"It will be enacted over two to three years but councillors will need to make a decision before the end of the year."
Watson said the fundamental problem with the proposed reforms was projecting costs for ratepayers.
"If a ratepayer comes to me now and says 'what will be my bill' I can tell them but if the council is no longer managing the three waters how would we make those projections?"
Watson said there was no indication as to how the different three water authorities would be arranged and what the boundaries might look like.
"My understanding is that each aggregation is likely to serve an area covering around a million people so how will that look if, say, a larger authority decided to opt out of that grouping?"
Independent Three Waters steering committee chairman Brian Hanna said it was still a "live question" as to whether authorities would be able to change their minds after opting out of the Government's programme and it would be unlikely they could do so within a short timeframe.
"That would be very hard to do," Watson said.
"The entities would be structured to work for the authorities that have opted in so it would have to be restructured again to accommodate an authority that wanted to opt in later."
Watson is co-chairman of the Zone 3 Local Government New Zealand group which includes 19 central North Island councils.
The grouping includes Palmerston North, Napier and New Plymouth city councils and Taranaki Regional Council as well as district councils.
"There are mixed responses to the Three Waters Reform Programme," Watson said.
"At our last Zone 3 meeting two weeks ago some expressed enthusiasm while others have strong reservations.
"We need more information in order to make such an important decision and it does raise a lot of questions about what the role of councils will be. Local Government Minister Nanaia Mahuta has said that local government will be more important than ever but we need to know what that will look like."
Mahuta recently announced an independent local government review which is expected to take two years.
The Government has promised a public information and education campaign on the Three Waters Reform Programme before Cabinet makes decisions on reform proposals mid-year.