The Manawatu-Whanganui regional council is proposing to buy and remove dozens of homes in the most flood-prone areas of Whanganui.
In its 2018-28 long-term plan, the district council Horizons said it preferred not to make any further investment in higher stopbanks along Anzac Parade.
"We consider the technical challenges, impacts on Kowhai Park and associated costs to be too large, and the residual risks too challenging to adequately manage," its consultation document said.
In May last year, the regional council said improving flood defences along Anzac Parade could cost as much as $10 million.
Instead it is proposing the voluntary purchase and removal of homes in the worst affected areas of Anzac Parade.
Property owners on the fringe of the flood-prone area will be provided with incentives to raise their homes off the ground.
The regional council's head of river management, Ramon Strong, said it plans to set aside $50,000 a year to either raise homes off the ground or remove them completely.
He conceded that at that level of funding, the council would need outside help to make significant progress.
"We're hoping that the insurance industry will also at some point in time realise the wisdom of being proactive rather than ultimately reactive in this space."
Mr Strong also wants central government to contribute.
In the future Anzac Parade could be extended parkland, he said.
But the Insurance Council said it was not the responsibility of its members to pay for houses to be moved out of flood prone areas.
The chief executive of the insurance council, Tim Grafton, praised the council for taking a long-term view to prioritising risk, but said it was looking in the wrong place for a contribution.
It would be better to consider those that would benefit from the homes being removed - like homeowners and banks, Mr Grafton said.
The policy would affect about 100 homes and the council plans to set a side $50,000 a year to pay for it.
"Not taking steps to progressively reduce the risk over time has a range of economic and social consequences for Whanganui that we believe (in the absence of more robust flood defences as a feasible option) are too large to ignore," the plan says.
The news is more upbeat for residents for the Pūtiki area where the council is proposing to spend $1.2 million on improved flood defences.
"We believe that constructing flood defences for the Pūtiki area is a feasible proposition, requiring lower height stopbanking for a more contained area that doesn't have the same technical (foundation) challenges," the plan states.
Construction of the Pūtiki flood defences is slated for year 6 and 7 of the 10-year plan.
The regional council is not proposing to invest in improved flood defences on Taupo Quay in the CBD at this stage and will instead work with the Whanganui District Council to explore ways to mitigate flood damage in the area.
A $3.9 million investment over 30 years in the moles at the Whanganui rivermouth - which help manage the alignment of the river - has also been signalled in the plan.
The district council will pick up 25 percent of that bill over the 10 years of the long term plan.
Public submissions on the plan close on April 30.