An Environment Court ruling against the planned Oreti River section of the Around the Mountains Cycle Trail is a blow for communities in the area, Southland District Council says.
Mayor Gary Tong says he's deeply disappointed by the court's decision to uphold an appeal by Fish and Game Southland.
He says areas like Lumsden, Mossburn, Five Rivers, Garston and Athol are reporting significant benefits attributed to increased visitor numbers as a result of the cycle trail development.
"This is a blow not only for those communities but for the good work a large number of people have put into the development of cycle tourism throughout the country as part of the Prime Minister's national cycleway project," he said.
The council would now assess the court's findings more thoroughly and evaluate its next step.
The trail project began in 2010 and the first section was officially opened in November 2014.
However, Fish and Game appealed against an independent commissioner's decision to grant consents for stage two.
It argued against the route going beside the Oreti River, which is a major attraction for anglers.