Minto council voted by a narrow margin to go ahead with plans to sell bulk water to a business from outside the municipality.
Several councillors said they could not vote in favour of the sale as they have heard no local residents who are in favour of it.
Others argued that once people hear the safety measures built into the new policy, they have no objections to bulk water taking.
Mayor George Bridge says the bulk water policy gives the municipality the power to cut off sales in the event of a drought or water shortage.
Several months ago, Bright's Water Service of Kitchener-Waterloo asked to buy bulk water from Minto. It's expected the sale would generate $10,000 or more annually for Minto.
The town has excess water since usage dropped with the installation of water meters.