The Bennett wallaby has been established in the Waimate region for more than a century and in recent times has spread into the Mackenzie Country.
Animal Health Board contractors have reported seeing eight wallabies in the Clear Stream area on the northern flanks of the Hawkdun Range recently.
Department of Conservation technical support officer Bruce Kyle said they had probably crossed the Waitaki River into Otago across one of the dams.
"We're potentially dealing with a small self-sustaining population."
Wallabies graze on grass, small trees and shrubs, putting forestry plantation pine seedlings, pasture and native plants at risk.
"They can cause considerable damage."
The sightings of the wallabies were in the Environment Canterbury district but very near the Otago regional boundary. Wallabies were listed in both regional councils' pest management strategies.
Some surveillance and control of the wallabies would be needed to ensure they did not spread further into the region, Mr Kyle said.
"They're a real nuisance to farmers as they can move 2km to 3km feeding on seed crops or eat significant amount of pasture in a night."
Otago Regional Council environmental services manager Martin King said if the "voracious" eaters were confirmed in the region, they would have to be removed by the affected landowners. In the meantime, the council was keeping a watching brief.
"They [wallabies] are not in the area and we do not want them in our area."
Mr Kyle said any sightings of wallabies should be reported.
Wenita Forest Products chief executive Dave Cormack said he had heard rumours about wallabies moving south but was not aware of any imminent threat.
"The idea of any other pest contributing or increasing the damage suffered is not a prospect we'd look forward to."
Federated Farmers North Otago president Ross Ewing said it would not be the end of the world if wallabies came to Otago, but the region would be "better off without them".
Waimate's Bennett's wallabies or red-necked wallaby
• 1870 brought to Christchurch by Captain Thompson
• 1874 liberated to Hunter Hills
• Occupy about 350,000ha of land in Hunter Hills, Two Thumb Range, the Kirkliston and Grampian mountains
• Considered pests under regional council pest management strategies
• Browse on grasses, clover, small shrubs and trees
• Is a marsupial
• Young born Feb/March and joey remains in pouch until Nov/Dec
• Can live up to 15 years
• Are nocturnal and solitary
• Are about 86cm and weigh 15kg
• Have greyish brown body with pale grey chest
Source: Waimate District Council website
