Dam near Nelson could be dead in the water after $20m shortfall revealed

A controversial dam project in the Tasman region could be all but dead in the water, with local council and investors scrambling to cover a $20 million shortfall.

Today the project was caught in a crossfire between outraged ratepayers and industry supporters.

"A large dam is not economic," says dam opponent and Golden Bay resident Dr Roland Toder.

"Tasman District Council (TDC) need to understand it and TDC needs to abandon that dam right away".

The Waimea Community Dam is the Tasman District Council's preferred solution to what it says is a water shortage 'crisis' facing the region.

The three-year project will be in the upper Lee Valley and compromises of a dam and a storage reservoir.

However, costs have ballooned.

The original estimate was nearly $80 million but construction costs increased by $18 million, then additional costs were estimated at $8 million, bringing the overall price to just under $102 million.

Waimea irrigators are paying half, Tasman ratepayers a third and Government and Nelson ratepayers the rest.

Dr Toder believes there are a range of "less expensive" alternatives.

"For example, make water tanks compulsory for every new build. Fix the water leakage, enhance greywater usage. Establish storage ponds along the Waimea River".

Tasman mayor Richard Kempthorne believes the costs of those options and others would be "very significant".

Residents and businesses are now giving feedback on plans to tighten restrictions on water use when it's in short supply.

At the severe end of the scale, water could only be used for essential health and firefighting needs, a scenario the council predicts will take place every six to 10 years.

Nelson Pine Industries chief executive Murray Sturgeon told 1 NEWS irrigators aren't the only group concerned by the changes if a water storage solution isn't found.

"The restrictions would be unacceptable to our company. That in a drought could represent our plant being out for 50 days a year.

"And that's going to be very, very serious conditions for other companies like Alliance freezing works, Fonterra," he says.

A decision on the dam's future is expected at the end of the month.

Opponents and supporters of the Waimea Dam clashed in a protest over its future. Source: 1 NEWS