Forest and Bird is questioning why an irrigation-boosting dam is receiving cash from a government fund for cleaning up rivers and lakes.
The Waimea Dam Project will get $7 million from the Freshwater Improvement Fund.
The Waimea basin is fed by bountiful aquifers but it's not enough to quench the region's thirst. It's been over-allocated, which means too much water is being drawn out of it.
So the Tasman District Council says it has a choice - claw back consents or build a dam.
"If we have no dam in the summer months we're going to have significant rationing for both urban ratepayers and for irrigators," says council mayor Richard Kempthorne.
"Also we've got a real problem in the summer months because there's a very low flow when it gets dry.
"So doing nothing is not an option; we have to find a solution and the dam is the most cost-effective solution that we've got."
The Freshwater Improvement Fund is designed to improve management of our lakes, rivers and streams. The Waimea Dam Project has got the biggest share of the fund's money so far, despite not being identified as a vulnerable catchment.
"I think most people would've seen the Freshwater Improvement Fund and imagined that it was about improving the quality of freshwater, and what this project is - the Waimea Dam - is an irrigation project, which is in fact likely to deteriorate fresh water quality," says Forest and Bird CEO Kevin Hague.
Forest and Bird says Environment Minister Nick Smith is too close to the project.
Mr Smith is the MP for Nelson and the dam would be built in Tasman, to irrigate the Waimea plains, part of which are in the Nelson electorate.
"Nick Smith has spent years, in fact, advocating for funding for this particular dam, and now he is the person who has made the decision to actually give it funding from the Freshwater Improvement Fund," says Mr Hague.
But the Environment Minister doesn't see a problem.
"The only region in New Zealand that applied for funding and got none was the Nelson City Council. Every other region in New Zealand was able to access funds where they applied," Dr Smith says.
Both Dr Smith and MR Kempthorne say irrigators will have to pay most of the $82 million it will cost to build the dam, and there are issues there too. An irrigator spoken to by Three's The Nation says the project is simply too big and too expensive.