All major water users are to be metered from July.
Environment Minister Nick Smith said in Christchurch on Friday night that only 31% of the water extracted nationally is currently metered.
Dr Smith described that as a hopeless system and said it is impossible to manage water properly when the amount being used is not measured.
He said water take of more than 20 litres per second will be metered within two years, and takes of more than five litres per second will be metered within six years.
Regulations under the Resource Management Act will come into effect on 1 July. They do not apply to domestic use.
Dr Smith said economic analysis shows that water use is worth more than $5 billion per year to the economy.
Taylor Preston - a meat processing company that already has its water metered - is backing the move. Chief executive Simon Gatenby says the company, which is a big water user, noticed a marked reduction once it began having its use metered several years ago.
Federated Farmers supports the move, but says the plan put forward by Dr Smith appears to penalise rural users. Its dairy and environment chairman, Lachlan McKenzie, says farmers need more details about what the set-up costs will be.