The Aquifer Interference Policy defines the regime for assessing and managing the impacts of aquifer interference activities, including mineral and petroleum activities, on NSW's water resources. The policy provides for the licensing of groundwater taken as part of mining or petroleum activities and for the assessment of those activities according to ‘minimal harm’ criteria. This section overviews the legislative framework for water in NSW, basic landholder rights to water, and the Aquifer Interference Policy and includes a link to the full policy online.


The importance of groundwater

Enormous volumes of water are stored in the ground as groundwater. In fact, if all groundwater was removed from under the surface and placed on the face of the Earth it would cover the land to a depth of 300 metres.


Groundwater is also a crucial freshwater supply. Approximately 97% of the water on Earth is found in the oceans. Of the remaining 3%, about three-quarters is frozen in ice-caps and glaciers, while most of the other quarter is stored in groundwater. Surface water represents less than 1% of the world’s fresh water.[i]


Groundwater is an integral part of the hydrological cycle which drives the earth’s weather systems. Groundwater also plays a significant role as a resource which is necessary to sustain life, either as a source of water for human use or for the environment to sustain streams and wetlands in dry periods.[ii]

Groundwater is also critical to agriculture and was the major source of water used for agriculture in NSW in 2008-09 making up 40% of the total water used in the State for the purpose.[iii]



Legislative framework for water in NSW[iv]

The two key pieces of legislation for the management of water in NSW are the Water Management Act 2000 and the Water Act 1912.


Water Management Act 2000 and Water Sharing Plans

The objective of the Water Management Act 2000 is to allow the sustainable and integrated management of the State's water for the benefit of both present and future generations.


The Water Management Act 2000 applies the principles of ecologically sustainable development which are defined in section 6(2) of the Protection of the Environment Administration Act 1991 and require the effective integration of economic and environmental considerations in decision-making processes.


As a result, the Water Management Act 2000 recognises the need to allocate and provide water for the environmental health of our rivers and groundwater systems, while also providing licence holders with more secure access to water and greater opportunities to trade water through the separation of water licences from land.


The main tool the Act provides for managing the State's water resources are water sharing plans. These are used to set out the rules for the sharing of water in a particular water source between water users and the environment and rules for the trading of water in and between water sources.


The Act has been progressively implemented through the commencement of water sharing plans marking the transition from the Water Act 1912 to the new Act. The first plans commenced in mid-2004 and these areas cover most of the State's major regulated river systems and therefore the largest areas of water extraction. The entire Murray-Darling Basin (both surface and groundwater) is now also covered by water sharing plans and most of the coastal strip is also covered.


Water Act 1912

The Water Act 1912 is being progressively phased out and replaced by the Water Management Act 2000, but some provisions are still in force.


Water in the State not covered by a water sharing plan is still regulated by the Water Act 1912.


Under the Water Act 1912, licences can be issued without needing to meet the requirements of a ‘minimal harm test’, and need to be renewed every 5 years and water trading is limited to landholders only.


Aquifer Interference Regulation

An aquifer interference regulation took effect in NSW on 30 June 2011. This regulation amended the Water Management (General) Regulation 2004 to require mining exploration and petroleum (including coal seam gas) exploration activities that take more than three mega litres of water per year to hold a water access licence. Prior to that, these activities were exempt from needing a water access licence. This latest update means the regulation is now referred to as the Water Management (General) Regulation 2011.


What is an aquifer?

In the Water Management Act 2000 an aquifer is defined as ‘a geological structure or formation, or an artificial landfill that is permeated with water or is capable of being permeated with water.’[v]


In more general terms, the word ‘aquifer’ is commonly understood to mean a groundwater system that is sufficiently permeable to allow water to move within it, and which can yield productive volumes of water.


For the purposes of the Aquifer Interference Policy the term ‘aquifer’ includes low yielding and saline groundwater systems.


Groundwater is often perceived as flowing in underground streams similar to surface streams, but in reality it is only in limestone caves that groundwater will flow in this way. Most groundwater is stored within the pores and fractures of rocks in much the same way as a sponge holds water.


Groundwater sources can vary markedly in the quality and quantity of water they hold and the extent of their connectivity with other groundwater sources or surface water bodies.


What is the Aquifer Interference Policy?

The Aquifer Interference Policy is a NSW Government policy which was released on 12 September 2012.

It was released as part of a package of measures known as the Strategic Regional Land Use Policy package.


For more information on the Strategic Regional Land Use Policy see the page:

What is the Strategic Regional Land Use Policy?


Just as landholders and other users of water in NSW are subject to water licensing requirements, the mineral and petroleum industries must account for the water they take from the State’s water supply and must obtain licences which account for that take. This requirement is also in place for exploration activities where the take of water is more than 3 mega litres a year.


The Aquifer Interference Policy:


  • clarifies the requirements for obtaining water  licences for ‘aquifer interference activities’ under NSW water legislation, and

  • establishes and objectively defines considerations in assessing and providing advice on whether more than minimal impacts might occur to a key water-dependent asset because of ‘aquifer interference activities’.[vi]


The Aquifer Interference Policy applies to all ‘aquifer interference activities’ in the State and, along with mining and petroleum extraction, applies to:


  • sand and gravel mining

  • construction works where de-watering is required

  • injection works used to transmit water into an aquifer, and

  • activities with the potential to contaminate groundwater or result in unacceptable loss of storage or structural damage to the aquifer.


Mining and petroleum developments proposed on Strategic Agricultural Land will need to be assessed by a Mining and Petroleum Gateway Panel as part of what is known as the Mining and Petroleum Gateway Process before they can proceed to the development application stage.


Part of the Mining and Petroleum Gateway Panel’s assessment requires consideration of the impacts of the proposal on groundwater as assessed in accordance with the Aquifer Interference Policy. This assessment is done by the DPI Water and the Minister for Primary Industries provides the advice to the Gateway Panel.

For more information on Strategic Agricultural Land see the chapter:

Strategic Agricultural Land


For more information on Gateway Process see the section:

Mining and Petroleum Gateway Process Stage


What is an Aquifer Interference Activity?

The Water Management Act 2000 defines an aquifer interference activity as that which involves any of the following:


  • the penetration of a groundwater source

  • the interference with water in a groundwater source

  • the obstruction of the flow of water in a groundwater source

  • the taking of water from an aquifer in the course of carrying out mining or any other activity prescribed, including coal seam gas extraction

  • the disposal of water taken from a groundwater source in the course of carrying out mining or any other activity prescribed, including coal seam gas extraction.


Mining and coal seam gas extraction are considered aquifer interference activities.


Other aquifer interference activities include the extraction of sand and road-base material, the injection of water into the water table, and any commercial, industrial, agricultural or residential activities that intercept the water table or interfere with aquifers.

Where will I find a copy of the Aquifer Interference Policy?

The full Aquifer Interference Policy is available to view or download online.


To view or download a copy of the Aquifer Interference Policy visit:

Aquifer Interference Policy


Structure and content of the Aquifer Interference Policy

The Aquifer Interference Policy contains two main parts. They are:


  • licensing the water taken through aquifer interference; and

  • assessment process for aquifer interference activities.

  • a security deposit


Licensing the water taken through aquifer interference

This section sets out the requirements for a mining or coal seam gas company to obtain a water licence to account for the water taken from the State’s water resources.


All water taken by an aquifer interference activity needs to be accounted for with a licence, in accordance with the water sharing plan framework.


Mining or coal seam gas companies must obtain a water licence for any take of water and for exploration activities where this take of water is greater than 3 mega litres a year.


A water licence is required under the Water Management Act 2000 (unless an exemption applies or water is being taken under a basic landholder right, such as for domestic or stock watering purposes) for any aquifer interference activities where they cause:


  • the removal of water from a water source; or

  • the movement of water from one part of an aquifer to another part of an aquifer; or

  • the movement of water from one source to another water source, such as an aquifer to an adjacent aquifer, or from an aquifer to a river or lake, or from a river or lake to an aquifer.


Water access licences under the Water Management Act 2000 are not to be granted unless the Minister for Primary Industries is satisfied that adequate arrangements are in place to ensure that ‘no more than minimal harm’ will be done to any water source as a consequence of water bring taken under the licence.


Assessment process for Aquifer Interference Activities

This section of the Policy sets out the basis on which aquifer interference activities are assessed by the NSW Office of Water by defining ‘minimal impact considerations’.


The assessment of the aquifer interference activity provides the basis for advice given by the NSW Office of Water to the Minister for Primary Industries, who then provides advice to the Mining and Petroleum Gateway Panel, the Planning Assessment Commission or the Minister for Planning in the consideration of mining or coal seam gas development proposals.


An aquifer interference approval is not required under the Aquifer Interference Policy.


This section also requires that mining or coal seam gas proponents take a risk management approach to assessing the potential impacts of an aquifer interference activity. The Policy also details the data and modelling requirements to quantify the impacts associated with an aquifer interference activity.


Security deposit[vii]

A security deposit is a bank guarantee or sum of money held by the Government to cover the costs of remediation works for unforseen impacts or ongoing post-closure activities. The effect of security deposits is to assign the risk of unforseen and ongoing impacts to the proponent of the aquifer interference activity and not other water users or the environment.


In providing advice to the Minister for Planning or the Planning Assessment Commission, the Minister may recommend that a security deposit be held relating to the potential water issues.


The actual amount calculated to be deposited will reflect the level of risk to the aquifer or its dependent ecosystems from the proposed activity. This amount will be determined on a case by case basis.


Water use by agriculture

All agricultural activities accounted for 57% of total Australian water consumption in 2010–11, which was slightly less than 2009–10, when agricultural activities accounted for 59%.[viii]


Potential impacts on groundwater – coal seam gas extraction

The potential impacts of coal seam gas extraction, particularly the cumulative effects of adjacent projects, need to be understood and assessed to manage and minimise:


  • reduced flow and water storage in non-target groundwater (and potentially, surface water) systems caused by connectivity with the dewatered coal seam;

  • contamination of groundwater systems through the introduction of chemicals sometimes used in hydraulic fracturing; and

  • contamination of shallow groundwater systems or surface waters following the disposal of produced coal seam gas wastewater.[ix]


Potential impacts on groundwater - mining

The mining industry consumed 10% more water in 2010–11 than in 2009–10 and accounted for 4% (540 GL) of Australia's total water consumption.


Mining activities that can effect the quality of groundwater include:


  • the construction of shafts and tunnels that intersect and connect groundwater systems;

  • the oxidation of certain minerals, which can cause acidic groundwater to develop and induce other contaminants to dissolve;

  • storage of tailings or other materials that leach contaminants into groundwater;

  • increased interception of groundwater; and

  • disposal of saline and contaminated wastewater produced in the mining process by allowing it to infiltrate into the ground without appropriate treatment.


Mining activities that can effect the quantity of

groundwater include:


  • the deliberate lowering of groundwater tables by pumping, to permit the safe and efficient removal of materials;

  • the deliberate lowering of groundwater pressures by pumping to facilitate the release of coal seam gas from the coal seams;

  • extraction of groundwater for consumptive use in mining processes.


For more information on groundwater see the National Water Commission web site at:

National Water Commission


Regulating the water you use[x]

If you wish to construct pumps, bores, spear points or wells on your property and to use water for a particular purpose, such as irrigation, you will need to apply for an approval, typically a water supply work approval and/or a water use approval, from the NSW Office of Water.


A water supply work approval authorises its holder to construct and use a specified water supply work at a specified location.


A water use approval is required to use water on land for all purposes, for example irrigation, except when exercising basic landholder rights.


When taking water under your basic landholder right (e.g. for domestic and stock purposes) you do not need a water use approval.


You do not need a water supply work approval for:


  • pumps, pipes, troughs or tanks to take and store water from a river under a basic landholder right

  • dams within the maximum dam capacity under the harvestable right for your property, or

  • conveyance works, provided they are located wholly within land that is subject to a water use approval.


However, you still need a water supply work approval to construct a dam in a river or to construct a bore, well, spear point or excavation under the domestic and stock right.


What is my domestic and stock basic right?

If you own or occupy a landholding with river frontage or above an aquifer, you are entitled to take the river water or groundwater for domestic consumption and for stock watering. This is your domestic and stock basic landholder right.


Water taken under a domestic and stock basic landholder right may be used for normal household purposes around the house and garden and for drinking water for stock.


It cannot be used for irrigating fodder crops for stock, washing down in a dairy or machinery shed, intensive livestock operations (such as feedlots, piggeries or battery chickens), aquaculture or for commercial purposes (including caravan parks or large-scale bed and breakfast accommodation).


You are also entitled to build dams or minor streams that capture up to 10 per cent of the average regional rainfall run-off for your property without requiring a licence in the Central and Eastern Divisions, and up to 100 per cent in the Western Division. Your entitlement can be calculated with an online calculator.


While you do not need a water access licence to take this water, landholders and occupiers still need to obtain a water supply work approval to construct a water bore to access the groundwater, or to construct a dam that does not fall within your harvestable right allowances.


Each approval includes conditions to minimise adverse impacts.


You also need approval to construct and use all water supply works to:

  • extract water from a river (e.g. via a pump), unless you are taking water under a basic landholder right

  • extract water from a groundwater source (e.g. via a bore)

  • capture more rainwater run-off than your harvestable right (e.g. in a farm dam)

  • store water taken from a river a groundwater source or aquifer, in tanks or off-river storages

  • convey water to another location via irrigation channels

  • divert water away from an area, via banks or levees, including floodplain banks

  • hold back water in a river, via a weir or in a dam other than under a harvestable right.


You do not need a licence or approval from the NSW Government to capture or use any rainfall run-off from your roof in a tank, however your local council may have regulations that apply.

For more information on the management of water in NSW see the DPI Water web site at:

DPI Water


[i]       Centre for Groundwater Studies An Introduction to Groundwater p 2.

[ii]      National Water Quality Management Strategy Guidelines for Groundwater Protection in Australia (September 1995).

[iii]      Australian Bureau of Statistics 4618.0 – Water Use on Australian Farms (2008-09)

[iv]      NSW Government, Department of Primary Industries, NSW Office of Water, Law and policy.

[v]      Water Management Act 2000 (Cth) (definition of ‘Aquifer’).

[vi]     NSW Government Aquifer Interference Policy (September 2012).

[vii]     ibid.

[viii]   Australian Bureau of Statistics, 4610.0 - Water Account, Australia (2011-12)

[ix]     National Water Commission Groundwater Essentials (NWC, Canberra, 2012).

[x]      NSW Government, Department of Primary Industries, NSW Office of Water, Water supply work and water use approvals.