A methodology is demonstrated to account for the use and productivity of water resources. This water accounting methodology presents useful information to water resource stakeholders and decision makers to better understand the present use of water and to formulate actions for improvements in integrated water resources management systems. Based on a water balance approach, it classifies outflows from a water balance domain into various categories to provide information on the quantity of water depleted by various uses, and the amount available for further use. The methodology is applicable to different levels of analysis ranging from a micro level such as a household, to a macro level such as a complete water basin. Indicators are defined to give information on the productivity of the water resource. Examples from Egypt's Nile River and a cascade of tanks in Sri Lanka are presented to demonstrate the methodology.