Water security through diversification: A smarter water future for Australia

Why diversification matters: The case for a multi-source water strategy

Australia has long relied on large rainfall fed reservoirs to supply drinking water, but this model is no longer sufficient. Climate patterns are shifting, and urban expansion is increasing demand. Melbourne’s Thomson Reservoir, for example, was once considered a long-term storage solution, holding more than half of the city's supply. But today, it cannot be relied upon in the same way—rainfall is declining, and higher consumption means storages are depleting faster than ever before. This leaves communities more vulnerable. 

Stormwater provides a stark example of wasted potential. Every year, around 500 billion litres of stormwater runoff flows into Melbourne’s Port Phillip Bay—more than the volume consumed by Melbournians in a year. If more stormwater was captured, treated and reused this could ease pressure on existing reservoirs and support urban water resilience.

According to the Centre for Population, Australia’s population is projected to grow to 31.3 million people by 2034-35. That’s around four million additional people whose thirst we need to quench. Take Melbourne as an example; at an average water consumption rate of around 165 litres of water, per person per day, every new resident requires an equivalent increase in supply.

Yet, many Melbournians continue to gauge water security solely by reservoir storage levels. If reservoirs are near full, there's an assumption that there is enough water. Only as storages get lower, people start to worry about water security. However, with more people drawing from the same water storages, and with less rainwater water flowing into them due to climate change, storages can drop very quickly – much more quickly than the Millennium Drought. 

And one of the key tools used to respond to water shortages in the past will also be less effective in the future. Melbournians have locked in many water efficiency behaviours from the drought, meaning water efficiency campaigns will deliver less savings than in the past. The appetite for harsh restrictions may also be less. 

Throw in the potential for catchment bushfires to pollute storages and take them offline for months at a time, and the lead times to build new sources of water (like a desalination plant) being as long as 8-10 years, and the case for timely implementation of diverse, non-rainfall dependent sources of water becomes very compelling.

The old dynamic has changed.

Tough decisions ahead   

Melbourne–and Australia as a whole–has started planning for new sources of water. However hard decisions lie head, and the community needs to be engaged. Are people happy to pay for the cost of new sources of water, which will drive up bills? Or would they prefer a system where, if we start running out of water, harsh restrictions come into place—like not being able to water lawns or having shorter showers?

We’re also at a point where the choices available to us are becoming more limited. The easy wins in water efficiency—such as more efficient appliances and conservation behaviours—have already been largely achieved. Unlike during the Millennium Drought, when simple conservation efforts made a significant impact, we’re now dealing with a much tighter system. This means the community needs to consider whether they want to invest in long-term water security or risk increasing restrictions that impact daily life.

Stormwater harvesting: Unlocking an underutilised resource

Stormwater is one of the most overlooked opportunities in Australia’s water cycle to both increase supply and improve liveability and waterway health. With urban surfaces like roads, rooftops, and footpaths preventing natural absorption, stormwater rushes into drains and waterways—contributing to flooding, pollution, and erosion.

That makes our waterway flows very volatile and difficult for flora and fauna to survive. By harvesting more stormwater, we can smooth out these peaks and reduce that flashiness.

Stormwater solutions tend to be localised, meaning their costs and benefits must be carefully weighed against other water supply options.

One way to ensure we’re always investing in the best-value solution is to look at all the benefits. If we only look at the cost per megalitre of water, stormwater recycling can seem expensive compared to other sources of water. But when we monetise the impacts of excessive stormwater—flooding, environmental damage—it fundamentally shifts the equation.

There’s also a significant opportunity to integrate stormwater use with urban greening projects. Using harvested stormwater locally in the landscape supports cooling, reduces the urban heat island effect, and improves liveability. This means stormwater investment delivers not just water, but also public health and environmental benefits.

Each year, vast quantities of stormwater carry excess nitrogen and phosphorus into Port Phillip Bay, potentially fuelling algal blooms and harming marine ecosystems. To combat this, Melbourne Water built an extensive system of artificial wetlands, filtering pollutants before they reach the bay. The initiative prevents over 500 tonnes of nitrogen from entering marine ecosystems each year. In essence, these wetlands function like human kidneys, successfully filtering stormwater.

Beyond water quality benefits, stormwater harvesting can supplement drinking water supplies. For instance, in NSW, Orange City Council successfully integrated stormwater into its supply strategy, showing how smart water management solutions can reduce reliance on dams.

Key benefits of stormwater harvesting:
✔ Increases available water supply
✔ Reduces flood risk in urban areas
✔ Improves river health by normalising flows

Challenges remain—infrastructure investment and maintenance costs must be weighed against benefits. However, when stormwater projects factor in flood prevention, ecosystem health, and cooling benefits, the business case for stormwater investment strengthens significantly.

Recycled water: Closing the loop on supply

Currently Australia only recycles a fraction of wastewater produced. In Melbourne, for example, the Eastern Treatment Plant releases around 130 billion litres of high-quality, treated wastewater into Bass Strait each year. While some of this water is repurposed, much more could be used for industry, agriculture, or even drinking water if supported by policy and the community.

Inland communities already rely on indirect potable reuse—rivers receive upstream wastewater discharges, which are then extracted and treated downstream. Adelaide’s drinking supply, for example, includes recycled water from multiple upstream towns. Yet, direct potable reuse remains a contentious issue, with government and community hesitation delaying progress.

Overcoming the ‘yuck factor’

Successful public engagement strategies are key to increasing community acceptance. More demonstration projects—local and international—will help build trust. This will allow people to see the treatment process firsthand. Real-world examples are essential for building trust in recycled water systems. 

Key benefits of recycled water:
✔ Provides a consistent, climate-independent water source
✔ Reduces pollution from wastewater outfalls
✔ Supports agriculture and industry, freeing up drinking water

Despite its potential, scaling up recycled water requires policy shifts. Many jurisdictions remain cautious about direct potable reuse, but growing demand may force a rethink in the coming years.

Expanding recycled water use will require greater collaboration between different levels of government and the water sector. Councils often have access to land and open space where recycled water can be used, while state governments have the policy levers to support large-scale implementation. More coordinated efforts could unlock greater potential for stormwater and wastewater recycling across Australia.

Desalination: A climate-independent solution

It’s inevitable that we’re going to see more desalination plants in Australia. The challenge will be reducing costs, especially in a time of bill sensitivity. But the equation remains: less rainfall, more people, means we have to make water. And desalination will be an integral part of that mix.

For coastal cities, desalination is an essential part of water security. The Victorian Desalination Plant, for example, can produce up to 150 billion litres per year, enough to supply one-third of Melbourne’s demand. Unlike reservoirs, desalination provides a rainfall-independent water source, making it a crucial baseload supply for Melbourne in a normal year – not just safety net during droughts.

However, desalination comes with significant economic and environmental considerations. It is energy-intensive, and the disposal of brine waste can impact marine ecosystems. Careful site selection for outfalls and proper mixing zone management can help mitigate these risks.

The importance of early planning:

Cities that delay planning and investment in new water infrastructure, like desalination plants, often find themselves rushing projects when drought hits, leading to higher costs and greater public resistance.

With declining rainfall and growing demand, water supplies are becoming more volatile and depleting more quickly. Many cities, including Melbourne, Perth, and Sydney, have already diversified their water sources with desalination. These plants are not just supplementary—they provide essential baseload supply that underpins water security.

The key is proactive planning and action. The sooner planning is conducted, the better prepared cities will be to take action. Many governments and water authorities are proactively planning, however more can be done to assess all possible future scenarios and make investment decisions in a timely way that avoids water supply crisis and delivers the most cost-effective solution with the broadest community benefits.

RPS has significant experience in critical desalination areas—including environmental modelling, community engagement, and approvals processes. Integrating these elements from the outset ensures desalination projects are efficient, cost-effective, and publicly accepted.

Lessons from past desalination projects:
✔ Early investment is critical – Delays lead to rushed, high-cost infrastructure projects
✔ Public engagement matters – Desalination is costly, and communities need to understand its role in water security
✔ Efficiency improvements are essential – Innovations in energy use and smart water delivery systems can reduce costs over time.

Water efficiency: The cheapest water is the water we don’t use

While increasing supply is vital, reducing demand remains one of the most cost-effective ways to increase water security. Cities like Melbourne have successfully reduced per capita water use to around 165 litres per day, demonstrating the impact of sustained conservation efforts. 

Victorians have embedded water-saving behaviours since the Millennium Drought. But in other cities, there are still significant opportunities. Other capital cities and regional cities can learn from Melbourne, with some cities using well over 300 litres per person per day. 

Water efficiency programs help by:
✔ Delaying the need for costly infrastructure upgrades
✔ Reducing environmental strain on rivers and aquifers
✔ Lowering household and business water bills

In cities with low per capita consumption, future gains will rely on smart water technology, such as digital water meters and automated leak detection, to help reduce wastage at scale.

Water efficiency is fundamental to sustainable water management. It is the most cost-effective way to secure supply, and every water business must have demand management as a core part of its strategy. Additionally, the less water we consume, the less energy is required for water treatment.

Overcoming implementation challenges

While a diversified water portfolio offers clear benefits, several challenges must be addressed:

•    Environmental considerations – Many water sources, including rivers and creeks, have ecological limits. Extracting too much water can damage natural ecosystems, affecting flora and fauna. Careful management is needed to balance water supply needs with environmental health.

•    Cultural and social factors – Water holds deep cultural and economic significance for Indigenous communities. When making decisions about water allocations, the rights and perspectives of Aboriginal people must be fully integrated into planning processes, with Aboriginal people involved in the decision making process.

•    Public health standards – Recycled water and stormwater require rigorous treatment to meet safety regulations. The highest treatment standard is for drinking water, but even for other uses—such as agriculture—specific purification steps must be followed. These processes add to the overall cost.

•    Energy and sustainability – Desalination is highly energy-intensive. To minimise environmental impacts, investments in low-carbon energy sources—such as renewables—are essential. The same applies to recycled water, which often requires desalination or further treatment to make it suitable for different uses.

•    Economic investment and timing – Water infrastructure is expensive, and funding decisions must balance affordability with long-term security. Many business cases favour ‘just-in-time’ investment—delaying projects until absolutely necessary. While this approach preserves financial resources for other priorities, it can lead to rushed, costly infrastructure projects when water shortages become critical.

•    Regulatory consistency – Water policies, particularly for recycled water and stormwater use, vary between states. A more uniform national approach could accelerate adoption and reduce inefficiencies.

•    Public perception and cost concerns – Consumers are often hesitant about higher water bills, and there is lingering resistance to concepts like direct potable reuse. Transparent community engagement is critical to building trust and acceptance of new water solutions.

To ensure a sustainable future, Australia must take an adaptive approach—one that maximises benefits while addressing social, economic, and environmental challenges. A diversified strategy reduces risk, but only if investments are carefully planned and supported by policy, technology, and public trust.