Australians have done little to curb water usage despite the worst drought in living memory, with households in the desert-dominated country still using water at a rate 30% higher than the OECD average.
The problem is most acute in large cities, such as Sydney, Melbourne and Adelaide, which account for well over two-thirds of Australia's 20 million population. Australia is the world's most arid inhabited continent.
With reservoir levels below 50% in all of Australia's major cities except Brisbane, experts have warned something must be done.
Dams in Sydney, the nation's largest city, are at a near-record low, with experts saying the bulk of the country's population on the coastal fringes do not realise the extent of the problem.
In response, the Victoria state government has proposed large fines and even jail terms for individuals or companies that persistently flout restrictions.
University of New England water policy research expert John Wolfenden said drawing ever-increasing amounts of water from river systems reduced waterways to a trickle, leaving them vulnerable to toxic algal blooms, and devastated fragile marine ecosystems.
"Demand by far exceeds supply and the problem is getting worse," Wolfenden said, pointing out the annual flow of Australia's largest river system, the Murray-Darling, was now less than one day's flow of South America's Amazon river.
Dry conditions and heat cause
deadly fires in Australia
A report by the Commonwealth Scientific and Industrial Research Organisation, a government body, this year said water shortages would intensify.
It warned by 2030 there would be reduced rainfall and around double the number of very hot summer days in some states.
Proposed solutions fall into two categories, massive engineering projects to dramatically increase water supply or initiatives to reduce demand and ensure water is used more efficiently.
Some of the schemes put forward by the engineering camp have been unfamiliar, including towing freshwater icebergs from Antarctica and stimulating rainfall by creating artificial mountains in the desert or building a giant whisk to send seawater skyward.
Experts say Australia gets plenty
of water, but in the wrong places
The latest idea, released this week by the Farmhand Foundation, a group set up by prominent business leaders two years ago in response the drought, is for a national water grid that can pipe water from areas with excess rainfall to areas in need.
The cost of the project, which Farmhand estimates would take a century to build, is AU$300 billion ($216 billion), plus a maintenance bill of AU$6 billion a year.
Farmhand chairman Bob Mansfield, a one-time top executive at companies such as telecoms giant Telstra and fast-food chain McDonald's, said Australia's biggest problem was not lack of water but the fact that it falls in the wrong place, particularly the country's tropical north during the cyclone season.
"The truth is that we have plenty of water in this country, it's just that we don't have it where we need it," he said.
"We need the vision to plan and fund a national water grid that will harvest more water where it falls and move it to where it is needed."
Attitudes must change
But Wolfenden said planners needed a more subtle approach, suggesting Australians still took a European attitude to water usage and ignored Australia's reality.
"There's no quick fix," he said. "The old days of dam it, divert it and dominate it are over. We need to find a way to use water that works more harmoniously with the Australian environment."
"The old days of dam
it, divert it and dominate it are over"
University of New England water policy research expert
Australian Water Association chief executive Chris Davis says the answer lies in controlling demand.
While he sees a role for desalination plants to turn seawater into drinking water, Davis said more low-key innovations such as preserving so-called grey water from treated sewage would have a huge impact.
"We need to make people aware of what a precious resource water is and stop them from taking it for granted," he said.