The Board of Directors for the Lower Colorado River Authority unanimously voted to approve $18 million for the creation of reservoirs.
Building reservoirs near the Gulf Coast region would help rice farmers thirsty for water.
The money will help buy property in Wharton County and apply for permits to build a new reservoir. The LCRA estimates the project will cost about $206 million.
This, in addition to other projects, could add as much as 100,000 acre-feet of water to the supply by 2017, which is roughly one-tenth of Lake Travis' capacity.
The rest of the funding will come from grants, loans and outside sources.
"To the extent that we can capture rain, in another part of the basin downstream it is going to give us more options and a greater portfolio of water supply," LCRA General Manager Becky Motal said.
Earlier this month, LCRA board members made the unanimous decision not to release water from the Highland Lakes to farmers downstream unless there was substantial rainfall.
This would make it the second year farmers have not had access to water from the Colorado River.