An $18.5 million grant to develop irrigation systems in Northland could create hundreds of jobs and tens of millions of dollars in income, regional councillors say.

Earlier this month Regional Development Minister Shane Jones announced the funding to investigate and, if feasible, construct large-scale water storage facilities in the Mid North and Kaipara.

The announcement was part of a tranche of Provincial Growth Fund cash which also included $3.2m for a sea wall at Opononi and an as yet undetermined sum for ''digital hubs''.

Northland regional councillor Justin Blaikie (Hokianga-Kaikohe) said recent studies, co-funded by the council and central government, had already shown investing in water storage in the Mid-North and Kaipara could create hundreds of jobs and boost the economy by tens of millions of dollars a year.

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Making the funding announcement at Opononi are Regional Development Minister Shane Jones, kaumatua John Klaracich and Deputy Prime Minister Winston Peters. Photo / supplied
Making the funding announcement at Opononi are Regional Development Minister Shane Jones, kaumatua John Klaracich and Deputy Prime Minister Winston Peters. Photo / supplied

Councillor Penny Smart (Kaipara), however, said a lot of work still had to be done. That included more analysis of water supply and storage options, user demand, environmental impacts and financing.

Blaikie said some of the PGF funding would be spent on analysis, with the rest made available as construction loans if viable storage and distribution systems were identified.

Despite Northland's relatively high rainfall, a lack of storage meant it couldn't be harvested for use in summer and during droughts.

So far only a tiny portion of the region (8500ha of a total 1,400,000ha) was irrigated, most of it for horticulture, by two 1980s-built irrigation schemes at Kerikeri and Maungatapere.

Like the existing Kerikeri scheme, any new water storage ventures would have a predominantly horticultural focus rather than enabling the conversion of land to dairy, Blaikie said.

Previous studies had indicated about 6300ha of the Kaipara, much of it on the Pouto Peninsula, and another 1600ha south of Kaikohe could be irrigated, though the construction costs would run into tens of millions of dollars.

Smart said growers couldn't afford to build such schemes alone but given the wider benefits there was a good case for wider investment, including by central and local government.

"This was part of the case made to the government by Northland when applying for PGF funding," she said.

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National lobby group IrrigationNZ has also applauded the funding.

Chief executive Elizabeth Soal said water storage and irrigation infrastructure, if built with sound technical, environmental and stakeholder advice, could benefit the whole community.

People in the Kaipara and the Mid-North were likely to see similar benefits to those delivered by the Kerikeri scheme in the 1980s.

An impact assessment after 30 years found the Kerikeri scheme had created 1300 jobs — 6.5 per cent of all jobs in the Far North — and was adding $106 million per year to the Northland economy.

The assessment also found the scheme had no negative impact on water quality in surrounding waterways, Soal said.

The Kerikeri irrigation system was partly funded by the Muldoon Government's ''Think Big'' scheme.