The Ministry for Primary Industries is giving nearly $900,000 to the proposed Flaxbourne Community Irrigation Scheme in Marlborough.
A group of landowners is promoting the Flaxbourne irrigation scheme to transform an area of Marlborough's arid east coast into more productive land.
The scheme aims to provide irrigation water to about 2200ha for horticulture and seed crop land uses.
The Irrigation Acceleration Fund money will help the farmers develop the proposal to the stage where it is investment ready.
Marlborough Mayor Alistair Sowman said the project had the potential to boost Marlborough's annual gross domestic product by $15 million.