THE state government has announced $187,050 to develop flood models for the town of Bridgewater on the Loddon River.
The funding will support North Central Catchment Management Authority and Loddon Shire Council to develop a $215,000 project, which will also assess flood mitigation options for the town.
Water Minister Peter Walsh made the announcement in Bridgewater on Wednesday morning.
He said the plan would include consultation with the community via a steering committee to make the most of local knowledge.
"This project will give the Bridgewater community a better understanding of its flood risk, which will improve land use planning, flood emergency planning and response, and community preparation for floods," Mr Walsh said.
The state government provided the funding through its FloodZoom program and the Federal Government contributed almost $30,000 through the Natural Disaster Resilience Grants Scheme.
During the January 2011 floods, 177 homes and 16 businesses in Bridgewater were inundated with water.
The Bridgewater Bakehouse was among those businesses hit during the flood as the owners renovated the building in preparation for its opening.
Owner Theresa O'Toole said she hopes the flood plan also focuses on the removal of stormwater.
"The stormwater system wasn't maintained as well as it could have been," she said.
"Hopefully they find the right strategy to help the town avoid flooding as much as possible."
Ms O'Toole said it took the bakery 12 months to open after floods went through the town.
"Since then, we've gone from strength to strength," she said.