Incredibly, the reservoir would be the first of its kind to be built in Britain since Severn Trent opened Carsington Water in Derbyshire in 1991.

Portsmouth Water, which is developing the new reservoir in partnership with neighbouring Southern Water, expects the facility to open in 2029. Once completed, it will hold approximately 8.7 billion litres of water, while it will be capable of supplying up to 21 million litres of water each day.

It will be one mile from east to west and half a mile from north to south. Future Water MJJV Limited is a joint venture between the civil engineering contractors Mackley and Jones Bros.

Portsmouth Water also handed a £41m contract to Ireland's Ward & Burke Construction to complete a new pipeline running to and from the reservoir.

Bob Taylor, the chief executive of Portsmouth Water, said: "This is a major milestone for the Havant Thicket Reservoir project, and we are delighted to have these two exceptional contractors delivering the scheme.

"We look forward to working closely with both companies to progress and complete this environmentally led project on time and within budget.

"This includes honouring our commitment to leave a really positive legacy by creating opportunities for local employment and skills development through the reservoir scheme."

The UK's controversial first use of water recycling technology

The scheme has not been without controversy.

One concern among some residents has been that constructing the new reservoir will involve the flooding of land and its subsequent loss - it is being built on a 160-hectare grassland site owned by Portsmouth Water since the mid-1960s - and the widespread felling of ancient woodland trees.

Perhaps the bigger issue, though, has been unhappiness that the reservoir will be partly filled with treated wastewater mixed with water from underground springs.

Alex Rennie, the leader of Havant Borough Council, wrote to Southern Water last year claiming that the use of recycled water - in the first use of such technology in the UK - had not been made clear in the outline planning application.

Councillor Rennie wrote: "The council fully recognises the importance of addressing the significant and urgent need to address Hampshire's water shortfall and welcomes the efforts that are being made by Southern Water to address this.

"However, we have serious concerns relating to the use of recycled treatment wastewater as a new water source to top-up the Havant Thicket reservoir and we are opposed to any such use."

Southern, whose customers will pay for the reservoir via their drinking water bills over a lengthy period of time, has said the water recycling technology is used safely in parched parts of the world including Australia, Singapore and California.

It has insisted that growing demand due to the increased population in its region, along with different rain patterns, makes the new facility essential - while using recycled wastewater would also help protect environmentally sensitive chalk streams.

The local controversy underlines the difficulty involved in building reservoirs.

30 new reservoirs needed

An estimated 30 new reservoirs are needed across the country to safeguard water supplies in coming years due to both population shifts, declining rainfall levels and the increasing incidence of droughts.

The National Infrastructure Commission has suggested that, in the absence of new reservoirs being built, there could be a capacity gap in the UK of up to four billion litres of water - the equivalent of 22 million full bath tubs - per day by 2050.

But obtaining planning permission for such sites can be both expensive and time-consuming because, invariably, there is local opposition to such projects.

Opposition and how to deal with it

Sir John Armitt, the chairman of the National Infrastructure Commission, has argued that ministers need to back such projects despite local opposition on the basis that the social benefit provided by new reservoirs to large numbers of people outweighs the inconvenience to a small number of people locally affected.

He wrote in The Times last year: "We must wake up to the impact of using more water than we can securely replenish in the face of hotter, drier weather.

"Many waterways and groundwater bodies in England are already under pressure due to water abstraction, presenting risks to biodiversity.

"So in addition to reducing leaks and demand, we need to invest seriously in new reservoirs and transfer infrastructure."

One case that Sir John has said deserves ministerial support is in Abingdon, Oxfordshire, where Thames Water - which last year had to implement a hosepipe ban due to water shortages - has been trying for nearly two decades to build a new reservoir.

It has been thwarted at every turn by local opposition.

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Leak prevention investment v new reservoirs

Layla Moran, the Liberal Democrat MP for Oxford West and Abingdon, has argued Thames should be doing more to prevent leaks before it builds new reservoirs.

Critics of the water industry also argue that the industry should have sought to invest before now in new reservoirs.

It has been suggested by some that, after privatisation in 1989, the industry sought to maximise financial returns by patching up existing assets rather than building new ones.

But that needs to be balanced against Ofwat, the industry regulator, often discouraging such investment by making it a greater priority to keep household water bills low.

The industry also argues that, since privatisation, it has invested some £160bn - more than could have been put in had the industry remained under state ownership - on reducing leaks and improving environmental standards - a priority that has assumed growing importance in recent years.

It is also fair to say that the industry is haunted by past mistakes.

In 1975, when the industry was still nationalised, the old Northumbrian Water Authority began work on the Kielder dam and reservoir at huge expense. But the rise in demand for water that it was built to meet never materialised - and the project became a white elephant.

As the last few decades have seen big steps made on reducing leakage, more metering and, perhaps most importantly, more efficient use of water in appliances like dishwashers and washing machines, opponents of new reservoirs question whether there really will be such a requirement for more of them in future.

That is clearly not the view of the National Infrastructure Commission. If it gets its way, it will not be another 30 years after the Havant Thicket reservoir before another such facility is built.