Key Points:

A project rivalling the controversial Central Plains Water (CPW) scheme has been awarded priority to take water from the Rakaia River.

The High Court decision this week raises doubts over the future of Environment Canterbury resource consent hearings on the CPW irrigation scheme for Canterbury.

Drawing water from the Rakaia is part of the $400 million CPW scheme, but the private company has been in dispute with dairying firm Synlait over which should have the primary claim on the river, The Press newspaper reports.

Both companies argued that they were entitled to first access to the water if their resource consent applications were granted.

In May, the Environment Court ruled that CPW was the rightful priority holder, but that decision was overturned this week after Synlait appealed in the High Court.

CPW wants to draw up to 40 cubic metres of water a second (cumecs) from the Raikaia and a similar amount from the Waimakariri River to irrigate about 60,000 hectares of Canterbury farmland.

Synlait plans to draw 6 cumecs from the Rakaia to spray-irrigate 10,000ha of dairy farms in the Dunsandel-Te Pirita area.

CPW announced immediately it would appeal the High Court judgment.

CPW chairman Pat Morrison told The Press last night the decision didn't mean the scheme was no longer viable.

"It is business as usual," he said.

Synlait general manager Ben Dingle said he was happy with the decision.

"It gives clarity to the priority issues, but the far greater challenge is to get the water flowing."

The resource consent hearing, expected to take five months, was continuing in Christchurch today, but was likely to adjourn until late next month.