Water from the Oreti River is currently Invercargill's only supply of water, putting the city at "extreme" risk if the supply were to fail, the council's water manager says.

Invercargill could face extreme consequences if the city's only water supply fails, councillors have been warned.

Most New Zealand towns have two water sources, but Invercargill has one - the Branxholme Treatment Plant.

At a city council infrastructure committee meeting on Monday, council water manager Alister Murray said it aimed to develop an alternative supply in the next decade.

JOHN HAWKINS/STUFF The Invercargill City Council processes its water at the Branxholme water treatment plant.

"Councillors may not be aware of the risk that we carry having just a single supply," Murray said.

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"If for some unthinkable reason that supply was rendered unsuitable, the effect on our community would be dire.

"By examining an alternative, we would halve the risk that we're currently exposed to."

Murray said it was preferable that the city's second water source was not a second river, to prevent risk in the case of drought.

His report to the committee says that in 2019-2028 Long Term Plan workshops, councillors had expressed a desire to investigate an alternative or emergency water supply.

The proposed long-term plan includes funding to develop an alternative supply from the 2025-26 and 2026-27 financial years at $4.25 million for each year.

If Invercargill's water supply failed or became unserviceable, the impact on the community would be "extreme in the most adverse sense", it says.

The report says if the plant or supply from the Oreti River were to fail, the city may require evacuation, because the city would not be able to fight fires or flush away waste.

Under the Civil Defence Emergency Management Act, the council might be required to declare a local emergency, the report says.

Additionally, the council may face claims from businesses forced to close, a "major media event" and a government inquiry, it says.

"At the very least there would be widespread community discontent."

The report says the likelihood of failure was rare. However, it was possible and so there was a significant risk, it says.

Extreme drought, contamination of the Oreti River or a destructive event at the plant could cause failure, it says.

"Most New Zealand urban communities of a similar size to Invercargill have more than one water supply and thus do not have the same high level of risk as that of Invercargill."

The report says Ashburton has eight water supplies, Nelson has three and Timaru has two.

Cr Alex Crackett said she did not feel comfortable committing that level of funding when the council did not know what the project would be.

The funding could be lower or higher depending on the final option, she said.

Cr Karen Arnold asked why the report did not provide more information on the water supply at Queens Park as an alternative.

"We need more information before us. We've got to balance the books and justify the spending."

Arnold said the council risked spending millions of dollars for an alternative water source "that we might not even need".

Council works and services director Cameron McIntosh said he understood there was some uncertainty around the large amount of money pegged for the project.

The council was not committing to the amount of money but were asking to put it in to the long-term plan so that it could be considered fully, McIntosh said.

Its most cost-effective way of finding a new supply was the aero magnetic surveys being undertaken by Venture Southland.

"There's enormous pressure coming on, in light of what's happened in Havelock North and in light of the change of land use and therefore the risk we have from the Oreti River."

The committee, except Crackett and Arnold, agreed to the report's recommendation that the city accept the inclusion of the project to develop an alternative or emergency water supply in the 2019-28 long-term plan.

*This story has been amended from an earlier version