Tucked away in a picturesque valley between Kiama and Jamberoo, Jerrara Dam has long been viewed as a site of enormous potential.

However, before any grand ideas become reality, a decision must be made on whether the dam wall grows - or goes.

Kiama Municipal Council has put a series of dam safety-option reports out for public exhibition.

Feedback will be used to decide the fate of the 53-hectare earth-fill dam when the council meets in October, even though councillors this week declared their preference for options that will involve the dam's decommissioning.

The 58-year-old dam was transferred into council ownership in 1975 when it was no longer needed as a water supply.

Fate of Kiama's Jerrara Dam unclear

The council has already factored $1.3 million into future budgets for the decommissioning to take place.

Cost estimates to raise the embankment or widen the spillway range between $3.1 million and $3.6 million.

Kiama Mayor Brian Petschler said in terms of cost and value the decommissioning proposal was the one most likely to be supported, but some good ideas may emerge during the exhibition period.

"We have a unique problem with Jerrara Dam," Cr Petschler said.

"It has a small catchment area with quick run-off.

"The dam itself is quite safe, we have never had major problems, but there are theoretical calculations that the dam could overtop in extreme circumstances."

The dam has regularly been the subject of emergency warnings or "amber" alerts during heavy rain in recent years.

"The dam safety committee has recognised situations are much more variable," Cr Petschler said.

"The old one-a-hundred-year events seem to be happening more often and it seems climate is becoming more uncertain.

"The amber alert that occurs now is unsettling for residents downstream, but it has never reached a point where it has become a full scale emergency."

Cr Petschler said councillors and the community had already put forward many ideas for the area.

Ideas include decommissioning the dam and using the site as an outdoor events venue, or keeping the dam and using it for a fishing, wildlife and environmental park.

Yesterday, Federal Agriculture Minister Joel Fitzgibbon visited the dam with Cr Petschler and Kiama councillor and Labor candidate for Gilmore Neil Reilly.

Mr Fitzgibbon announced $48,000 would be given to the Small Farms Network through Kiama council to restore 1.5 kilometres of riparian corridor along Jerrara Creek which flows into the dam. This includes planting more than 2000 trees.