Selwyn District Council in mid-Canterbury has approved in principal an $8 million loan to one of the South Island's largest irrigation schemes.
The council had already provided a $5.84 million loan to stage one of the Central Plains Water scheme which opened in September. That loan has since been repaid.
Construction of the second stage is due to begin early next year.
Irrigation schemes are controversial in Canterbury because of their association with the rapid expansion of dairy farming and increasing nitrate pollution in waterways.
Selwyn District Council says most people who made submissions on its latest loan were supportive of it, and that pointed to the economic benefits of irrigation for the region.