Environment Canterbury could be split up by the Government and its elected 14 councillors replaced with a temporary commission.
The commission could be appointed as soon as possible to oversee splitting Environment Canterbury (ECan) into two separate entities using special legislation through Parliament.
A new entity - the Canterbury Regional Water Authority - may be created to manage water in the Canterbury region, which includes the Waitaki catchment, with ECan then managing the other functions of a regional council.
A review found ECan had fallen well short of managing water in its region and "comprehensive and rapid intervention" was needed by the Government.
The review, at the request of Environment Minister Dr Nick Smith and Local Government Minister Rodney Hide, started in October last year and 13 recommendations were made in a report released to the public yesterday.
The Government has not formed a view on the recommendations and planned to carry out consultation before making any decisions.
The review, under the Resource Management and Local Government Acts, followed years of discontent over the way the Christchurch-based regional council handled its functions and dealt with local communities, culminating in a strongly worded letter to the two ministers by all 10 Canterbury mayors.
The review panel said ground and surface water management was the single most significant issue facing Canterbury.
The region had about 70% of New Zealand's fresh water resources, significant in terms of the nation's agricultural and horticultural production, as well as hydro-electricity generation.
Much of that water was under demand from competing interests and unresolved water quality issues persisted.
"The extent of the gap between the capability of ECan and what is required for it to adequately manage freshwater issues is enormous and unprecedented.
"ECan's performance on water policy and management . . . falls well short of what is essential," the panel said.
"This failure requires comprehensive and rapid intervention on the part of central Government to protect and enhance both regional and national wellbeing."
A "profound change in approach" was needed to satisfactorily resolve water management issues, leading the panel to recommend setting up the water authority.
The authority had to be established by an Act of Parliament, its members appointed by Dr Smith and Mr Hide, in consultation with key stakeholders, and be reviewed in three to five years to consider alternatives, including a mix of appointed and elected members.
The existing elected council should be replaced by a temporary commission "as soon as practicable" under special legislation, the report said.
That would give ECan and the region breathing space to allow the water authority to be soundly established.
In addition to the normal functions of the regional council, the commission would also oversee transferring the functions and funding of water management from ECan to the new authority, administer management of water until the new authority was able to undertake those activities, put in place a structure for ECan to operate all non-water related functions, implement other recommendations regarding the broader performance of ECan and initiate a review of the management and operation of public transport.
The panel has also recommended ECan undertake actions including a review of its resource consent section and how it recovers resource consents process costs.
It also said ECan needed a model to manage large and complex resource consents.
Other recommendations are aimed at improving its relationship with district and city councils.
Full report: http://www.mfe.govt.nz under "News and Events"