There is an increasing demand for water resources in the Canterbury region. The impact of this demand has lead to unacceptable minimum river flows, which has resulted in adverse affects to river ecology. In an effort to resolve this problem water storage projects have gained considerable attention. However, in order to consider all values of the impact of water storage projects, a systematic way of implementing an ecosystem services approach is developed. This ecosystem services approach coupled with various appropriate analytical methods are developed for the purposes of evaluating the cost-effectiveness of water storage projects and the sustainability of river systems impacted by water storage projects. For the purposes of evaluating the cost-effectiveness of water storage projects it is argued that cost utility analysis should be applied through an ecosystem services index, which is constructed from the aggregation of normalized indicators that represent each ecosystem service and preferential weights for each ecosystem service. The evaluation of sustainability is considered both according to its weak and strong definitions. Weak sustainability is evaluated by a non-declining ecosystem services index over time. Strong sustainability is evaluated by the elicitation of threshold levels or safe minimum standards where an ecosystem service, as represented by an indicator, should not pass below. These analytical methods developed are subsequently applied to the Opihi River, which is a river system located in Canterbury that has been hydrologically modified and impounded by the Opuha Dam scheme. The application of the analytical methods to the Opihi River provides a few preliminary results. Further data collection is required to fully determine the cost-effectiveness of the Opuha Dam and the sustainability of the Opihi River impacted by the dam scheme.


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