Both levels of government have committed $6 million to undertake a business case into the construction of a 10 kilometre pipeline between Lake Rowlands and Carcoar dam, as well as the options in either raising the existing Lake Rowlands dam wall, or to build an entirely new one further downstream.

With Carcoar Dam under the control of NSW Water and Lake Rowlands under Central Tablelands Water, the complexities have led to the creation of the Belubula Water Security Scheme business case with the the Australian Government providing $2.7 million and the New South Wales Government contributing $3.3 million.

The business case will be conducted by the one year old Water Infrastructure NSW, a division of the Department of Planning, Industry and Environment.

Both Water NSW and CTW will take on advisory roles delivering their expertise on their respective water supplies.

In 2018 the state government committed $850,000 towards exploring infrastructure options for a pipeline between Carcoar Dam and Lake Rowlands.

Then in 2019 the state government invested a further $1 million of funding for the completion of a feasibility study for the lake's extension as part of the government's emergency response to the drought in regional NSW.

Those two studies may at first seem like money poorly spent, but the work already carried out has sparked the enthusiasm for a water supply that comes without the environmental or social costs of raising Wyangala Dam and would help create what Deputy Prime Minister Barnaby Joyce said is a "safe and reliable water supply."

"A safe and reliable water supply would help unlock the economic potential of new and expanded agricultural opportunities, and this business case is the first step towards helping achieve this across the Central Tablelands," he said.

"When farmers have the water they need, they can grow their business which means more jobs, more economic opportunities and a better standard of living for them and the people they employ."

NSW Minister for Lands and Water Kevin Anderson said providing a holistic approach to water security for towns, businesses and the environment is crucial for the region's future growth.

"The Belubula Water Security Scheme takes a collaborative and big-picture approach to delivering water security for the region," Mr Anderson said.

"In close partnership with Central Tablelands Water, we're expanding the current Lake Rowlands Dam to Carcoar Dam pipeline project to include the ongoing development of the Lake Rowlands Dam augmentation project."

Member for Calare Andrew Gee has long been a supporter of the pipeline and dam upgrade and said that the business case is a crucial step in bringing the project to life.

"It will guide the action we take to support these initiatives and the future water security of this region," he said.

"A new dam wall at Lake Rowlands is a very bright hope for a new dam project in our area."

Chairman of CTW and Blayney Shire councillor David Somervaille said that the breakthrough came courtesy of National's MP Melinda Pavey who could see the sense in the two projects becoming the one, and the board of CTW are more than happy to be involved.

"I'm very happy to help progress it because they [Water Infrastructure NSW] have all the expertise to execute and deliver the project whereas CTW with its small size would struggle with a project like that."

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