The final Board of Inquiry decision on the Ruataniwha dam has made the scheme more viable for farmers, Irrigation New Zealand's chief executive believes.
The board on Thursday ruled the dam and the Tukituki catchment plan can proceed, but nutrient run off from farming must be kept at levels that ensure the area's rivers can sustain life.
Irrigation New Zealand chief executive Andrew Curtis said irrigators are pleased the board has changed the rule that would have required individual farmers to meet nitrate leaching limits.
Mr Curtis said the decision made the scheme more viable for farmers by raising the upper threshold for leaching nitrogen, though it would still be challenging for a number who already exceed the nitrogen limits.
Overall, he said, the ruling would allow sustainable development in the area irrigated by the proposed dam.
National water quality questions
Scientists and environmentalists say the ruling has implications for the national freshwater management plan.
Hawke's Bay Regional Council had proposed nitrogen in the catchment should only have to remain below toxic levels - a condition similar to the policy in the Government's draft freshwater management plan.
Fish and Game environmental manager Corina Jordan told Radio New Zealand's Morning Report programme the decision showed regional councils could not keep allowing big increases in nitrate levels.
She said new research indicated farmers are able to reduce leaching by 20 percent and increase profit by 2 percent, and it was important to let farmers know limits on leaching will not put them out of business.
"What it may do though it may constrain further land use intensification and that's what we have to look at in the Ruataniwha catchment."
Environmental scientist Mike Joy said the ruling had made it clear that is not an acceptable control, and that the Government would now need to reconsider its plan.
Dr Joy said the ruling meant the project was not economically viable. "We've reached the limits and we have to face that we've reached the limits. We can't squeeze any more out of the landscape here."
The head of the Environmental Defence Society, Gary Taylor, said the conditions could force the Government to include phosphate and nitrate monitoring in its national freshwater plan, and the decision was a win for river quality.
Environment Minister Amy Adams would not comment on the decision while an appeal could still be lodged.
The project still has major hurdles to overcome - it has no investors and no customers. It lost $100 million in investment money when institutional investors Trustpower and Ngai Tahu pulled out, and not a single farmer has signed a contract to buy water.
Board's final decision
The Board of Inquiry 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.
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 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 were studying the final decision and it would be some days before they could comment.
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.
Council chairman Fenton 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.