The Canterbury Regional Council has failed to act against farmers who have abused their water consents, Forest and Bird says.
Information obtained by the environmental organisation Forest and Bird showed 376 serious breaches of water consents in the year to July, 2014, with another 23 requiring enforcement action.
It said there have been cases where streams have run dry and in one case a farmer took 31 million litres more water than permitted in a six-week period.
Other breaches were for either taking water while a river was restricted, taking more than the allocated amount, faulty water-measuring devices or not submitting data to the council.
Forest and Bird lawyer Peter Anderson said none of the transgressions that year resulted in a fine, and the council, known as ECan, needed to start enforcing its own rules.
"(The) Resource Management Act has very significant enforcement powers in terms of prosecutions, which have terms of imprisonment, and fines in the hundreds of thousands of dollars.
"Yet ECan's not using those tools to address what seems to be a very serious issue," he said.
The council had issued and abatement notice for an irrigator who continuously overused water for three seasons in a row, and it was behaviour like this that was putting stress on the region's waterways, Mr Anderson said.
Irrigation New Zealand chief executive Andrew Curtis said farmers who consistently over-extract should face consequences, but there were concerns about whether the water measurements were accurate.
"It sounds really easy to just put a meter on something and just get some data from it, but... water measurement in New Zealand is still in its infancy," he said.
There were plans in place to ensure the data being recorded by water meters was robust and accurate, Mr Curtis said.
Federated Farmers' Canterbury branch president, Lynda Murchison, said farmers should be given the benefit of the doubt unless they were serial offenders.
"Everyone makes a mistake every now and then, and you have a conversation.
"If you have someone who's deliberately and consistently taking the mickey then you hope they would take stronger action, because if you don't, it ruins the game for everybody," she said.
The Canterbury region has about 5900 water-take consents - more than three times any other region in New Zealand - and a surge in farms converting to dairy has meant more demand placed on the region's water resources.
Richard Purdon, the council's principal resource management advisor, said the evidence needed for prosecution was very high and over the past two season no breaches have reached that threshold.
He said abatement notices and fines were issued.
Mr Purdon said since metering requirements came into force in 2012, it has been working with nearly 6000 water users.
"Given the scale of the task in Canterbury this has been a huge job - it is now largely in place and our focus is on dealing with the small number of people who have not complied, as well as encouraging water use and nutrient efficiency."
He said more than 90 percent of irrigators were now measuring and reporting.
All those who have yet to install the meters - about 500 people - have been contacted, as the council wants everyone to have a water meters by July, Mr Purdon said.