Australia’s inland waters, both above and below the ground, are of considerable ecological significance. Their significance arises from both their intrinsic ecological values and the contribution they make in providing water to our communities and industries, and connecting our land, atmosphere, coastal and marine environments. This theme looks at both the ‘unregulated’ parts of the aquatic environment (upstream of major control structures), which are less affected by water management infrastructure, and the managed areas, where water policy and directed management actions are in play. Similar to the 2011 state of the environment assessment, this theme considers the pressures of climate, development, management and pests, and the resulting state and trends of surface waters, water quality, ecological processes and species populations. The state and trends of groundwater are also assessed for the first time. Water management is considered from a policy perspective and from the perspective of the observed outcomes of water management actions. The discussion of the resilience of aquatic ecosystems includes resilience benefits that have been reported in recent years, and a view to the future includes risks of resource development and the effective implementation of water-related policy.

The capricious nature of our nation’s water environment was evident during 2011–16. The period provided the first cooler than average year since 2001, along with record warm years. Urban water demand rose, with an increased focus on finding climate-resilient water supplies. Land-cover changes—because of, for example, fires and land clearing—continued to exert some pressure on aquatic ecosystems, along with invasive species such as cane toads and aquatic weeds. Aquatic environments responded to these pressures and post–millennium drought conditions, as well as to the benefits and detriments arising from the directed management of water resources. Online availability of flow data and water resources information has increased enormously since 2011, supporting ongoing assessment. The state of surface water and groundwater varied considerably during the past 5 years, largely in response to climate, with national surface-water storage levels dropping from above 80 per cent to below 50 per cent. Groundwater condition is mostly graded as poor, reflecting historical groundwater use, significant numbers of bores and low knowledge of the impacts on groundwater-dependent ecosystems. Water quality assessments varied; for example, results for the Lake Eyre Basin were generally consistent with previous reporting, the period sampled and the hydrological conditions, whereas some improving trends were noted for the Murray–Darling Basin. The state and trends of ecological processes and key species populations ranged from very poor, with deteriorating trends across the Murray–Darling Basin, to poor to good, with stable trends for the south-east and south-west, to good for much of the rest of the country.

Looking to the future, our inland waters are at risk from Australia’s projected changes in climate, including the intensity of extreme rainfall events, time spent in drought and, in some areas, decreases in cool-season rainfall. Proposals for significant national infrastructure development and exploitation of coal-seam gas resources during the coming decades raise risks of surface-water regime change, surface-water pollution, increased groundwater extraction, seawater intrusion, and accelerated spread of pest plants and animals. However, we have a significant body of practice and knowledge to assist in avoiding the land and water management mistakes of the past. Australia’s water resources information is becoming increasingly available in many forms to support broader understanding and debate about the future of our water resources and aquatic environments. Also, inland waters continue to receive reasonable attention in national research and policy agendas, assuring a continuing supply of new ideas and knowledge. The outlook for the National Water Initiative, as Australia’s national blueprint for water reform, is variable, with water markets and environmental water reforms operating well in some areas but having less traction in others. Finally, cultural water, and co-management of groundwater and surface water are areas where inland water environments will benefit from whole-of-government attention.