That amount of water would be more than half as much as is presently extracted from the Great Artesian Basin each year.

The "conservative" projection is contained in a submission from the National Water Commission that was among hundreds put to a NSW parliamentary inquiry into coal seam gas.

The commission said coal seam gas offered substantial economic benefits but that if it was not managed and regulated properly risked having significant, long-term and adverse impacts on surface and groundwater systems.

Potential impacts of coal seam gas developments, particularly the cumulative effects of multiple projects "are not well understood", the commission said.

The industry posed a number of potential risks to sustainable water management. Extracting large volumes of water would affect surface and groundwater systems, some of which may already be fully or over allocated.

The "dramatic" depressurisation of the coal seam could also change pressures in adjacent aquifers, reduce surface water flows and create land subsidence.

The production of large volumes of waste water raised problems of how to dispose of it without affecting surface water systems, and the use of the process of hydraulic fracturing had the potential to cross-contaminate aquifers.

It said total water extraction from the Great Artesian Basin was about 540 gigalitres a year.

The coal seam gas industry alone was projected to extract about 7500 gigalitres over 25 years, or 300 gigalitres a year.

A precautionary management approach was needed, the commission said, including proper monitoring, and the interception of water by the industry should be licensed to ensure it was part of entitlement and planning frameworks.