Public tip offs to the state's water regulator significantly increased as NSW recorded its second driest April on record.
The state's Natural Resources Access Regulator, which is tasked with ensuring license holders comply with water laws, typically receives between 50 and 60 public tip-offs about suspected water misuse each month.
But following record low rainfall, that number jumped to 84 in February, 88 in March, and 72 in April.
"When conditions are dry, there is a heightened anxiety amongst the community and the scrutiny does increase," the regulator's chief Grant Barnes said.
"If you take more than your share, you're taking it off your neighbour, your community, the environment".
Recent public reports of suspicious activity include creeks or streams being modified, dams being enlarged without permission, pumps illegally running at night, and water being used for non-licensed purposes.
Entities that extract water from rivers or lake for business or public supply - such as farmers, mining companies and local councils - are required to have a licence.
Mr Barnes said only a small minority of rogue operators were breaking the law for financial gain, but increased reports of suspected water misuse show the public won't tolerate misbehaviour.
But the NSW Irrigators Council chief Madeleine Hartley suggested misuse reports could be attributed to confusion about what is permissible under water regulations.
She said farmers support rules around water use but they have to deal with more than a dozen regulatory bodies, a plethora of laws, and shifting water restrictions.
Ms Hartley added there have been numerous recent regulatory changes in response to the drought.
"The potential for confusion in the community is large, and that's concerning," she said.
"The laws are very complex."
People who are guided by water restrictions and people who have been the subject of complaints work and live together in the same small communities, Ms Hartley said.
She called for the clarification of the water use laws for one of the state's most crucial sectors.
"Water users are just trying to get on the job of farming and producing food and fibre that we all eat and wear," the NSW Irrigators Council chief said.
Below average rainfall is expected across southern, central and eastern Australia until the end of August, according to the Bureau of Meteorology.
More than half of NSW remains drought affected.
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