The Board of Inquiry into the Ruataniwha Dam appears to have upheld some conditions which the Hawke's Bay Regional Council has said makes the $600 million project unworkable.
The board sat for 29 days and considered about 28,000 pages of evidence in considering the resource content application for the Ruataniwha Water Storage Scheme and Plan Change 6.
On Thursday afternoon it issued its final decision in a 700-page report confirming nitrogen leaching levels from agriculture at 0.8 milligrams per litre, which would ensure the ability of rivers to sustain life.
The Hawke's Bay Regional Council has previously acknowledged that the Tukituki River already significantly exceeds the 0.8 milligram per litre limit and it appears that would leave no room to further intensify agriculture in the catchment.
The Board of Inquiry said its final decision on the water storage project and associated Plan Change 6 - which sets minimum flows and water quality measures for the Tukituki catchment - gave rise to a range of competing interests.
"A major issue concerned the balancing of intensification of land use with the protection of the
environment, in particular the river system within the Tukituki catchment. Cultural issues, especially the relationship between Maori and the waters in the catchment, were also prominent," it said.
The regional council and its investment company, HBRIC, said on Thursday they are studying the final decision and it would be some days before they could comment.
Council chairman Fenton Wilson and HBRIC Ltd chairman Andy Pearce said staff would report back to council and the investment company in the near future. "It is expected to be later next week before the council and HBRIC Ltd will be in a position to make any informed comment," they said in a statement.
Radio New Zealand News understands HBRIC has been preparing a High Court challenge to the Board of Inquiry's final decision. These decisions can only be challenged on points of law, and it is unclear whether the nitrogen limits can challenged on this basis.
Mr Wilson said on Wednesday he would not comment on whether the council would challenge the board's decision. It was waiting for the final decision and was seeking to find a balance between environmental protection and economic growth.
Critics of the scheme, such as councillor Tom Belford, have said the regional council has a major conflict of interest in being the developer of the dam and the environmental regulator in Hawke's Bay.
For the council to proceed with the dam development, it would have to substantially weaken the environmental protections put in place by the Board of Inquiry. This is despite HBRC saying the primary reason it wanted to build the dam was to improve the environmental condition of the Tukituki River.
Opponents say the scheme is even more tenuous, now that the Board of Inquiry has upheld strict environmental conditions.
Environmental Defence Society chairperson Gary Taylor said on Thursday the project was marginal to begin with and leaves big question marks over the entire plan.
"It certainly means that the level of intensity of land use that was originally assumed by the dam proponents is less and given that the project was marginal in the first instance, it's probably even more so now."
Fish and Game says it appears the Board of Inquiry's final decision has weakened environmental protections. Scientist Corina Jordan says the board has not changed the nitrogen limits for waterways in the plan change.
But Ms Jordan says on initial review, these limits are not reflected in the consents for the dam itself, which could allow more intensive agriculture and turn rivers toxic. She says Fish and Game is still going over the detail of the decision and its implications.
Other roadblocks loom
As well as apparently not having a workable resource consent, the Ruataniwha Dam also had other major hurdles to overcome. It lost $100 million in investment money when institutional investors Trustpower and Ngai Tahu pulled out.
Trustpower said the investment was too risky and the returns were not high enough. Ngai Tahu was a piggy-back investor with Trustpower, relying on its expertise in building and investing in dams to guide its investment. It pulled out after a suitable replacement for Trustpower could not be found.
Not a single farmer has signed a binding contract to buy what would be amongst the most expensive water for sale in the country at about 26 cents per tonne under pressure. For construction to begin, the council must have signed contracts to supply 40 million tonnes of about 90 million tonnes of water available. Non-binding expressions of interest signed by farmers totalled 44 million tonnes.
The council originally had a deadline of the end of this month to sign up the required number of farmers, but this has now been pushed back to the end of September.
The council also does not know the final cost of the dam with negotiations continuing with the preferred contractor OHL Hawkins.
The Board of Inquiry, chaired by Justice Lester Chisholm, said one of the most contentious features of the proposal was Hawke's Bay Regional Council's approach to managing phosphorus and nitrogen.
The proposed HBRC plan adopted what was described as a "single nutrient" approach, focusing on the management of phosphorus.
In its findings, the board rejected this approach in favour of a 'dual nutrient' control which manages phosphorus and nitrogen.
Environmental groups had been pushing for nitrogen levels to be set at 0.8mg/l as a level which would ensure the ability of rivers to sustain life.
The Board of Inquiry was not convinced by Hawke's Bay Regional Council's argument that nitrates leeching into waterways from livestock urine don't need to be managed. It favoured arguments put forward by the likes of Fish and Game that nitrates need to be managed in order to sustain life in waterways.
Biggest NZ dam
The proposed Ruataniwha dam would be the biggest irrigation dam built in New Zealand, holding more than 90 million tonnes of water.
The Hawke's Bay Regional Council said the proposed dam has the potential to supply secure irrigation to 25,000 hectares of land for irrigated farming, while improving the water quality and summer flows in the Tukituki River.
The National Party made irrigation a plank of its economic growth agenda in the 2008 and 2011 election campaigns, with plans to subsidise massive irrigation dams to intensify agriculture and boost the economy along the east coast of New Zealand.
The aim is to lift the contribution of exports to gross domestic product from 30 percent to 40 percent by 2025.
The Ruataniwha water storage project is the most advanced of 12 proposed irrigation schemes which have won taxpayer money from a $35 million pool to get such projects to an "investor-ready" stage.
The Government has earmarked $400 million from the partial sale of State-owned assets to co-fund the irrigation and water storage schemes.