Healthy Rivers Dubbo convenor Mel Gray has cast doubt on the city's ability to replace river water with groundwater should Burrendong Dam run dry as early as mid-2020.
But Dubbo Regional Council seems confident the city won't be needing as much water in the future.
It expects demand for water to fall through "high level" compliance of water restrictions, forecast to get tougher.
Burrendong Dam may not be able to service the city by the middle of next year if "extremely low" inflows continue.
The state government has given the council $30 million to expand its bore field.
Ms Gray is not convinced the project will pay off.
"I'm quite furiously concerned that the groundwater they find won't be enough or of good enough quality to help Dubbo," she said.
"There won't be enough groundwater to replace the 75 per cent of Dubbo water coming from the river."
The council's chief executive officer Michael McMahon said the current mix of water going through the John Gilbert Water Treatment Plant was about 70 per cent river water and 30 per cent groundwater.
He said a 50/50 mix was possible if need be.
"Our town water bores are of good quality and any appropriate treatment capacity exists to ensure continued provision of water which complies with appropriate water quality guidelines," Mr McMahon said.
The council's annual town water bore allocation is 3850 megalitres (ML) and river water allocation 8700ML.
Under normal operational conditions and excluding restrictions, 9500ML of water are treated each year representing about 75 per cent of the city's total allocation.
"However, the introduction of water restrictions, along with a high level of compliance by the community, will significantly reduce the demand for water," Mr McMahon said.
"At the same time, council is actively seeking additional and alternative water sources to ensure that a sufficient supply is available which can satisfy the community needs under the restricted usage regime of water restrictions."
Ms Gray said it was time for the city to be progressive in ways including the "tightening" of water use and recycling of water.
"The way we have been doing things will not work anymore," she said.
"There's been plenty of warning that this was coming."
Ms Gray said the council had "resisted" a push by Cr Stephen Lawrence to put up water rates with a view to using the extra revenue to investigate the means of reducing reliance on water including recycling and use of grey water.
"That was voted down," she said.
But the environmental activist is "encouraged" by the council's efforts since January to make the city more drought resilient.
"We need to investigate all innovative solutions," Ms Gray said.
This week Mr McMahon reported of the council ramping up its campaign to keep water flowing in Dubbo.
"Council is looking for alternative sources of water such as storm water harvesting and effluent/grey reuse including managed aquifer recharge," he said.
"Other steps being taken include council's review of its own operational water usage.
"In the coming days and weeks, council will progressively scale back its water usage on council owned-and- operated open spaces, as well as reviewing the times and frequency of watering."