The market for water in urban areas in Australia is often dominated by one provider, for ex Sydney Water in the Sydney area. Sydney Water is a New South Wales government-owned company that provides drinking water (and also wastewater and stormwater) services to the Sydney region. Sydney Water has historically held a monopoly over the supply of water within the Sydney region. The Independent Pricing and Regulatory Tribunal of NSW (IPART) periodically set water, wastewater and stormwater prices. The focus here is on drinking water.

The supply of water is largely dependent on the amount of rainfall. With Australia going through a long-lasting drought in the first decade of the 21st century, serious concerns were raised about the possibility of running out of water. What policies can be implemented to address this issue?