The funding comes from the Ministry for Primary Industries' Irrigation Acceleration Fund (IAF) and will help the Marlborough District Council complete concept designs, finalise funding arrangements, and begin the detailed design phase for the storage dam.
"Water from this project will most likely be used for wine grapes and arable crops, showing again that irrigation is about much more than just dairy," says Guy.
"Providing a reliable water supply for growers has major potential to boost growth, creating jobs and exports. This is especially important in Marlborough given the serious drought the region has suffered over the last 18 months."
The Flaxbourne Community Irrigation Scheme proposes to source water from the Awatere River at peak times for storage and distribution that will irrigate 2200ha.
"We know that viticulture involves significant employment and investment of around $40,000 per hectare, and once established has significantly higher annual turnover than the current dryland pasture uses.
"This funding is another positive step forward for this scheme which has strong community support. The project has the potential to boost Marlborough's economy by $15 million per year."
A full economic assessment is part of the IAF work programme that will be delivered by end of July 2016.
The proposal has been previously investigated in different forms since 2008, and most recently in late 2014 received IAF funding of $50,000.
