The NSW Department of Planning and Environment has released its draft Murrumbidgee Regional Water Strategy as part of planning for the state's water needs over the next 20 to 40 years.

The draft strategy includes an option to investigate building a new water storage at Lake Coolah-Mejum, about six kilometres north-east of Narrandera.

The lake and its nearby swamp have been repeatedly raised by Riverina councils over the past 10 years as a possible new dam location.

The draft also listed options for raising Blowering Dam by four metres, which would increase its capacity by 200 gigalitres - the equivalent to 12 per cent of current capacity - or enlarging the Burrinjuck Storage Reservoir.

The options were described as possible responses to the "limitations of existing water infrastructure, delivery and operations", which were labelled by the strategy as one of the key challenges facing the region.

NSW Farmers Wagga branch president Alan Brown said he welcomed discussion of potential increases to water storage as it would lessen the impact of droughts.

"We're looking at the effects of climate change, which is going to produce bigger variations in our rainfall," he said. "We have got to remove or mitigate the effects of climate change by storing more water."

The draft strategy did not include indicative budgets or schedules for any potential water storage projects at Blowering Dam, Burrinjuck Reservoir or Lake Coolah.

Mr Brown said another benefit to more storage would be to preserve heavy rainfall instead of sending excess water downstream.

"Storing more water is beneficial for both the environment and productivity," Mr Brown said. "There have been immense permanent plantings in the irrigation areas, which are going to require more water to remain productive.

"We need to store more water and also use it more wisely."

The draft strategy noted that Blowering and Burrinjuck dams already had a high potential for severe cold water pollution and that large releases of water with low oxygen levels damaged the environment for up to 300 kilometres downstream of where the Tumut and Murrumbidgee rivers meet.

"Cold water pollution disturbs the growth, breeding and survival of some native fish, including Murray cod, freshwater catfish and other aquatic fauna," the strategy said.

NSW Lands and Water Minister Kevin Anderson said the strategy would put forward the best mix of solutions to address the region's water-related challenges.

"We will assess all options, including infrastructure, water recycling, improved water efficiency and policy and regulatory and operational changes," he said.

This draft Murrumbidgee Regional Water Strategy is on public exhibition and accepting feedback via written submissions until May 22.

Stakeholders will also be able to attend webinars or face-to-face consultation sessions and provide their feedback on the strategy, including at Mercure Wagga on Morgan Street on April 29 from 9am to 3pm.

Department of Planning and Environment executive director Kaia Hodge said the Murrumbidgee was an extremely complex river system and state-of-the-art hydrological modelling and climate data had been used in the draft strategy.

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