Farmers and residents around the NSW town of Caragabal are lobbying state and federal governments for funds to secure their water supply.

They want to set up a water scheme to pipe agricultural and domestic water from a nearby artesian water supply.

Caragabal Water Scheme Committee secretary Kylie Taylor says 40 landholders have already signed up to participate if the water scheme goes ahead.

“They want to find a secure water source for the community, and for the village as well,” Ms Taylor said.

“We don't have a reliable source of water.

“In the past we have relied on rain water, but we are seeing a decline in rain water run-off and a continued decline predicted, so we need security for the future.”

But Ms Taylor said the financial cost of the water scheme was too much for locals to cover.

“It's a huge, huge spend. We have put together a business model and we are looking for an input from government of $1 million.

“The problem is, these grants always call for things like financial records from three years and previous experience.

“And we are just a new organisation.”