Nutrient Trading in Lake Rotorua: Choosing the Scope of a Nutrient Trading System

A nutrient trading system is one mechanism that is currently being considered to control and reduce nutrient loss into Lake Rotorua. However this may not be the best mechanism for controlling nutrient loss from all sources. A more comprehensive system improves efficiency and decreases market power opportunities, but it can also bring increased compliance and administrative costs. This paper discusses which sources should be included in a nutrient trading system for Lake Rotorua. It examines existing systems and presents an empirical analysis to estimate the impact of including different nutrient sources.