The Water-Wastewater Utility is owned by the City of San Marcos and operates a high quality wastewater treatment plant and water system rated superior by the State of Texas. Two thirds of the City's water comes from surface water treated at the City's Water Plant under the operation of the Guadalupe-Blanco River Authority. The utility promotes water conservation and works closely with agencies such as the GBRA, the Edwards Aquifer Authority, the Texas Commission on Environmental Quality and other organizations to develop regional water policies.

The City of San Marcos strives to protect the Edwards Aquifer Recharge Zone which lies under the western portion of the city.