastructure, treatment plants and wastewater services, which require ongoing monitoring and maintenance

  • meeting primary industry water resource needs in response to Victoria’s growing population and resource consumption. This includes managing the increasing pressures on services such as irrigation, drainage and storage

  • addressing water resource availability and flow regimes to support aquatic life amid climate change, particularly during extreme weather events such as floods and droughts

  • addressing the increased dependency on groundwater as a water resource, particularly during periods of drought or less-than-average rainfall, which can lead to unsustainable use

  • better utilisation of the water available from stormwater

  • facilitating innovation in water resources and infrastructure to upgrade existing sewerage treatment facilities and develop new sewerage treatment approaches to reduce CO2 emissions

  • continuing to develop processes and protocols to enable transparent and accountable collaboration on infrastructure projects across organisational boundaries to deliver sustainable, integrated water management solutions.

Current Victorian Government Settings

Water for Victoria (2016) sets out strategic directions and proposed actions to meet the state’s water security challenges, principally climate change and population growth. The government invested $537 million to deliver Water for Victoria over a four-year period.

Major areas of investment aligned to the strategic aims of Water for Victoria have included $222 million to improve waterway and catchment health in regional Victoria​, $60 million to strengthen water entitlement and planning processes​, $151 million for water and irrigation infrastructure (including $42 million in the 2018–19 Victorian budget towards water security infrastructure in the East Grampians and Mitiamo​), and $20 million to respond to the challenges of climate change​.

Water for Victoria recognises the value water has for Traditional Owners and Aboriginal Victorians. Funding of $9.7 million has been provided to support economic development and an Aboriginal Water Program. The objectives of the Aboriginal Water Program are to:

  • recognise Aboriginal values and objectives of water

  • include Aboriginal values and traditional ecological knowledge in water planning

  • support Aboriginal access to water for economic development

  • build capacity to increase Aboriginal participation in water management.

In 2018, the Department of Environment, Land, Water and Planning (DELWP) established the Water Grid Partnership. The partnership will oversee the operation of Victoria’s water grid and create a forum for delivering the best possible solutions to Victoria’s water security challenges. The partnership builds on recent grid investments, including the $80.6 million South West Loddon Pipeline, the $85.2 million East Grampians Pipeline and the $43 million Lance Creek Water Connection.

In 2017, DELWP published the Integrated Water Management Framework for Victoria. The framework aims to help government, the water sector and the community work together to improve planning, management and delivery of water in Victoria’s towns and cities.

Melbourne Water published the Melbourne Water System Strategy in 2017, which presented a system view of water resource management across Melbourne and the surrounding region over the next 50 years.

Victoria contributed to the development of the Basin Plan, published by the Murray–Darling Basin Authority in 2012. The Basin Plan is a coordinated approach to water management across the Murray–Darling Basin’s four states (South Australia, Victoria, New South Wales and Queensland) and the Australian Capital Territory, and is designed to ensure that water taken from the Murray–Darling Basin for consumptive use is sustainable.

The water sector, responsible for the largest proportion of government CO2-e emissions, is participating in the Climate Change Adaptation Action Plan. Victoria’s 19 water corporations have pledged to reduce their collective emissions by approximately 350,000 tonnes – or 42% – by 2025.

DELWP used the Victorian Climate Initiative outputs to develop Guidelines for Assessing the Impact of Climate Change on Water Supplies in Victoria. This document was produced to help Victoria’s water sector plan for the impacts of climate change on water supplies.

DELWP also oversees the Victorian Water and Climate Initiative that supports research into the impact of climate change and climate variability on Victoria’s water resources. This includes three research projects undertaken with the University of Melbourne, the Bureau of Meteorology (BoM) and CSIRO.

Future Focus

Two significant issues that emerge from the Water Resources chapter are that (i) water supply shortfall projections for Victoria are expected to occur due to a drying climate and population growth, and that (ii) there is an absence of detailed knowledge on how the environmental water reserve and the allocation of water for consumptive purposes is affecting waterway health.

The Water Act 1989 was amended in 2005 with a requirement for Victoria to complete a Long-Term Water Resource Assessment (LTWRA) every 15 years. The LTWRA is Action 8.6 of the Water for Victoria plan and the first LTWRA was undertaken in 2018.,, It is anticipated that it will be released in 2019.

A LTWRA must identify whether either or both of the following has occurred, that:

  • there has been any decline in the long-term availability of surface water or groundwater and whether the burden of decline has fallen disproportionately on the environmental water reserve or on the allocation of water for consumptive purposes;

  • there has been any deterioration in waterway health for reasons related to flow.

There is an opportunity to improve future water resource decision-making if the evidence base established by the current LTWRA is used to develop metrics for water availability and ecosystem health. These metrics would include corresponding thresholds that would determine actions required when thresholds are crossed.

Given the significant water resource, water quality, climate and population changes that can occur during a 15-year period, more frequent LTWRAs are likely to be required to report on these metrics and thresholds to ensure environmental values and the health of aquatic ecosystems are being preserved.

Recommendation: That DELWP use the current Long-Term Water Resources Assessment (LTWRA) to identify metrics for monitoring the condition of, and risks to, Victoria’s water resources and waterway health for reasons related to flow, and commit to long-term monitoring. Complementary thresholds would also be established for these metrics, and actions determined for circumstances when thresholds are crossed. Further, in a changing climate, it is recommended that DELWP review the 15-year period between LTWRAs as more frequent assessments may be required to maintain ecosystem health and function.  

UN Environmental Economic Accounts

Under the System of Environmental-Economic Accounting, there are water resources accounts, along with water quality accounts and water emissions accounts (discussed in the Water Quality section).

Water resources accounts provide a framework to make explicit the links between the use of water and economic activity – both the contribution of water to the economy and the impact of the economy on water resources.

Water resources accounts typically include physical supply and use tables for water, and a water asset account. The physical supply and use tables show the amount of water extracted from the environment, how this flows through the economy, and the volumes that are returned to the environment (such as the discharges of treated sewage water). The water asset account shows the amount of water occurring in the environment, including artificial reservoirs, inflows from rainfall and upstream sources, and the amount extracted from the environment for use.

Water accounting is one of the most developed and applied areas of environmental-economic accounting. There are two existing Australian water resources accounts – the Australian Bureau of Statistics (ABS) Water Account and the BoM National Water Account.

The ABS Water Account is produced annually and presents information on the physical and monetary supply and use of water in the economy – nationally, and at a state and territory level. The water resource that is accounted for is the volume of fresh water extracted from the environment for consumption and production, and the water returned to the environment or discharged to sewage treatments. The accounts also outline who uses the water (such as households or industries) at a state level.

BoM’s annual National Water Account reports available water resources at a national and regional level in megalitres, but not in monetary terms. This complements the ABS accounts, which report on water supply and use within the economy.

Victorian Water Accounts are published by DELWP each year and focus on water availability and use across Victoria at bulk-supply level.

Water supply and use accounts that show water use by different industries and sectors can be compared with economic activity to track patterns of use and efficiency over time. They could also be used to evaluate the success of government or community initiatives to improve the efficiency and productivity of water use in different industries and sectors.

Water resources accounts could be linked to ecosystem service accounts for water supply and water filtration (for example, by forest ecosystem assets) to give an integrated picture of the linkages between ecosystems and the water resources available for use in the economy. Linking water and ecosystem accounts can also help to track the impact of the economy on the environment due to water extraction. Extraction of water can affect the condition of ecosystem assets (such as wetlands), which impacts on their ability to produce ecosystem services that support economic activity and wellbeing (such as recreation and tourism).

Case studies

More water, more life

Water set aside for the environment has real benefits in north-western Victoria

In the dry Mallee country in north-western Victoria, the Hattah Lakes are an oasis for native animals who find food and shelter in these wetlands and floodplains. The lakes are filled seasonally by creeks connected to the Murray River, and occasionally flood. But with rainfall becoming less predictable thanks to climate change, the native fish and waterbirds are threatened by loss of habitat.

Water for the environment

Environmental water is water that's set aside in reservoirs and dams to be used for environmental purposes, such as supporting plants and animals. In the Hattah Lakes, scientists from the Arthur Rylah Institute monitored plants in the area before it was flooded with environmental water in 2014, and then every two years after.

A model for the future

Based on this research, the scientists developed a model to evaluate the effectiveness of environmental watering and predict the resulting changes to vegetation. The focus is on key plant species and plant communities so that environmental watering can be carefully planned for future.

Since the program started, the researchers found more than 80 plant species, 26 of which were rare or threatened. Some had never been recorded at Hattah Lakes before. There was an increase in native species and a reduction in non-native species. The watering also reduced the number of dryland plants invading the floodplain.

Good news for Hattah Lakes – and other wetlands

Environmental watering will be undertaken at Hattah Lakes every eight years, with benefits expected to increase. The research has shown the value of environmental watering for maintaining quality of habitat and improving tree cover not just in the Hattah Lakes but other similar areas. And the model itself can be used in the future throughout Victoria and beyond.

Discover more