You are here > Home / Research / Environmental Regulation / Nutrient Trading and Water Quality
Nutrient Trading and Water Quality
This programme explores how we can apply market-based instruments to the problem of non-point source water pollution from agriculture.
To date the programme has considered contamination problems in Lake Taupo (with Environment Waikato) and Lake Rotorua. We have identified the key economic, natural science, and policy development process issues that must be addressed to effectively design and assess the potential value of a trading system in such a complex, contentious area.
Our research has two key components. We are developing the new, integrated model N-TRADER from the existing models LURNZ (Motu) and ROTAN (NIWA). We are also investigating nutrient trading policies and regulation frameworks under uncertainty.
NEW: Click here (PDF 132KB) to download our nutrient trading project report to the Foundation for Research, Science and Technology for 2008/09.
Nutrient Trading in the Lake Rotorua Catchment
Motu has developed a prototype nutrient trading system for the Lake Rotorua catchment. Throughout the design process we met with the Nutrient Trading Study Group, a small focused group of experienced stakeholders and technical experts, facilitated by CommonGround, to discuss different aspects of the system. A short article about the study group and its role is printed in Motu Research Update 15.
Each meeting of the study group focused on a different aspect of the trading system. Discussions were informed by research at Motu and elsewhere, and by drawing on group members’ expertise. From each meeting we produced a working paper, and these papers together form the design of the system.
The papers produced by this process cover the following topics:
- Overview (Motu Working Paper 08-02). Provides an overview of the prototype nutrient trading system and its components.
- Goals and trading caps (Motu Working Paper 07-08). Explores the issues involved in translating an environmental goal into allowances and a trading cap.
- Reporting and modelling nutrient inputs Motu Working Paper 08-03). Describes how models can be used by regulators and landowners to estimate nutrient losses as part of a water quality management system.
- Choosing the scope of a nutrient trading system (Motu Working Paper 08-05). Discusses the tradeoffs required to decide which sources to include in a nutrient trading system.
- Social, cultural, economic and environmental issues (Motu Manuscript 2008). Features of the local context relevant to a nutrient trading system for Lake Rotorua.
- Legal mechanisms (Advice from Chapman Tripp). Looks at a nutrient trading programme within the context of the Resource Management Act 1991.
- Cost sharing and allowance allocation (Motu Working Paper 09-09). Clarifies how the benefits and costs of water quality improvements in Lake Rotorua are likely to be shared in the absence of a trading system, and how costs could be shared if a trading system were in place.
Nutrient Trading and Emissions Trading: Interactions
Motu Note #2 surveys interactions between nutrient trading and the agricultural component of the New Zealand emissions trading system. Implementing both systems could have a large impact on farmers in affected catchments. However, these costs may be lower than the sum of the costs of each individual system.
Motu Notes are less technical than our working papers and are designed to appeal to a general or policy audience.
Lake Rotorua Short Films
Motu commissioned Wellington filmmaker Jess Feast to produce two short films on Rotorua water quality issues.
The films interview dairy farmer Jamie Paterson from Hamurana, north-east of Lake Rotorua, and three Maori landowners and caretakers from Te Arawa, tangata whenua in the Rotorua region. All have knowledge of the prototype system through their involvement in our stakeholder group, the Nutrient Trading Study Group, but were free to present their own views of the proposed system and its implications.
You can watch the films here.
Environmental Trading Game
Motu’s environmental trading game is freely available for download. Participants act as farmers in a nutrient (or emissions) trading system, though the game can be adapted for any other environmental problem. It is suitable for use with any group interested in better understanding these issues, both in an educational or professional setting (and comes with non-technical instructions).
Find out more and download the game here.
Useful links
We have found the following links helpful for information on this topic:
Environment Bay of Plenty
- Lake Rotorua/Rotoiti webpage
- Lake Rotorua/Rotoiti propose Action Plan
- Lake Rotorua/Rotoiti fact sheets
- Lake Rotorua/Rotoiti technical reports
Parliamentary Commissioner for the Environment
- Restoring the Rotorua Lakes: The Ultimate Endurance Challenge Report
- Dairy Farming Impact on Water Quantity and Quality: Briefing to the Primary Production Committee
Ministry for the Environment and Ministry of Agriculture and Forestry
- Kerr, Suzi. 2010. ‘Creating a Cost Effective Nutrient Trading System for Lake Rotorua’ Natural Capital Project, Stanford University, 21 January 2010.
- Kerr, Suzi. 2008. 'Nutrient Trading in Lake Rotorua: A Prototype System,' Motu Public Policy Seminar, September.
- Kerr, Suzi. 2009. "Environmental markets: how can they work for water quality and climate change?" Auckland Public Policy Seminar, April.
- Gunningham, Neil. 2007. "Innovative governance and smart regulation: institutional and regulatory regimes for a water-constrained world," Motu/Landcare Research seminar, December.
- Todd, Maribeth and Suzi Kerr. 2009. "How Does Changing Land Cover and Land Use in New Zealand relate to Land Use Capability and Slope?" Motu Working Paper 09-17.
- Kerr, Suzi and Kelly Lock. 2009. "Nutrient Trading in Lake Rotorua: Cost Sharing and Allowance Allocation," Motu Working Paper 09-09.
- Kerr, Suzi and Marianna Kennedy. 2009. 'Greenhouse Gases and Water Pollutants: Interactions Between Concurrent New Zealand Trading Systems,' Motu Note #2.
- Lock, Kelly; Suzi Kerr, Tim Cox and Kit Rutherford. 2008. "Assessing design options for a Nutrient Trading System using an integrated model," paper presented at the ESAM/NZAE Conference 2008, Wellington, June.
- Kerr, Suzi and Kit Rutherford. 2008. "Nutrient Trading in Lake Rotorua: Determining Net Nutrient Inputs," Motu Working Paper 08-03.
- Lock, Kelly and Suzi Kerr. 2008. "Nutrient Trading in Lake Rotorua: Overview of a Prototype System," Motu Working Paper 08-02.
- Lock, Kelly and Suzi Kerr. 2008. "Nutrient Trading in Lake Rotorua: Choosing the Scope of a Nutrient Trading System," Motu Working Paper 08-05.
- Kerr, Suzi; Kit Rutherford and Kelly Lock. 2007. "Nutrient Trading in Lake Rotorua: Goals and Trading Caps," Motu Working Paper 07-08.
- Lock, Kelly and Suzi Kerr. 2007. "Nutrient Trading in Lake Rotorua: Where Are We Now?" Motu Working Paper 07-06.
- Kerr, Suzi; Glen Lauder and David Fairman. 2007. "Towards a Design For a Nutrient Trading Programme To Improve Water Quality in Lake Rotorua," Motu Working Paper 07-03.
- Kerr, Suzi; Kit Rutherford and Elena Irwin. 2006. "Proposed Research Programme on Water Quality for Lake Rotorua," proposal submitted to the Foundation for Research, Science and Technology.
- Rutherford, Kit and Tim Cox. 2009. "Nutrient trading to improve and preserve water quality," Water & Atmosphere, 17:1, pp. 12-13.
- Rive, Vernon; Barclay Rogers and Cameron Law. 2008. "Nutrient Trading in Lake Rotorua: Legal Mechanisms," Advice from Chapman Tripp - Website version.