Waitaki Development Board chief executive Mark Jurisich said there were more people in the area disturbing the birds.
In April, dogs, along with human intervention, appeared to have caused the deaths of about eight blue penguins.
The reserve was set up as a control site to compare with the blue penguin colony at the Oamaru quarry.
The increase in tourism meant there were more people in the harbour area and also it had become a popular area for "boy racers", Mr Jurisich said.
Work started this week on the fence which has been paid for by the penguin colony.
The initiative was supported by the Department of Conservation, he said.
The fence would be difficult to climb over and it would also provide wind protection.
Flax will be planted along the front of the fence to give a garden-like effect and the no entry signs will be clearly visible.
The refuge has been subjected to erosion caused by heavy seas and both the Waitaki District Council and Doc had agreed it would not be extended, he said.
Further round, at the quarry colony, Mr Jurisich is working on a proposal to close the car park in front of the visitor centre to traffic, moving all vehicles to the park in the quarry, for safety reasons.
There were also plans for extensive plantings and beautification at the site, along with an area where day-time visitors could view nest boxes with transparent glass at eye level.
