The Ruataniwha Dam project in Hawkes Bay has suffered another blow with its second institutional investor, Ngai Tahu, pulling out of the irrigation scheme.
Ngai Tahu had intended to invest in the $600 million water storage project, relying on the expertise of the other institutional investor Trustpower to guide its investment.
Trustpower pulled the plug in March saying the risks surrounding Ruataniwha were too high and the returns too low.
Ngai Tahu said because a replacement investor for Trustpower has not been found it does not want to risk its own investment.
Ngai Tahu's withdrawal comes as the Hawke's Bay Regional Investment Company, which has been championing the scheme, says the nitrogen cap the Board of Inquiry set, makes the scheme financially unviable.
Federated Farmers has been a cheerleader for more irrigation and its president Bruce Wills says it doesn't look like Ruataniwha will get over the line now that Ngai Tahu's gone.
"And I suspect the nail in the coffin, so to speak, was the Board of Inquiry environmental requirements, they were tough - they just make the economic viability of building this water storage proposal in Hawke's Bay that much harder."
He said that was disappointing.
"As a Hawke's Bay resident, as a Hawke's Bay farmer, this is disappointing news. We desperately need to store water in Hawke's Bay, we go from drought to drought all to frequently."