The terrestrial phase of the water cycle can be seriously impacted by water management and human water use behavior (e.g., reservoir operation, and irrigation withdrawals). Here we outline a method for assessing water availability in a changing climate, while explicitly considering anthropogenic water demand scenarios and water supply infrastructure designed to cope with climatic extremes. The framework brings a top-down and bottom-up approach to provide localized water assessment based on local water supply infrastructure and projected water demands. When our framework is applied to southeastern Australia we find that, for some combinations of climatic change and water demand, the region could experience water stress similar or worse than the epic Millennium Drought. We show considering only the influence of future climate on water supply, and neglecting future changes in water demand and water storage augmentation might lead to opposing perspectives on future water availability. While human water use can significantly exacerbate climate change impacts on water availability, if managed well, it allows societies to react and adapt to a changing climate. The methodology we present offers a unique avenue for linking climatic and hydrologic processes to water resource supply and demand management and other human interactions.