This paper quantifies the effect of three policy levels on the water and energy futures of Melbourne, Australia. During a time of severe water shortages attributed to climate change, water strategies lacked consideration of energy consequences. Modeling, guided by urban metabolism theory, demonstrated that a compact urban form, reduced water consumption by 90 GL/a, compared with a sprawling city, and had greater water conservation impact than simulated demand management measures. Household water conservation, coupled with increased use of solar hot water systems, reduced grid energy use by some 30 PJ/a. Desalination, tripled water supply energy demand, growing to a total of 4.5 PJ/a, by 2045. While the increase is less than 1% of total Melbourne urban energy use, it contributes to a substantial increase in the energy bill for urban water provision. Importantly, the energy impact could be offset through demand management measures. Recommendations for the combined management of water and energy include improving energy characterization of the urban water cycle; impact-evaluation of regional plans; using total urban water and energy balances in analysis to provide context; and developing reporting mechanisms and indicators to help improve baseline data across the water and energy systems.