Nutrient Trading in Lake Rotorua: A Policy Prototype

Water quality in Lake Rotorua has been declining for at least the last 30 years as increased levels of nutrients have entered the lake. Despite significant effort and expenditure, the level of nutrients entering the lake still exceeds sustainable levels. A nutrient trading system would help the catchment achieve this goal for the least cost. Nutrient sources would bear the cost of their impact on water quality and hence take these costs into account in their decision-making. If the community decides to achieve its environmental goals using a nutrient trading scheme, this paper presents a scheme that would achieve nutrient loss reductions for the Lake Rotorua catchment cost effectively, whilst maximising participant flexibility and environmental certainty.