The first project for the Government's irrigation acceleration fund will be in central Hawke's Bay.
Primary Industries Minister David Carter says the fund and Hawke's Bay Regional Council will jointly fund a $3.3 million feasibility study for the Ruataniwha area.
A 90 million cubic metre storage dam is proposed on the Makararo river, which would increase land that could be irrigated from 6000 hectares to around 22,000 hectares.
Mr Carter says the scheme has the potential to provide security of supply for Hawke's Bay farmers, improve river flows in summer and enhance recreational opportunities.
He says irrigation projects will succeed only if they promote efficient water use and good environmental management.