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In what’s being dubbed a “historic” agreement, groups representing cultural, environmental, agricultural and development interests have reached a settlement in a longstanding dispute over the diversion of millions of gallons of water on the west side of Kauai.

Under the settlement, which state officials approved Tuesday, the water initially diverted for a sugar plantation that shut down 15 years ago will instead be used for Hawaiian homesteading, a hydro energy project, agricultural irrigation and the Waimea River’s restoration.

Earthjustice, a nonprofit environmental law group, filed the initial complaint in 2013 on behalf of a community group called Poai Wai Ola. Its petition against the state and its tenant, Kekaha Agriculture Association, said the diversions via the Kekaha and Kokee ditches were degrading the environment and limiting traditional uses of the resource.

Over the past year, the parties — which also included the Kauai Island Utility Cooperative and the Hawaiian Homes Commission — worked together to reach a settlement mediated by Robbie Alm, a well-known Hawaii business and community leader.

State Department of Land and Natural Resources Chair Suzanne Case, who also serves as chair of the state Commission on Water Resources Management, said she hopes this becomes the model to resolving other complex disputes.

“This is an historic agreement,” Case said in a statement. “During this process, the commission sought not only to resolve the claims brought by the Poai Wai Ola hui, but to provide a mechanism for dealing with complex water issues holistically.”

She said the settlement also includes provisions for real-time monitoring of water flows, which will be public information.

“For too long, private interests have been allowed to take the public’s water and use it to reap private profits,” Earthjustice attorney David Henkin said in a statement. “In approving this agreement, the Water Commission is carrying out its constitutional and statutory mandate to protect the public trust, ensuring that the mighty waters of the Waimea River will once again flow from the mountains to the sea, for the benefit of present and future generations.”

The Kekaha Sugar Plantation constructed the Kekaha and Kokee ditches in the early 1900s, diverting water from the Waimea River — which flows through Waimea Canyon, the so-called “Grand Canyon of the Pacific” — to the sugar fields below.

The state took over the ditches after the plantation went out of business in 2000, leasing them to the Kekaha Agriculture Association.

In its complaint, Poai Wai Ola alleged that the association did not need nearly as much water as the plantation had been using, thus wasting a public resource.

“Our group’s name acknowledges the life-giving power of water,” Poai Wai Ola President Galen Kaohi said in a statement. “Today’s agreement ensures that, for the first time in over 100 years, life-giving water will once again flow continuously in Waimea River from mauka (the mountains) to makai (the sea), which is vital for the health of the river and our community.”

A provision in the agreement states that “all streams will be allowed to run from the mountain to the sea and no diversion will ever be a total diversion again,” and that any diversion must be justified with no more water taken than is needed.

The Kauai Island Utility Cooperative, which provides power for the island, is proposing a project that provides renewable energy and water delivery. KIUC Chief Executive Officer David Bissell said he is pleased with the settlement.

Read the full settlement agreement below: