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Waterborne parasites that infect both humans and animals are common causes of diarrhoeal illness, but the relative importance of transmission between humans and animals and vice versa remains poorly understood. Transmission of infection from animals to humans via environmental reservoirs, such as water sources, has attracted attention as a potential source of endemic and epidemic infections, but existing mathematical models of waterborne disease transmission have limitations for studying this phenomenon, as they only consider contamination of environmental reservoirs by humans. This paper develops a mathematical model that represents the transmission of waterborne parasites within and between both animal and human populations. It also improves upon existing models by including animal contamination of water sources explicitly. Linear stability analysis and simulation results, using realistic parameter values to describe Giardia transmission in rural Australia, show that endemic infection of an animal host with zoonotic protozoa can result in endemic infection in human hosts, even in the absence of person-to-person transmission. These results imply that zoonotic transmission via environmental reservoirs is important.