The work contained in this case study examines six different approaches to nutrient management, and simulates the economic costs and environmental impacts associated with them using NManager. The work is focused on Lake Rotorua in the Bay of Plenty in New Zealand, where the regional council is concerned with the decline in the lake's water quality and has set a goal to restore the lake to its condition during the 1960s.
NManager combines data from several external models with its own internal calculations. These include inputs from ROTAN, OVERSEER, and Farmax. In the modeling groundwater lags are defined for eight groundwater lag zones based on mean residence times of parcels of land within the zones. Legacy loads of nitrogen (nitrogen already present in groundwater that will input to lake in future) are estimated by ROTAN. The proportion of different land uses is determined for each groundwater lag zone.
Landowner management practices are modeled using profit functions. All farms of each type are assumed to be homogeneous and have the same leaching and profit per hectare before regulation. Six approaches to regulation are modelled to simulate potential nitrogen outcomes for the lake and to understand land owner behaviour under different regulation.
Outputs of future nitrogen loads for the different appraoches to regulation were provided by NManager.
The net present value of the cost of each mitigation under each of the schemes is estimated by NManager. The cost of mitigation under the export trading scheme is estimated to be 20% less than under land retirement.
The work undertaken in this report demonstrates 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, or sufficiently certain, gains in cost effectiveness over the simple trading scheme to justify the increase in complexity involved in their implementation.
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 nutrient trading scheme, and two more complex trading schemes that account for groundwater lags.
Anastasiadis, Simon, Marie-Laure Nauleau, Suzi Kerr, Tim Cox, and Kit Rutherford. 2011. "Does Complex Hydrology Require Complex Water Policy? NManager Simulations for Lake Rotorua," Motu Working Paper 11-14, Motu Economic and Public Policy Research, Wellington.