At the Waiau's junction with the small Wairaki River the plain widens. From here the Waiau is fed by numerous other streams and burns, notably the Lill Burn close to Clifden and the Alton Burn, as well as the Orauea River, close to Tuatapere. As the river nears the coast it widens, with several small low-lying islands contained within its channels At its mouth on Te Waewae Bay, the river forms a long tidal lagoon separated from the sea by a narrow sandbar which extends along the coast for several kilometres. There are diverse species in the forested catchment basin of the Waiau River. Vegetative understory within most of the Fiordland National Park includes numerous fern species including the crown fern ("Lomaria discolor"). Several species of endangered birds live around the shores of Lake Te Anau, and the upper Waiau River, notably the Takahē ("Notornis hochstetteri"). An area between the Middle and South Fiords called the Murchison Mountains is a sanctuary set aside for these birds. The western shore of Lake Te Anau also holds the Te Ana-au Caves, from which Lake Te Anau derives its name. Toxic levels of the algae benthic cyanobacteria were found in December 2018 where the Waiau River runs by Tuatapere. High levels of nutrients or sediment run off into waterways combined with high summer temperatures and low summer flows are the main factors that lead to the growth of toxic algae. In Summer 2019 and 2018 the Waiau River had high levels of Escherichia-coli, Environment Southland gave the river an 'amber' warning, advising caution if swimming. E-Coli comes from the intestines of humans or animals and is introduced to the environment through feces. In December 2019 the New Zealand Government set up the 'Thriving Southland' Change and Innovation Project, allocating nine million dollars across Southland's 21 river catchment groups to help farmers and growers lift their environmental sustainability. Near the mouth of the Waiau River is the Te Wae Wae wetlands, built by the Waiau Fisheries and Wildlife Habitat Enhancement Trust on 25 hectares of land leased from Meridian Energy and the Department of Conservation. This wetland habitat allows juvenile whitebait to grow to maturity and other wetland species to breed. It is the largest of several wetland areas developed by the trust to increase the diversity and habitat of Waiau native species and improve the water quality of the river.