GRIFFITH City Council will join with Leeton and Narrandera councils to explore the cost of a dam at Lake Coolah.
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Agriculture Minister Barnaby Joyce inspected the site near Narrandera last week and said the proposal was worth investigating.
Mr Joyce said more questions needed to be asked, but his first reaction was not to discount it.
"None of these projects happen overnight and what I'm hoping is whilst we have a government that is pro-development, that is not scared of water infrastructure and while you have a local representative such as Michael McCormack, you've got a very good chance of pursuing these agendas," Mr Joyce said.
Member for Riverina Michael McCormack said he believed the visit had represented a big step forward for the poposal.
"I think if everything goes according to plan, it seems to be the sort of site which won't require tens of millions of dollars and years of work," Mr McCormack said.
Griffith mayor John Dal Broi said Mr Joyce supported exploring the proposal.
"We let him know that this area has suffered a lot due to loss of water," Cr Dal Broi said.
He said Mr Joyce acknowledged that fact.
The three councils will seek estimates on the cost of the project and seek support from the state government.
"We have to work out the cost if it yields 200,0000 or 250,000 megalitres, it would obviously be a huge bonus with benefits for the irrigators in the Murrumbidgee Irrigation Area."
Lake Coolah has been flagged as a potential site to build a new dam for more than 20 years.