"The first Rotorua mud festival event is scheduled to take place in December 2017. This investment will help seed the event's growth over its first five years," said Ms Blumberg.
"The festival concept was inspired by the South Korean Boryeong Mud Festival, which has attracted a large following of millions. The Rotorua mud festival will leverage Rotorua's extraordinary natural resources and will include a mud-arena, spa and wellness experiences, as well as education and historical story-telling.
"Inviting the world to immerse themselves in geothermal mud is a unique opportunity to showcase Rotorua's distinctive volcanic and geothermal environment to an international audience.
"Over time, the event is forecast to attract a significant number of domestic and international attendees, which will generate strong economic returns for both Rotorua and New Zealand," said Ms Blumberg.
The Government invests, through the Major Events Development Fund, in major events that generate significant immediate and long-term benefits to New Zealand.