Denmark, on Western Australia's south coast, is described as "one of the wettest places in WA", but it is running out of water, prompting desperate action to keep the tourist town from running dry.

Water Corp — the State Government-owned main supplier of water in WA — will spend up to $32 million building a pipeline stretching more than 60 kilometres between Denmark and its neighbouring regional city, Albany, to shore up supply into the future.

The town's residents will also face tighter water restrictions as of October 1 and it is expected water will be trucked into the town by the end of summer.

Denmark is a tourist town known for its surf, forests and rainy weather, receiving on average more than 1,000 millimetres of rainfall a year.

Faced with declining rainfall and four consecutive years of some of the driest conditions on record, the town's drinking water supply, which is collected purely from rainfall, is running short.

Water Minister Dave Kelly says a multi-million-dollar pipeline is the only option. ( ABC News: Jacob Kagi )

WA Water Minister Dave Kelly said it was a costly measure, but they had no choice.

"Denmark has had three of its worst years rainfall-wise since 2014," he said.

"We've now come to the conclusion Denmark's two dams are simply not reliable enough to supply the town. We just don't get the rainfall anymore because of climate change.

"Some people think climate change is a problem that we'll need to deal with in the future, but Denmark's water supply cannot simply rely on rainfall anymore so this financial commitment is a direct result of the impacts of climate change."

The drying climate has led to a significant drop in streamflow into Denmark's two dams.

According to Mr Kelly, the long-term average streamflow into the Quickup Dam is 2,000 million litres.

But he said this year it had recorded just 292 million litres: about 14 per cent of the average.

"The south-west of Western Australia is one of the places on the planet most impacted upon by climate change," he said.

"And what we're seeing with the water supply in Denmark is a really good example of how severe climate change is impacting that town."

Used to rain '364 and a half days' a year

Denmark residents, who have become used to the consistent rain all year round, say the move — while shocking — makes sense.

Resident Rob Plant says he's noticed drier weather in Denmark in recent years. ( ABC News: Tom Edwards )

Youngs Siding resident Rob Plant said he had noticed a difference in the weather in recent years.

"People used to say it rained 364 and a half days a year here and … you'd get misty rain all the time," he said.

"But I have noticed it over the years, it's getting drier and drier and drier."

Others in town, such as Carl Hesser, agree.

"Growing up playing junior football, we used to play the entire season, it felt, in the rain and being an adult playing football in the past few seasons that I played, I was wearing sunscreen and zinc," he said.

Whole region faced with declining rainfall

According to the Bureau of Meteorology, rainfall in Denmark has been steadily declining since the 1970s.

In the eight months until September this year, the town received 536.4mm of rain, down from a long term-average of 777.1mm for the same period.

The bureau's WA spokesman, Neil Bennett, said it was typical of the whole of the south coast of WA.

"We've seen some very small rainfall amounts over the last couple of years in particular," he said.

"So far, this year to date is the fourth lowest on record, last year was the second driest on record.

"That is part of a trend we've observed not just in Denmark but all along the south coast.

"Really the whole of the south west of WA is experiencing this decline in rainfall, and that's something we've seen across the whole south of Australia but it's true to say the south of WA is experiencing these dry conditions a little earlier than the rest."

Mr Bennett said the trend was expected to continue.

"Certainly looking at the outlooks, there's nothing to suggest we'll switch back to the wetter winters experienced in the 1940s," he said.

Future of Albany water source

Denmark's drinking water supply is reliant on rainfall ( ABC: Tom Edwards )

The move to pump water from Albany to Denmark has raised concerns about how reliable Albany's water supply will be in the future.

Mr Kelly said, longer term, contingency plans would be needed for the neighbouring city.

"Albany's water supply can, in the short term, cope with the additional demand placed on it by providing water to Denmark, but in the long run we're going to have to expand supply in Albany in as well," he said.

"That's due to a combination of figures such as a growth in population and impact again of climate change.

"Most of Albany's supply is groundwater so while we're always looking for new groundwater sources, it is likely in the next 10 to 15 years that we will need a desalination plan at Albany as well."

Construction of the pipeline is flagged for 2020, with routes still to be decided on.

Mr Kelly said he expected it would take two years to complete once construction had started.