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Water providers and environmentalists are engaging in confrontational debates about the need for new water supply projects. The controversy is fueled by uncertainty about growth and about the water savings from potential conservation and wastewater reuse projects. This controversy has slowed water supply development to the point where many communities now routinely operate their system above the "safe yield". This means, for surface water systems, that during a drought water providers will have to ask or force customers to temporarily cutback consumption. What is needed is a balanced approach that assesses all factors as utilities plan for providing adequate water supplies. Today's challenge is to fully integrate these findings on demand management into the water supply planning process. This paper will demonstrate how to do that integration and optimize the new supply/demand management balance. Includes 8 references, tables, figures.