Hawke's Bay Regional Council is proposing the massive expansion of a lake on the Heretaunga Plains to prevent Bridge Pa streams from drying up in summer.
The proposed water storage facility has been granted $5 million from the Provincial Development Unit (PDU) and the council is nowexploring how the expansion on private land at Te Tua Station, near Maraekakaho, would work.
The lake on Mike Glazebrook's farm can currently store between 450-500,000 cubic metres of water.
The expansion could increase that to as much as 3 million cubic metres of water, sourced from the Ngaruroro River during high flow periods.
Storing the water would allow for it to be pumped into waterways like the Paritua Stream which often run dry - most recently leading to the discovery of hundreds of dead eels in the Karewarewa and the Paritua Streams in February this year.
HBRC water security director Tom Skerman said the state of lowland waterways in Heretaunga was a pressing concern.
"[Water] is a resource under immense pressure and stress.
"It is not good enough for these lowland streams to run dry as they frequently do now during the height of summer and unless we act these impacts will worsen with a changing climate."
The PDU funding includes $1.3m for a feasibility study, which includes hydrological and technical work, and community consultation.
A further $3.7m of loan funding to help cover construction costs is dependent of the project's viability being confirmed
The water stored in this dam would be used "almost exclusively" for the environment to offset the collective impact of existing takes, Skerman said.
"Our freshwater challenges are complex, yet we are clear that our focus is on protecting the environment first and foremost.
"We acknowledge the frustration around the time that developing these solutions takes."
It would also help address decades of "frustrations and suffering" relating to water access inequities, particularly for mana whenua.
Skerman said while the Te Tua water storage facility could improve environmental conditions relatively quickly, there was still much work to be done.
"We are not a long way down the track and we really need to engage with mana whenua.
"We have heard very clearly the concerns of the Bridge Pā community in particular and are urgently looking at solutions.
He said any investment in water storage developments, either through expanding the Te Tua facility or developing new storage facilities, is proposed to be paid for by the users of water in the catchment.
HBRC chief executive James Palmer said a lesson learned from the failed Ruataniwha Dam proposal was the importance of having the community's "trust and confidence" and demand to focus on mitigating environmental degradation.
"Until we've satisfied that environmental side, council can't expect anyone to get behind future water storage projects."
He acknowledged water was a divisive issue, owing to previous management strategies, and emphasised the council was taking a new approach.
Financing would be the smallest of the challenges - getting the community on board and resource consent would be harder, Palmer said.
He said water was the "absolute lifeblood of our community".
"The value of freshwater to the community of Heretaunga is hundreds of millions of dollars of economic and huge cultural and social value.
"This is an incredible return on investment."
It was still too early to estimate a total cost for the proposed project, but the council was in a strong position financially, he said.
The Heretaunga storage investigations are part of a regional water security programme to secure the region's freshwater supplies, to protect natural environments and to ensure the life-giving benefits of freshwater are equitably shared.
It includes three pieces of work which are supported by up to $35m of funding from the Provincial Growth Fund - the region's first water assessment, the development of freshwater storage options and piloting the potential of Managed Aquifer Recharge in Central Hawke's Bay to supplement the aquifer and groundwater system.
Federated Farmers Hawke's Bay president Jim Galloway said the expansion could "make a big difference".
"It would be great to keep water in the stream."
He said protecting the environment was important and allowed for water to be used in the horticulture and viticulture sectors.
"Having that [water] for the environment allows the takes people have to continue."
He said anything to improve water security was important.
The idea had been floated around for a while and it was a case of "the sooner the better", he said.