Narrandera's Irrigation Canal which carries water to the Murrumbidgee Irrigation Area flows through the town. It begins west at Berembed Weir where water is taken from the Murrumbidgee River. The canal follows the natural bed of Bundidgerry Creek and in places is very wide and has no levee banks. Lake Talbot was formed in 1924 when the bank of the Irrigation Canal gave way, flooding the river flat between the canal and Bundidgerry Hill. The shallow lake was allowed to remain and became an important recreational feature of the town. The eastern end of the lake is used by water skiiers. The western end is a wetland habitat for native fauna. A wetland has been made near Lizard Drive, only from the Murrumbidgee River. The Narrandera Wetland is a collection point for storm water run-off from the town.