Documents obtained under a Freedom of Information (FOI) request have revealed the expected cost of the plan to raise the Warragamba Dam wall.
Since 2016 the government has said construction costs for raising the wall by 14 metres would be approximately $700 million.
However offsets, including heritage and biodiversity costs, could almost double the costs to more than $1 billion.
In documents seen by the Advertiser Water NSW advised the NSW Treasury in 2019 that it would not have any funding available to support the Warragamba Dam wall plan due to its expected $1.6 billion price tag.
The document, obtained by Slattery and Johnson Consulting through FOI, stated that additional equity from the NSW Government would be required in order to fund the plan.
Colong Foundation for Wilderness campaign manager Harry Burkitt said the documents revealed the real cost of raising Warragamba Dam wall.
He said the $1.6 billion figure excluded the World Heritage offset cost of $1.34 billion, which was leaked to the Sydney Morning Herald in late 2020.
"Minister Ayres can no longer squirm his way out of questions about the real cost to taxpayers of the dam project," Mr Burkitt said.
"We are talking about every Sydney household forking out a minimum of $860 for an ineffective flood mitigation dam that is being pushed by floodplain developers.
"Quite simply, this is nothing but a $1.6 billion in-kind subsidy to the floodplain developers of western Sydney.
"Raising Warragamba Dam wall is an obscene waste of taxpayers' money which will fail to alleviate flood risk and do enormous cultural and environmental damage to the Blue Mountains.
"The NSW Government should be urgently prioritising construction of flood evacuation roads in western Sydney for existing floodplain residents."
The state government has proposed raising the dam wall in an effort to mitigate the risk of flooding in the Hawkesbury Valley region.
However indigenous residents, scientists, environmental action groups, local councils, politicians and the United Nations Educational, Scientific and Cultural Organization (UNESCO) have raised various concerns about the plan.
Western Sydney minister Stuart Ayres did not respond to Advertiser questions about the expected cost for the dam wall raising project.
Instead his office sent through the following statement from a NSW government spokesman.
"The final cost estimate for the proposal to raise Warragamba Dam for flood mitigation will not be known until the Environmental Impact Statement (EIS), final business case and detailed design are completed, any conditions of planning approval are known, and a competitively priced contractor is selected," the statement said.
"The NSW Government remains committed to the completion of the EIS and Final Business Case to fully assess the project on its merits.
"No final investment decision will be made until all environmental, cultural and financial assessments and planning approvals are complete."