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In a statement yesterday, IrrigationNZ chief executive Andrew Curtis said the body was not convinced Labour had fully considered the implications of a ''resource rent'' for irrigation, particularly how it would be practically implemented.
In a speech on environmental policies this week, deputy leader David Parker said Labour was committed to encouraging the fair and efficient use of the country's ''precious'' public freshwater resource through a resource rental on large irrigation takes.
Irrigation accounted for nearly 80% of freshwater consumption.
All domestic users of water, which on a per capita basis was small, would be exempt from the rental, whether in cities or rural areas.
All the revenue raised within a region would go back into the region to fund water management and delivery, new storage and irrigation schemes, safe rural drinking water supplies, and projects such as the restoration of degraded waterways, Mr Parker said.
That was how irrigation infrastructure ought to be paid for, ''rather than by selling SOEs or through taxpayer funded subsidies'', Mr Parker said.
But Mr Curtis questioned how the many complex water takes, involving combinations of irrigation, hydropower and domestic supply, such as the Opuha Dam in South Canterbury, could be split apart to allow for resource rents.
He also believed it was not equitable given that private energy companies and commercial business connected to domestic water supply systems also prospered from the use of water.
A resource rent would mean increased cost for domestic water supply and electricity alongside food price increases and such a tax would therefore impact upon low income earners the most, he said.
Additionally, that increased cost to the farmer would impact production and prevent farmer investment in improved environmental management to meet the water quality limits now in place in some regions.
''Ultimately, it will see the demise of the traditional New Zealand family farm,'' he said.
Despite Mr Parker's comment that irrigation was funded by subsidies, that was not the case, Mr Curtis said.
The $400 million Crown Irrigation Investment Fund - which Labour would axe - was an investment company receiving market returns, he said.
However, New Zealand did need to consider the benefits of subsidising modern irrigation scheme development, which would allow increased farmer investment in improved environmental management.