Agricultural land use management responses to a cap and trade regime for water quality in Lake Taupo catchment, New Zealand

Managing the effects on water quality of diffuse nitrogen pollution from agriculture is a widespread problem. Cap and Trade is a policy approach which limits nitrogen discharge (the cap) but provides flexibility in land management (using trading of nitrogen). Lake Taupo Nitrogen Trading Programme (LTNTP) in New Zealand is an exemplar case in applying nitrogen discharge limits at both catchment and farm levels, with positive environmental effects at catchment scale. Less is known about the effects on land management at farm scale. This article investigates the land use and farming practice outcomes of the LTNTP. Analysis used landscape biographies focused on different scales of effect. Results identify five pathways of change in the catchment. The dominant trajectory is lowered production with little on-farm reinvestment. Lack of viable alternative low nitrogen land-uses is a major constraint, and non-financial influences on farmer trading behaviour are also significant. To achieve its socio-economic goals, Cap and Trade policy requires farmer social values aligned to cap and trade, and research that supports practice innovation.

Automated summary

Managing diffuse nitrogen pollution from agriculture is a widespread problem. Cap and Trade policies, like the Lake Taupo Nitrogen Trading Programme in New Zealand, show positive environmental effects at the catchment scale. However, there are challenges at the farm scale, such as lack of viable low nitrogen land-uses and non-financial influences on farmer behavior. Achieving socio-economic goals with Cap and Trade policies requires aligning farmer social values and supporting practice innovation through research.