The waterways of the Otway Coast fall predominantly within the Otway Coast Basin, with some of the waterways in the northwest of the area falling in the Barwon River Basin. This area contains the most individual waterways of the entire Corangamite region, flowing through the mostly forested Otway ranges. Major waterways for this region include the Gellibrand River in the west, Aire River in the centre and Painkalac Creek in the east.

The water quality in this Landscape System is generally good as large portions of the area are national parks or forested. Some parts such as the Gellibrand River, Aire River, Barham River and associated tributaries have been subjected to grazing pressures with livestock accessing waterways causing damage and impacting on water quality.

The Anglesea River is also subject to acidification events which has a major impact on water quality and usability.

Water management activities compounding the impact of drought occurrs most notably for Painkalac Creek. The Otway Coast Basin also holds the greatest proportion of near natural flow regimes in the Corangamite region. Parts of the Gellibrand River also show summer stress with long periods of low flows.

The West Barwon Dam is a significant waterbody within the Barwon River Basin area of the Otway Coast, which provides drinking water for greater Geelong. The Barwon River has been assessed as having flow regimes that were highly modified due to water off-takes.

The Gellibrand River estuary intermittently opens or closes depending on the prevailing freshwater river flows and tidal movements. Estuary closure can result in flooding of adjacent land which results in artificial estuary openings. However, this inundation is a natural process and plays an important role in the life cycle of many plant and animal species that reside or visit the estuary as well as the cycling of nutrients and deposit of sediments. In 2017 the Corangamite CMA developed the Gellibrand River Estuary Management Plan to guide management of the estuary and surrounding wetlands including the Latrobe Creek wetlands.

The Corangamite WaterWatch program, a citizen science volunteer program, regularly monitors water quality parameters at many sites across the catchment. The water quality of the waterways in the Otways Coast were mostly healthy, salinity levels in the riverine sections of the waterways were mostly low, though marginally above the SEPP (Waters) objectives whilst the oxygen levels in the water were marginally below the objectives. Turbidity levels were low and pH levels were mostly healthy, phosphorus levels in some waterways may be of concern. All waterways displayed a seasonal trend of increased electrical conductivity over the summer and autumn seasons resulting from reduced river flows, during these times dissolved oxygen levels were also lower though mostly remained within the healthy range.

In Wye River the water quality was mostly good displaying, relatively low salinity and turbidity, healthy pH and oxygen levels, phosphorus levels were marginally high. The macroinvertebrate community indicates the catchment to be mostly healthy. In the estuary, mouth closures occur most years during the summer season and are generally short lived. As summer river flows decline a salt wedge develops as tidal driven sea water enters the estuary. The water quality in the estuary was mostly very good, even though salinity stratification was evident oxygen levels remained within healthy levels. All water quality parameters remained mostly within the healthy range over the period monitoring was conducted.

In St George River the water quality monitoring was undertaken in the estuary only during the summer to autumn season and captures a time after seasonal river flows have declined and the salt wedge had already developed, with significant salinity stratification, this stratification resulted in very low dissolved oxygen levels (< 10% saturation) in the bottom waters, particularly at the upstream site, these low levels would be harmful to salt water dependent species. At the most downstream site the stratification also resulted in lower dissolved oxygen levels in the bottom waters, though not as low as that observed upstream. During this time the pH remained mostly within the healthy range, with low turbidity.

In the Erskine River on most occasions the water quality was good, displaying relatively low electrical conductivity, turbidity and phosphorus levels and healthy pH and dissolved oxygen levels. At the most downstream riverine site increases in electrical conductivity are observed likely due to reduced river flows and possibly due to estuarine influences. Increases in phosphorus over summer are also evident. The aquatic macroinvertebrate community (2016 survey) indicates the Erskine River catchment to be healthy. The estuary is mostly tidal dominated with a brief period over winter and spring when freshwater dominates, at these times oxygen levels are healthy, as the salt water penetrates the estuary stratification occurs resulting in lower levels. Over summer in the upper estuary the water column was stratified. This stratification resulted in very low oxygen levels (< 10% saturation) in the bottom waters, these low levels may be harmful to salt water dependent species. Nearer the estuary mouth the water column was also stratified however the bottom oxygen levels were much higher, this is due to tidal influences bringing freshly oxygenated sea water into the estuary on each high tide. During this time the pH remained mostly within the healthy range, with mostly low turbidity.

In the estuarine reaches greater variability was observed particularly over the summer and seasons when river flows decline and sea water moves up the estuaries, in many instances salinity stratification occurs reducing the potential for oxygenation of the saline bottom waters, the further the distance from the estuary mouth and the deeper the estuary results in lower oxygen levels, all of the estuaries intermittently close to the ocean with artificial openings common, particularly the Painkalac Creek and Anglesea River.

The water quality in the freshwater reaches of Painkalac Creek was marginal (limited monitoring may not reflect the true condition of the water quality in Painkalac Creek), whilst displaying healthy pH and low phosphorus levels, oxygen levels were regularly below 50% saturation. The salinity was also marginally high for a stream in the Otway Ranges and turbidity levels indicate sediment movement possibly associated with unrestricted stock access and reduced riparian vegetation. Aquatic macroinvertebrate monitoring indicated the waterways to be mildly impacted.

The mouth condition assessments indicate the Painkalac estuary is closed to the ocean for most of the time. The longest duration of closure of the estuary mouth was from September 2014 to July 2016. Outside of this time the estuary mouth generally opens to the ocean once or twice per year, these openings are mostly artificial and are conducted due to the risk of inundation of built infrastructure on the estuary floodplain. Over the summer to autumn seasons the water level within the estuary often reduces due to low or no freshwater inflows and increased evaporation, as river flows increase during winter and spring the water level increases within the closed estuary.

The water quality in the Painkalac estuary was mostly good, though at times was marginal and displayed several seasonal trends. During winter and spring there is a short period of near freshwater dominance due to rainfall in the catchment and increased river flows, following the opening of the estuary mouth salt water penetrates up the estuary and stratification is evident with the bottom water salinity higher than the top water. For most of the time the estuary water is brackish. In 2013 the salinity indicated the water to be hypersaline resulting from low inflows and evaporation. Due to the salinity stratification dissolved oxygen levels in the bottom waters was at times critically low particularly in the upper reaches of the estuary. On several occasions high levels potential algal growth.

The pH levels in Painkalac estuary also displayed a seasonal trend with low levels (acidic conditions) occurring during late autumn and winter usually at times of the first significant rainfall event, due to the release of acidic waters from the catchment following the dryer summer seasons. Very low levels (< 6.0 pH units) occur most years at these times with the lowest recorded in April 2017 (4.3 pH units) and are likely to impact on the plants and animals present. Often the stratification of the water column contains the acidic conditions in the top waters, these conditions marginally improve as the waters move toward the estuary mouth though are evident throughout the estuary. The turbidity was mostly low with higher levels recorded at times of increased river flows indicating sediments are being delivered to the estuary, likely due to land-use practices in the catchment.

The monitoring undertaken in the upper catchment of the Gellibrand River in Love Creek indicate the waterway to be in marginal to good condition, whilst displaying low salinity, turbidity, reactive phosphate and healthy pH levels, low oxygen levels on occasions potentially indicate high instream oxygen demand particularly over summer when river flows are reduced. Macroinvertebrate
monitoring identified several pollution sensitive bugs to be present, the complete community composition indicates the creek to be healthy.

Further down the catchment the Carlisle River joins the Gellibrand River, monitoring of the water quality in the Carlisle River indicates it to also be in good condition similar to Love Creek with occasional low oxygen levels particularly during times of low river flow over summer and autumn.
Downstream from the confluence with the Carlisle River on the Gellibrand river the water quality is maintained in good condition. Lower down the catchment the water quality whilst mostly healthy, shows some decline with increased turbidity indicating increased sediment entering the waterway.

As the Gellibrand River enters the estuary at the Great Ocean Road approximately fourteen kilometres from the estuary mouth there is a slight increase in turbidity, this area of the estuary is shallow compared to further downstream and saline water has rarely been recorded at this site.
However over the next eight kilometres declines in water quality are evident with decreases in pH levels indicating acid sulphate soils are likely in the area. Estuary flood plains are commonly associated with acid sulphate soils, disturbances such as channel drains used to reduce flooding often expose these soils which upon wetting release sulphuric acid into the waterway lowering pH levels.

There is evidence the salt wedge penetrates this area some ten kilometres from the estuary mouth at times of low river flows. This results in stratification on a salinity gradient. The effects of stratification are also evident in Latrobe Creek at the township of Princetown. At times of estuary closures the effects of stratification particularly as river flows start to increase can impact the whole estuary as the saline bottom waters become separated from the surface, oxygen levels soon decrease to a level that can be lethal to saltwater dependent fish. Fluctuations in dissolved oxygen is a natural occurrence in salt wedge estuaries, such as the Gellibrand River estuary. The overall water quality in the Gellibrand River estuary is marginal to good, every year over the summer to autumn seasons the estuary mouth closes due to reduced river flows, it is during these times when the water quality is most variable.