Following a series of highly publicised environmental issues relating to subsidence of rivers, streams, lakes and other surface water bodies, as well as groundwater systems, the longwall coal mining approval and environmental management process in NSW now has a significant focus on predicting, monitoring, managing and rehabilitating adverse effects on surface water and groundwater systems. Due to the recent public and regulatory focus on the issue, future longwall layouts and approvals may be required to demonstrate that unacceptable effects will not be imposed on rivers and streams. This may result in significant changes to panel layouts, or if no acceptable management and rehabilitation measures are available, the worst case scenario may occur where an environmentally sensitive water body may not be undermined. The range of environmental effects that have been directly observed by the author, as well as reported effects, or effects that could be anticipated from subsidence in NSW coalfields are outlined. Measures required to assess the potential effects on environmental systems, potential rehabilitation requirements, potential risk assessment and management procedures relevant to water related issues are discussed. The effects of longwall subsidence are outlined for a range of geomorphological areas, whilst an indicative process that can be used to assess the potential severity of effects on surface water and groundwater systems, which leads to the degree of attention required to manage them, are described.