The pin has been pulled on plans to build a controversial $100 million dam near Nelson.
The Waimea dam project was facing rising costs, with Tasman District Councillors on Tuesday voting not to cover a huge funding shortfall.
Waimea Dam was billed as a lifeline for Tasman farmers and growers, who claimed their futures relied upon a massive dam able to secure the region's water supply for 100 years.
"In my opinion, it was still a fundable model, so I am extremely disappointed our decision today," Tasman Mayor Richard Kempthorne told Newshub.
The proposal was on Tuesday rejected by councillors eight votes to six, drawing applause from the public gallery.
The sticking point was rising costs associated with the dam, which would've been 220m-long and standing 50m-tall.
"I have always stated that I believe the dam to be the best option, I just find it uneconomic," Tasman district councillor Paul Hawkes said.
In 2015, the Tasman District Council estimated the dam in Lee Valley would cost about $75 million - but in July, the cost blew out by $26 million, putting the final cost at $102 million.
"This is most disappointing, and really gut-wrenching actually, after the 20-odd years of work that has been put in to by an enthusiastic bunch of volunteers," Waimea Irrigators Ltd Chairman Murray King said.
The dam was intended to supplement Waimea Basin aquifers, which are being depleted during summer months through over-irrigation.
"There is no plan B because we have firmly believed from the outset that this was the very best solution," Mr King said.
However, opponents of the dam say the costly project would've benefited just a select few.
"We've just been overidden by irrigators' personal interest against the effects on the community," Maxwell Clark, Waimea Dam opponent said.
Mr Kempthorne says it's now back to the drawing board, with the region's water security problems still needing to be addressed.
Newshub.
