With Wyangala Dam reaching 95 per cent on July 28, LVW believes the current airspace release of water shows the urgent need for an increased capacity of the dam.

Lachlan Valley Water chair, Tom Green, said excellent winter rainfall had seen the dam close to filling for the first time since 2016 and, with significant tributary flows as well, had now increased the risk of flooding downstream along the Lachlan River in coming weeks.

"WaterNSW is managing this very actively with airspace releases, and like everyone, I'm hoping we won't see the devastating floods of 2016 repeated, given the negative Indian Ocean Dipole we are currently encountering," he said.

"It's extremely important under the current climatic variability that the Lachlan Valley can store more water in very wet years, to help manage both flood events and the drought periods we will encounter in the future."

Mr Green said in 2016 massive damage to crops and road infrastructure, amounting to hundreds of millions of dollars according to the Regional Recovery Co-ordinator, was disastrous, and closing of the Newell Highway, the main freight channel between Brisbane and Melbourne, for six weeks resulted in significant flow-on impacts for transport companies and travellers.

"Small floods are good for the river and it is important that significant flows reach the lower Lachlan for floodplain inundation, the Great Cumbung Swamp and all the environmental needs but much of this water can also have a substantial flooding impact upstream, so the aim is to try and manage this," he added.

The Wyangala Dam Wall Raising project is expected to increase the dam's capacity to hold an additional 650 gigalitres, which will increase capacity by 53 per cent.

The proposed project will see the dam wall height raised, which will increase the Full Supply Level by 10 metres.

Mr Green said the project wasn't about increasing extraction but securing water availability.

"One of the important messages about the Wyangala Dam project is that it's not about increasing extraction above the Basin Plan sustainable diversion limit, but about providing more security for water availability under a more variable climate," he said.

"We're urging the NSW Government to get on with this project to both greatly reduce the chance of major flooding in the Lachlan Valley and improve water security for irrigators and towns like Forbes, Parkes, Cowra, Condobolin, Lake Cargelligo and Hillston.

"We saw the drought that followed 2016, which set in very quickly and lasted over three years.

"This is likely to occur again in the future and the dam wall needs to be raised before we encounter the next major dry period, to protect our communities, businesses, agriculture and the environment."

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