Two options for water storage schemes in the Wairarapa have been selected for a feasibility study after six other options were ruled out.
A four-year investigation by the Wairarapa Water Use Project will now consider building reservoirs near Masterton at Black Creek and Tividale.
The two reservoirs would irrigate about 30,000 hectares from Masterton to Lake Wairarapa.
An independent study calculates the scheme could add $157 million to the Wellington regional economy each year and create 1,200 new jobs.
Costing between $138 and $205 million, the Black Creek scheme would require the construction of two dams, the larger being 51 metres high and 442 metres long.
Eleven dwellings and a protected wetland are in the proposed reservoir footprint, but a smaller variation of the option will also be considered.
The Tividale scheme could cost between $71 and $105 million for a dam 41 metres high with a crest 190 metres long.
There is one dwelling within the reservoir footprint and a protected area of native vegetation.
The reservoirs would affect rivers that are home to threatened several indigenous fish species: the long fin eel, dwarf galaxias, redfin bully and koaro.
The reservoir feasibility study will take 18-months and cost about $4 million funded jointly by the Wellington Regional Council and the Government through its Irrigation Acceleration Fund.