The Tasman District Council has warned that tougher water restrictions were expected within a fortnight, and dry weather taskforce convenor Dennis Bush-King said it was the most severe situation in 20 years.
David Easton, who has farmed apples on the Waimea Plains for 30 years, said the situation was worse than the El Nino summers of the late 1990s. He said it was the reverse of the extreme rain storm which struck the region four years ago, and he predicted the drought would have economic consequences.
Mr Easton said growers on the Waimea Plains relied on water to irrigate crops, and there was pressure to provide them year-round.
"Customers around the world want a consistent supply of top quality product and you can only achieve that if you have a consistent supply of the key inputs of water and sunshine."
The Tasman District Council has been taking small steps over the last decade towards building a large dam in the Lee Valley, south of Richmond. It has been trying to sell the message it would solve the region's increasingly dire water shortages, but many ratepayers did not buy that line.
Mr Easton said some believed the council's reaction was political, but it had no choice as the rules around water use and restrictions were set by central Government, and the Environment Court.
He said growers and residents should prepare for it to get worse.
Tasman district residents were now banned from watering lawns, and productive gardens could only be watered by hand-held hose every second day.
Mr Bush-King said it was the most severe situation in 20 years and stage three rationing, or a 50 percent cut, had never been needed in December before.
He has urged all people to take the message seriously, and he was encouraged that some already had taken it on board.
"Certainly the growers are. We've noticed that they're all complying with their new water permits - that's good, and we noticed also that some people have not replanted in their market gardens because they've obviously been expecting a dry summer."
Mr Bush-King was not in a position to comment on whether that might have consequences for the local grower economy, but he said it was not great news for the region's apple growers.
"January-February is the time apple growers need water to size up the fruit, so it's obviously not a good time for these restrictions to kick in," Mr Bush-King said.
Meanwhile, Blenheim was facing its driest year on record, with even less rainfall than the 369 millimetres recorded in 1969, and local authorities were concerned there was no sign of rain on the horizon.
The Marlborough District Council said some rain on Wednesday brought light relief but the benefits were short-lived and despite big efforts by people to save water, restrictions might be needed soon.
The council said the recent rain also stabilised the drain on the Wairau Plain's aquifer systems, which were extremely low and not being replenished at usual rates.
Last year there was significant rainfall in Marlborough between Christmas and New Year, which lifted well levels and delayed the need for water restrictions until the end of January, but that did not look likely this year, the council said.
The drought in Nelson city was not as severe but restrictions have been imposed on households that take their water from wells and streams.
Further south the situation was not as extreme, but the Christchurch City Council was to increase water restrictions in the popular holiday spot of Akaroa, and people across Christchurch were urged to save water or risk a reduction in water pressure.
Water restrictions were currently at level two in Akaroa, which meant people could only use hand-held hoses to water their gardens.
The Council's City Water and Waste unit manager, Tim Joyce, said Akaroa had a limited water supply as it came from streams in the area, and the weather forecast was for hot, dry conditions to continue.
He said demand on Akaroa's water supply also increased as people occupied holiday homes for the summer.