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Water Quality Management in Lake Rotorua: A Comparison of Regulatory Approaches Using the NManager Model
Abstract
This paper examines six different approaches to nutrient management and simulates the economic costs and environmental impacts associated with them using NManager, a partial equilibrium simulation model developed by Motu and NIWA. In particular, we focus on Lake Rotorua in the Bay of Plenty in New Zealand, where the regional council is concerned with the decline in water quality in the lake and has set a goal to restore the lake to its condition during the 1960s.
Reaching this goal will require significant reductions in the amount of nutrients discharged into the lake, especially from non-point sources such as farm land. Managing water quality is made difficult by the presence of groundwater lags in the catchment: nutrients that leach from the soil arrive at the lake over multiple years. The mitigation schemes we consider are land retirement, requiring best practice, explicit nitrogen limits on landowners, a simple export trading scheme and two more complex trading schemes that account for groundwater lags.
We demonstrate that best practice alone is not sufficient to meet the environmental target for Lake Rotorua. Under an export trading scheme the distribution of mitigation across the catchment is more cost effective than its distribution under explicit limits on landowners or land retirement. However, the more complex trading schemes do not result in sufficient gains in cost effectiveness over the simple scheme to justify their implementation as there is minimal (or negative) improvement in the cost of mitigation given the increase in complexity.
Citation
Anastasiadis, Simon. 2011. "Water Quality Management in Lake Rotorua: A Comparison of Regulatory Approaches Using the NManager Model," New Zealand Association of Economists Annual Conference, Wellington, 29 June-1 July 2011.
Motu code: MEL0800
JEL codes: