A South Australian irrigation project expected to deliver up to 3700 jobs will go ahead after the federal government agreed to partly fund the $155.6 million project.

The northern Adelaide irrigation scheme will provide an additional 12 gigalitres a year of recycled water from the Bolivar wastewater treatment plant.

The SA government said that the extra water would go towards expanding the state’s agriculture and horticulture industries in the northern Adelaide plains.

“Growing the reputation and capacity of the region for premium food production will boost the economic future of the horticulture industry and its communities,” SA Agriculture Minister Leon Bignell said.

The northern suburbs of Adelaide including Elizabeth are expected to be hit hard by the closing of car manufacturer Holden later this year, and the government said that high-tech food production was one way to create jobs.

The SA vegetable growers body AUSVEG SA welcomed the announcement, saying the horticulture industry was already worth more than $1 billion a year to South Australia, and growing demand from Asia meant investment in water infrastructure was critical.

“This is a once in a generation investment that has potential to grow our industry into the future,” Jordan Brooke-Barnett state manager of AUSVEG SA said.

“Horticulture is poised to grow significantly as a result of this investment and provide significant employment outcomes at a challenging time for our state.”