The federal and New South Wales governments are investing $1bn in water infrastructure for rural and regional communities impacted by the devastating drought in NSW.

“Our response to the ongoing drought impacting rural and regional communities is comprehensive and committed,” the prime minister, Scott Morrison, said in a statement on Sunday.

“It deals with immediate needs for financial assistance in and longer-term investments to build drought resilience for the future,” Morrison said.

He said the 50/50 investment would deliver a $650m upgrade of Wyangala Dam in the NSW central west and a $480m new Dungowan Dam near Tamworth. This would also free up NSW funding to allow progress for critical town water projects across the state.

“We want to get these projects under way because this is about water supply and security,” Morrison said. “These projects don’t happen overnight but we’re working as quickly as possible to get all the necessary work done so we can start digging.”

There would also be an initial $24m 50/50 investment for the proposed 100,000-megalitre Border Rivers project on the Mole River, near the Queensland border.

The NSW premier, Gladys Berejiklan, described these announcements as “historic” given the last dam built in NSW was in 1987.

“Dams and other water infrastructure are an important part of the mix when it comes to increasing supply and reliability so that NSW’s water supply is more resilient to the terrible drought being experienced across the eastern states,” she said in the joint statement.

However, the Nature Conservation Council warned the NSW government to retain thorough assessment of water infrastructure projects to avoid further ecological catastrophes, like the mass fish kills earlier this year.

“We need thorough assessment of water infrastructure projects now more than ever to ensure we don’t make matters worse,” the chief executive, Chris Gambian, said in a statement.

“The problems we are facing today are a direct result of this government refusing to listen to its own planning experts, who warned of this looming water crisis six years ago.”

The council said it feared the measures would open the door to the state’s water minister sidelining the planning department and leaving decisions to WaterNSW.

“Bypassing proper environmental checks will compound the ecological and social disasters the NSW government’s has already helped to create,” Gambian said.

“This is going to be a devastating summer across NSW and no amount of political chest beating is going to make it any more manageable.

“We need to reduce our water use, and the best way to do that is by slashing the amount of water allocated to big irrigators and to stop undermining the Murray Daring Basin Plan.”

“Governments stopped building dams 30 years ago for a very good reason. Dams fail to provide water security for local communities, they degrade river systems and cause a host of environmental problems.

“And in the era of climate change and higher evaporation, new dams are unlikely to fill.”

Australian Associated Press contributed to this report