A national water industry body is warning that drinking water systems in many small rural towns face an uncertain future.
Water New Zealand said declining populations and the cost of maintaining ageing infrastructure were putting a lot of pressure on smaller local councils that supply these services.
Chief executive Murray Gibb said it was already evident, with a proposal to remove drinking water services from Ohura in the Ruapehu district.
"A lot of these smaller towns in rural New Zealand that have got reticulated supplies are facing static or declining populations, which causes challenges round supplying water services because, of course, they depend on funding," he said.
"These services are capital intensive. So if you've got static and declining populations and your funding base, through your rating base, is put at risk then you're faced with a situation such as Ohura is, where the council has said, 'Well look it's actually cheaper to take the reticulated services out and put catchment from roofs in place.'"
Mr Gibb said the good news was that small communities in other countries had found solutions to their water supply problems.
Almost a quarter of New Zealanders who live in smaller centres receive water that does not meet required standards and a few small towns such as Otematata in the Waitaki district are on long-term boil water notices, he said.