Jerrara Dam has the potential to be a statewide tourism asset with one Kiama councillor regarding the 57-year-old earth-fill dam as an ideal location for a fishing, wildlife and environmental park.
"There is so much here to develop as a natural asset, it is incredible and we shouldn't waste it, in my view," said Kiama councillor Mark Way.
Kiama council is currently investigating the potential decommissioning of Jerrara Dam rather than face a multimillion-dollar bill to raise the dam wall or widen the spillway.
The council said "regulatory requirements" associated with the dam were placing an "extreme financial burden", with required improvements to its flood-handling capacity likely to cost more than $3 million.
The dam has not been used for water supply since the council took possession in 1975.
It has been the cause of numerous emergency alerts during heavy rains in recent years, and a handful of downstream residents were evacuated during the March 2011 deluge.
However, many Jamberoo locals have questioned the need for the emergency alerts, and Cr Way agrees.
He argues there is "an over-paranoia" about the dam's safety and that proper releases could benefit farms in the area.
"There is the potential for a great regional asset, even a state asset here.
"The right infrastructure would bring tourists to town, but it would also be a facility for local people.
"You could have a boardwalk for fishing, cabins and it would of a great benefit the Jamberoo township."
Cr Way's idea has already found support from Jamberoo publican Erica Warren who believes Jerrara Dam would be an ideal family destination for catch-and-release fishing, camping, school excursions, and tap into the increasing number of tourists coming to the region for bird watching.
Councillor Neil Reilly has also suggested using it as a concert venue.