Drought-stricken Northland will have to wait until next summer for construction to begin on a water storage facility.
Up to $30 million has been provided through the Provincial Growth Fund for the Far North, Mid-North and Kaipara to investigate potential water storage sites in the region.
Regional Economic Development Minister Shane Jones says the studies have identified some promising sites to build a series of small-scale reservoirs and create a distribution pipeline.
"An initial site near Kaikohe has been identified and, depending on post-Covi-19 timeframes, construction is expected to be underway there over next summer. Further sites will be explored as the project evolves," Jones said.
"There is strong interest in this project from the wider primary sector, and belief that there is significant potential to grow high-value horticulture in the region if more water was available."
The frequency and severity of droughts are expected to increase due to climate change and having a reliable water supply would be increasingly important, Jones said.
"Water is critical for Northland's economy and wellbeing. It will be even more so now that our regional economies are in recovery mode from the fallout of the Covid-19 pandemic.
"Security of water supply will open up new markets, create jobs and provide new opportunities for Northland."
Jones said further engagement with potential water users will be done when lockdown restrictions allow.