The Otago Regional Council has rejected a request to put money into a Central Otago water scheme and the decision may end the $39 million project.
The Tarras Water Scheme would irrigate farmland in the Ardgour Valley, taking water from the Clutha River to supply 40 properties covering about 6000 hectares in the district which lies between Cromwell and Wanaka.
But council chief executive Stephen Woodhead said on Thursday that the backers of the scheme have failed to meet several council-imposed conditions.
Mr Woodhead said the council was asked to contribute $3.5 million by way of dry shares. But there was a risk they would not be able to sell those shares in the future to recoup costs.
The council also said it couldn't ignore the depth of feeling in parts of the community about the wisdom of the regional council investing ratepayer money in an irrigation scheme or its impact on rates.
A spokesperson for Tarras Water said he is unable to comment until the share offer on the scheme closes on Friday.