The Government plans to give water storage and irrigation projects a shot in the arm, and later this year will reduce regulatory "roadblocks" constraining the sector in Canterbury.
"The Government is committed to ensuring that water storage and irrigation projects which meet environmental standards, and which are good economic propositions, can happen in a decent time frame," Prime Minister John Key said in an outline of his policy agenda to the first sitting of Parliament for 2010.
"This will include removing regulatory roadblocks to water storage in Canterbury," he said.
The area of land being irrigated in New Zealand has doubled every decade since the 1960s and irrigation takes up 77 percent of all allocated water. Canterbury has nearly 70 percent of the irrigated land and about 86 percent of water used in Canterbury is used for irrigation.
Water is currently allocated to farmers under the Resource Management Act, with most paying only for the consent process and monitoring, but the Parliamentary Commissioner for the Environment, Jan Wright, has warned dairy farmers are not paying enough for the pollution they cause and a price needs to be put on water.
The Canterbury regional council, Environment Canterbury, last year announced an ambitious water strategy it said would restore waterways affected by intensive land use, including farming, and would feature fences and planting stretching hundreds of kilometres to protect streams and wetlands.
But the council also said special legislation would be required to provide a legal framework for the 10 committees that the strategy suggested oversee water zones in Canterbury.
Changes to the Resource Management Act and the Local Government Act might be necessary to allow the new structure to operate.
The Government has created a land-and-water forum to look at water allocation and report to the Government in July this year.
Nationally, a farmgate value of around $800 million has been estimated for the 1100 million cubic metres of water used each year for irrigation, from a total consumption of 1920 million cubic metres. Another 350 million cubic metres is used for livestock.
Agricultural officials have estimated that the country could sustain another 200,000 hectares of land being irrigated -- adding $330 million earnings annually at the farmgate.
According to the Business Council for Sustainable Development the existing system of water allocation will result in water in all major catchments being fully allocated by 2012.
Options which have been previously canvassed include making it easier for farmers and other users to transfer water consents -- also likely to lead to a commercial trade in water rights -- and axing the present first-in, first-served allocation system for water.
Between 20 percent and 80 percent of water allocated for commercial use -- including municipal water supplies -- is not being used at any one point in time, and the Business Council has said government intervention to ease the transfer of water from one commercial user to another could boost the economy by between $180 million and $300 million annually.