Crown Irrigation Investments is funding $339,875 of a potential water scheme for South Canterbury.
The Orari-Temuka-Opihi-Pareora water management committee is looking at a number of tentative solutions to South Canterbury's water shortage problems.
The funding is for the conceptual design and costing of the project.
It's hoped the scheme will secure water supply from already consented irrigation water, through water swap and supply arrangements.
Environment Canterbury's project leader, Brett Painter, said the local community had made it clear that they expected improved river flows and water quality.
He said this could be done through cutting back the groundwater takes and replacing lost supply with surface water.
It's also been announced $815,000 will go to the Manuherikia Water Project in Central Otago, which will allow the Falls Dam proposal to go ahead.
The Primary Industries Minister Nathan Guy said this would give six independent irrigation companies in the Manuherikia Valley the opportunity to amalgamate under a single legal entity.
He said irrigation schemes had brought real economic and environmental benefits in other parts of the country.