The High Court has declined Forest and Bird's challenge to a decison revoking conservation park status for Hawke's Bay land to be used for the Ruataniwha Dam.
Department of Conservation is to exchange 22 hectares of conservation land from Ruahine Forest Park for 170 hectares of farm land.
The conservation land is home to several threatened species.
Forest and Bird argued under law DoC did not have the power to swap protected conservation park land.
Justice Palmer said in the decision he agreed with some of Forest and Bird's submissions on the law.
But he dismissed the challenge because he ruled the decision came within the broader conservation purpose of the legislation.