A new water storage dam in the Waimea catchment in New Zealand's South Island may save the region NZ$80-135M (US$55.5-93.6M) over 25 years, according to an independent economic analysis report.

The Waimea Water Augmentation Committee (WWAC) says the report also shows the region could lose between NZ$14-25M (US$9.7-17M) a year in agricultural earnings alone in the event of a one in 25-year drought. The region last experienced a drought of that magnitude in 2001. The report forms part of the committee’s investigations into the feasibility of building a new water storage dam in the district.

WWAC has chosen the Upper Lee Valley as its preferred site for a NZ$17M (US$11.8M) dam providing water for 50-100 years’ growth in the region. The innovative dam, potentially capable of electricity generation, will release stored winter water into rivers and aquifers, from where it will be pumped for irrigation and urban water supply.

The proposal is driven by a 22% to 60% over-allocation of the Waimea basin’s water, which, under current permit limits, could allow sections of the Waimea river to run dry and cause saltwater intrusion.

The Waimea basin is home to horticulturalists and farmers using 3700ha of irrigated land, industry and Richmond’s growing urban population. The proposed dam providing irrigation for a further 1800ha in Waimea basin could increase agricultural production by NZ$20-30M (US$13.9-20.8M) a year, according to the committee’s summary of the report.

Electricity retailer Network Tasman had expressed interest in exploring the dam’s potential for hydroelectric generation.