Mandatory water restrictions on Auckland businesses could be weeks away as drought continues, posing a threat to the economic recovery from Covid-19 level 4 restrictions.

Watercare said the second level of restrictions would be triggered if storage lake levels declined below 40 per cent, from their current 48 per cent.

"Level 2 would seriously impact on the economy - I'd like us not to be in Level 2 at all," the chief executive Raveen Jaduram told RNZ.

Supplied/Watercare Auckland's Lower Huia Dam in Auckland's Waitakere Ranges, with water levels at 46 per cent

However the likelihood remained, with forecasts for the next week or so including little rain, and consumption likely to increase as some businesses re-open next week in the move to Covid-19 alert Level 3.

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Auckland is facing its worst water shortage since the crisis of 1994, when storage lakes fell to 36 per cent, close to a level that would have brought in rationing.

A dry 2019 failed to top-up storage lakes last winter, and a severe drought through last summer and beyond has drained levels to their lowest in 26 years.

Jaduram previously told Stuff that the current shortage would normally have already triggered mandatory Level 1 restrictions, mostly on domestic outdoor use.

Supplied Watercare chief executive Raveen Jaduram.

The council water company has been urging people during the Covid-19 Level 4 restrictions, to curb unnecessary use voluntarily, and limit showers to four minutes.

"If the levels keep falling, level 2 restrictions are far more severe, it begins to impact commercial and industrial production," said Jaduram.

He told Auckland Council's Emergency Committee on Thursday that it had moved beyond a 1-in-100 year drought, towards a 1-in1000 year event.

None An aerial view of the lake bed in Watercare's Lower Huia water dam in Auckland's Waikatere Ranges.

"We would be asking them to seriously drop their production.

"If we don't get rain, we could be there by the end of May or some time in May," he said.

Since the 1994 water crisis, Auckland has tapped into the Waikato River, adding about 17 per cent to the city's capacity.

That source is running at the maximum allowable level, and an extra winter allowance from the river can not be accessed because the river levels themselves are below normal.

Level 1 water restrictions were mostly domestic, but the next level has the biggest impact on business, said Jaduram.

He highlighted the intersection of Covid-19 impacts on businesses, with water use.

"Cottonsoft, the toilet paper manufacturer is using four times the normal amount of water, due to production," he told councillors.

An increase in consumption on Wednesday he put down to businesses readying to re-open next week, possibly doing more cleaning.

Watercare has previously advised it would seek the enforcement of council by-laws on water use by next week, if there was not a turnaround in declining water storage.