It was later removed by Mahon on a trailer and he now plans to move the sculpture to Nelson next week.
In a statement, Mahon said he found "the poisoning of our children with cyanobacteria" to be offensive.
"As far as displaying Nick's genitals to the world, perhaps the [Ecan] CEO Bill Bayfield has never entered a gallery or visited the Vatican City and cast his gaze on the multitudinous penises in bronze and marble that swarm around the square, much to the delight of children, the Pope and one or two extraordinary cardinals," he said.
Meanwhile, Smith said he's not bothered by the statue.
"It is a bit crass, and there are far smarter ways of people expressing themselves without being offensive," he said.
"Politics gives one a thick skin so I am not bothered by it.
"I am far more interested in doing the hard policy yards that will actually improve management of freshwater on which we are making good progress."
In 2009, Mahon's sculpture of Smith made out of cow dung fetched $3000 on Trade Me.
Smith referred to Mahon's last piece as being "crap art".