A proposal to quench the thirst of a mega-mall under construction on the edge of Calgary with water from the Red Deer River has raised concerns.

Ground is being cleared for a $1-billion shopping mall and racetrack in the hamlet of Balzac. The development is set to open in the fall of 2008.

Earlier this year, the province decided it would no longer issue new water-use licences for three southern Alberta rivers, including Calgary's Bow River.

Three weeks ago, the Municipal District of Rocky View applied for a water licence allowing it to transfer up to 1,825,000 cubic metres annually from the Red Deer River, the last river in southern Alberta where water licences haven't been restricted.

'Innovative solution'

In a release, the district called it an "innovative solution that will enable a development in east Balzac to move forward."

Not only would the amount quench the thirst of the mega-mall and track, but it would also reduce water rates for residents in several Rocky View communities by nearly $1 a cubic metre.

John Scott, a vice-president for developer Ivanhoe Cambridge, told CBC News his company understands that water is a "very scarce commodity" in Alberta.

"We are very focused on water conservation. We have implemented strategies with respect to landscape for instance, that is low impact with respect to the use of potable water."

Water drawn from the Red Deer River will be discharged into the Bow River. Both meet up with the South Saskatchewan River.

Supporting more sprawl: critic

Tony Blake, spokesman for a group called the Red Deer River Naturalist, says he is concerned about the river's future.

"Is it really a good use of a publicly owned resource? To use this river to support more sprawl between Airdrie and Calgary?"

Red Deer Mayor Morris Flewwelling said he has concerns about diverting water from the river flowing through his city to Calgary's outskirts.

"We don't know where it would stop," he said.

"We in Red Deer and the surrounding area realize it's the limiting piece in the settlement and development of the whole of the reaches of the Red Deer River."

A recent report by the Geological Survey of Canada concluded that Calgary could face a water shortage in 10 to 15 years.

The report, prepared by the federal government's geo-science research agency, said a warmer climate and a booming population could mean Calgary is headed for a water crisis.

By law, the Rocky View municipality must collect public comment on the proposal for 30 days. Alberta Environment will review the reaction before deciding whether to issue a licence.