Blue Lake, a volcanic crater provides municipal water supply to the city of Mount Gambier, population of 26,000. Current average annual pumping from the lake is 3.6 × 10⁶ m³. The lake is fed by karstic unconfined Gambier Limestone aquifer. Storm water of the city discharges to the aquifer via about 400 drainage wells and three large sinkholes. Average annual storm water discharge is estimated at approximately 6.6 × 10⁶ m³ through drainage wells and sinkholes within 16.8 km² of the central part of the city. Chemical mass balance for calcium was used to estimate groundwater inflow to the lake at 6.3 × 10⁶ m³, almost equal to the volume of storm water discharge and slightly higher than the previous estimates using environmental isotopes (4.8 - 6.0 × 10⁶ m³). Considering the lake outflow volume of 2.7 × 10⁶ m³, the net inflow to the lake equates to the current annual pumping and therefore it is considered that the current pumping rate is at the upper limit. For meeting the short-term future demand, confined aquifer water may be used and in the longerterm, an additional well field is required outside the Blue Lake capture zone, preferably to the north-east of the city. For water supply security, inflow to the lake along with water quality has to be maintained within the city. Current annual private abstraction within the capture zone is about 4.4 × 10⁶ m³ and in order to maintain aquifer water levels, no additional allocation should be allowed.