The government has pledged $6.64 million to the major Canterbury irrigation scheme Central Plains Water.
The money from the Irrigation Acceleration Fund will be used to complete stage two of the scheme, the aim of which is to deliver alpine water to 25,000ha of land.
Stage one, which covers 60,000ha, was turned on last August.
Minister for Primary Industries Nathan Guy said irrigation gave a real boost to the Canterbury regional economy, and took the pressure off groundwater supply.
"A reliable source of water gives farmers certainty and options to invest in such as arable, intensive pastoral, dairy support or horticulture."
Mr Guy said irrigation schemes like Central Plains Water, which draw water from rivers, take pressure off the ground water supply.
Stage two of the scheme was designed with the help of an $8m loan from Selwyn District Council.
"A recent report by NZIER found that irrigation contributes $2.2 billion to the national economy and this has the potential to increase further.
"Importantly, any change in farming practices that occur as a result of this will need to meet existing environmental standards," Mr Guy said.
Mr Guy also announced $900,000 in funding for the Sheffield Irrigation Scheme, a subsidiary of Central Plains Water.
Support for aquifer recharge pilot study
Ministry of Primary Industries also announced today $312,000 from the Irrigation Acceleration Fund for a Canterbury Regional Council (ECAN) water trial.
Canterbury Regional Council hopes pumping river water into Ashburton's groundwater system will reduce its nitrate levels.
Under a pilot project beginning next month, about 500L a second will be taken from the Rangitata River and pumped into the ground.
Together with on-farm nutrient management the aim is to reduce nitrates leaching into groundwater by 36 percent by 2035.
If successful, the idea could be extended to a wider area.