1. Summary of Pilot Study for Upper Waikato in the Joint Venture project

2. Waikato River Catchments
Draft - Confidential
Why Waikato?
Waikato River Catchments
Opportunity to test proposed national bottom lines.
Support plan change on water quality for the Waikato River Catchment.
First since treaty settlement with 5 river iwi:
Specifies a “Vision and Strategy” which prevails over other policies and sets objectives for swimability and food gathering across all water bodies.
Agricultural sector is key to the economy.
Freshwater bodies are valued for cultural and recreational uses.
Freshwater quality is an increasing concern.
Key Messages
We have focused the economic studies on regions where we saw the opportunity to test proposed national bottom lines. As we will see further in the presentation, the proposed bottom line for e.coli is breached in Upper Waikato, and the proposed bottom line for Chlorophyll- A in the hydrolakes in Upper Waikato has potential to be breached in the future.
The Waikato studies will also inform the plan change on water quality for the Waikato River Catchment.
This is the first plan change in the Waikato since the treaty settlement with the five river iwi.
The treaty settlement specifies a “Vision and Strategy” which sets objectives for swimability and food gathering (mahinga kai) throughout the length of the catchment. These are potentially more stringent than proposed bottom lines and the current National Policy Statement-Freshwater Management.
The “Vision and Strategy” is the primary direction setting document for the Waikato and Waipa rivers and prevails over any inconsistent provisions in other policies.
Waikato is the fourth-largest regional economy in New Zealand, and agriculture is key to the economy.
The region’s freshwater bodies are valued by the community as they are of spiritual significance to Maori, provide recreational activities and are also pivotal to the region’s tourist attractions e.g. Lake Taupo and Waitomo.
However, freshwater quality is an increasing concern. Waterways in the region have the third highest nitrate levels of any region in New Zealand. This is mostly driven by non-point source discharges of nitrates. Sediment levels are high in Waipa and Lower Waikato and e.coli is high in Waipa.
Reference notes
The plan change for Upper Waikato is at the initial stage and is titled “Healthy Rivers: Plan for Change/Wai Ora: He Rautaki Whakapaipai”. Plan changes will be developed for the Waihou-Piako and Coromandal catchments from 2014 and the West Coast catchments from 2017.
Settlement legislation includes the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Act 2010.
The Waikato studies do not consider the potential impacts of water quantity limits. In 2012, a variation to the Waikato Regional Plan (Variation 6) was implemented by WRC to manage the allocation and use of all freshwater in the region. This was a highly contested variation due to the competing interests attempting to gain priority for their water takes. In the long term, the limits are expected to create greater security of supply for resource users and incentivise more efficient use of water to create headroom for economic growth.
Waikato region contains 25% of NZ’s dairy cattle, 13% of livestock and 6% of sheep. Dairy farming and processing contributed 10% ($1.4B) of Waikato’s value add (GRP) in 2011, with the rest of agriculture contributing 5% ($658M). The region has almost 40% of installed generation capacity (8 hydro-electric power schemes). There has been a notable trend of conversion from livestock farming to dairying in the region and between , there were significant forestry to pasture conversions (24,000ha), predominantly in Upper Waikato. 2

3. Phosphorus (Tonne/Yr)
Draft - Confidential
Nutrient Discharges by Sector
Waikato River Catchment
Nitrogen (Tonne/Yr)
Nitrate Leaching
Phosphorus (Tonne/Yr)
Phosphorous Loss
Key Messages
Agriculture is the primary source of both nitrogen and phosphorus discharges in the Waikato River Catchment overall.
Municipal and industrial discharges are currently regulated and are minor sources of contamination, although the contribution of these sectors to nitrogen discharges is more significant than in other regions, e.g. Hinds <0.5%
The data underlying the pie charts are mass flows of nitrogen and phosphorus in the Waikato River catchment during
The estimates for natural background discharges are based on the pre-development massflows.
Values are indicative only and are subject to regular updating.
Reference notes
Total nitrogen discharged in the Waikato River Catchment is approximately 9883 tonnes/yr (29% Upper Waikato, 35% Waipa, 36% Lower Waikato).
Total phosphorus discharged in the catchment is approximately 988 tonnes/yr (26% Upper Waikato, 27% Waipa, 47% Lower Waikato).
In Upper Waikato, natural or background nitrogen and phosphorus levels are higher than agriculture at 51% and 55% respectively.
Natural/background nutrients are caused by natural soil erosion and not land use.
Agriculture is the primary source of nitrogen and phosphorus discharges.

4. Recreation & Cultural Values
Draft - Confidential
Recreation & Cultural Values
Waikato Region
First step in identifying the values and uses of water bodies in Waikato.
Based on preliminary data, the top 5 hotspots include:
Waikato River in Hamilton – 19% (of kms travelled)
Lake Rotoroa (Hamilton) – 11%
Lake Karapiro - 10%
Port Waikato – 5%
Lake Hakanoa (Huntly) – 2%
Top recreational activities include:
Relaxing
Walking or jogging
Sightseeing
Picnicking
Fishing
Photography
Swimming
Bird watching
Key Messages
As a first step to identify the non-market values of freshwater in the region, we are currently using an online survey to collect primary data on freshwater sites visited in Waikato and on recreational and cultural uses of the sites. We have been successful in gathering primary data from 1200 New Zealanders to date.
Although the data has not yet been analysed, preliminary results show that the top hotspots (based on total distance travelled) include: Waikato River in Hamilton; Lake Rotoroa; Lake Karapiro; Port Waikato; and Lake Hakanoa. The map highlights that people value a number of sites in the region.
There are a wide of recreational uses and values of the water in the Waikato region.
Reference notes
Non-market values of water are those are not readily valued in monetary terms. These values include use values such as recreational use values, cultural and spiritual values and non-use values such existence values (value from knowledge of continuous existence); option values (future use); and bequest values (environmental integrity for future generations).
The data collected by the survey will be used to estimate the marginal impact of changes to water quality on recreational and cultural values in Waikato River Catchment. The data will be analysed using the travel cost method to estimate the value or willingness to pay associated with recreational and cultural uses of freshwater sites in Waikato, based on distances travelled and/or the opportunity cost of travel time.
Hotspots = distance x number of visits. Top activities = number of people who do the activity / total water users. 4

5. Recreation & Cultural Values
Draft - Confidential
Recreation & Cultural Values
Uses and values of Lake Karapiro
Top recreational and cultural activities include:
Non-active (relaxing, spectator, picnicking etc.);
Boating;
Rowing & kayaking.
Perception of water quality:
Excellent (17%)
Good (39%)
Fair (32%)
Poor (10%)
Key Messages
Lake Karapiro is at the bottom of the Upper Waikato catchment, and has lower water quality than sites further upstream, i.e. the lake in the C band for Chlorophyll-A. Water quality and the cost of meeting objectives will be discussed in later slides.
The lake has been identified as a valued site or hotspot, and by zooming into the area we are able to see how respondents use the area as well as their perception of the water quality.
The top recreational and cultural uses of the lake include: relaxing; picknicking; boating; rowing and kayaking.
Respondents are mixed in their perception of water quality.
Further work will link high use sites and values to changes in water quality.
Reference notes
Top activities Karapiro = number of Karapiro visitors who do the activity / total   visitors to Karapiro
Perceptions of quality = number of visitors who gave the score in that range (average of the 5-point scales for clarity, health, eco)/ total visitors. 5

6. Municipal & Industrial Sector
Draft - Confidential
Municipal & Industrial Sector
Waikato River Catchment
Overview of what has already been implemented
to mitigate discharges
Key Points
Replacement cost of wastewater treatment infrastructure already implemented in the Waikato is estimated at $347M.
Municipal wastewater
(2013 $m)
Municipal stormwater
Industrial wastewater
Replacement cost
193 1
154
Annual operating cost 8 9
This infrastructure prevents >70% contaminant produced from entering the Waikato.
Key Messages
Replacement cost of wastewater treatment infrastructure already implemented to mitigate discharges (discharging directly into) the Waikato is estimated at $348m.
Municipal and industrial treatment systems prevent more than 70% of contaminants produced from entering the Waikato River catchment. Virtually all faecal coliforms and E coli are prevented from entering the catchment.
Were it not for municipal and industrial wastewater treatment, we would have 4-30 times more BOD, SS, TN, NH3-N and TP being discharged into the Waikato River catchment from these sources (stormwater not included), and times more faecal coliforms and E. coli.
Although industrial generally removes a lower percentage of contaminants prior to discharging to the catchment, it removes a larger quantity.
Reference notes
There has been significant investment in the municipal and industrial sectors to mitigate discharges which has resulted in:
80% of nitrogen discharges mitigated from municipal wastewater, 66% from industrial wastewater;
77% of phosphorous discharges mitigated from municipal wastewater, 91% from industrial wastewater.
Replacement cost is likely to an underestimate for two reasons:
Conservative estimates for industrial plants, for which little information was available; and
There may be many other industrial and commercial bodies that produce wastewater that is treated prior to entering the municipal system – so total expenditures on wastewater treatment will be higher than those indicated.
The ‘cost per contaminant’ tables should not be used to compare costs across industries or between municipal and industrial because of the nature of the wastewaters being treated. Treatment processes target different aspects, e.g. contaminant or colour.
Further work to evaluate the effectiveness of increasing the level of treatment to reduce discharges. 6

7. Introduction to Catchment Modelling
Draft - Confidential
Introduction to Catchment Modelling
Land use and nutrients in Upper Waikato Catchment
Upper Waikato Sub-Catchments & Monitoring Sites
Integrating the Studies
Farm – Level Analysis
Models cost of mitigation &
resultant change in N & P
Economic Modelling
Models limits on nutrient concentrations to meet policies & evaluates impacts in the catchment
Key Messages
As the agricultural sector is both a key contributor to the regional economy as well as a contributor to nutrient discharges, catchment modelling has been carried out for the Upper Waikato catchment, where dairy, sheep and beef and forestry are the primary land uses. A similar analysis will be carried out for Waipa and Lower Waikato in the next phase of the project.
The modelling requires the complex integration of a number of studies:
Farm Level Analysis: provides data on the costs of mitigation/management options and the resultant changes in N and P loss on dairy and sheep and beef farms in the catchment.
Water Quality Modelling: aggregates the farm level nutrient losses to water quality concentrations at the 24 monitored sites across the catchment. It provides information on the nutrient losses (i.e. attenuation) between the farm source and the subsequent sub-catchment monitoring stations and between the sub-catchment and the main stem of the river. The nutrient loads at each of the monitoring stations are used to calculate median total nitrate, TN and TP and Chlorophyll -A concentrations at each monitoring station.
Economic and Environmental Modelling: integrates the farm level data and the hydrological data to model the economic and environmental impacts of water quality objectives in the Upper Waikato catchment. With the model, we can set limits on nutrient and Chlorophyll-A concentrations inferred by different water quality policies, and the model identifies the most optimal set of land uses and management practices within these constraints.
Water Quality Modelling
Converts farm level losses into sub-catchment water quality outcomes 7

8. Farm Level – Dairy Upper Waikato
Draft - Confidential
Farm Level – Dairy Upper Waikato
Current Nitrate Leaching
Nitrate Leaching
Nitrate Leaching
Key Points
DairyNZ collected primary data on 103 randomly selected farms in the Upper Waikato across a range of soil types and dairy systems.
N leaching generally ranges from kg N/ha.
Key Messages
For the farm level data on Dairy, DairyNZ surveyed and collected primary data on 103 randomly selected farms in the Upper Waikato across a range of soil types and dairy systems.
The farms were categorised into 14 farm types to cover the full range of soil, rainfall and slopes across the catchment.
N leaching generally ranges from kg N/ha. 8

9. Farm Level – Dairy Upper Waikato
Draft - Confidential
Farm Level – Dairy Upper Waikato
Costs of mitigating nutrient discharges
Key Points
Variation on cost effectiveness of mitigation options:
standoff pads – cost effective;
building effluent storage – less effective;
optimal reductions in stocking rates, fertiliser and feed – costly.
Key Messages
The dairy farm level analysis evaluates the costs and benefits of mitigation and the resultant changes in nitrate (N) loss.
This was modelled using OVERSEER and an farm system optimisation model.
We looked at three different mitigation options:
Standoff pads: were quite cost effective and are represented by the initial flatter part of the curve here,
Building effluent storage to avoid spraying effluent directly from the farms sump where applicable was not as effective,
Optimal reductions in the amount of nitrogen excreted by animals through reductions in stocking rates, fertiliser use, and feed. These reductions were even more costly and are at the steeper right hand end of the curve here.
Opportunities to cheaply mitigate nutrient loss vary considerably across farm systems because of differences initial characteristics of the farm such us stocking rate, system type, room to improve efficiencies etc.
Opportunity to cheaply mitigate nutrient loss varies across farm systems. 9

10. Upper Waikato – Sheep & Beef
Draft - Confidential
Upper Waikato – Sheep & Beef
Current Nutrient Losses & Costs of Mitigation
Key Points
Current nitrate leaching ranges from kg N/ha and kg P/ha.
Sheep & Beef sector currently leaches less N than the dairy sector.
Limited scope for change in N loss per farm. Some mitigation of P with planting riparian mgmt and fencing streams .
Key Messages
Current nutrient discharges range from 15-25kg N/ha and 2 – 5.1 kg P/ha for sheep and beef farms in Upper Waikato, less than the dairy sector
To analyse the cost of mitigation, two model farms were developed which were representative of the drystock sector for a hill farm and an intensive finishing farm.
A selection of mitigation options were modeled on the base farms to analyse the individual impacts of different options.
Mitigation results in no change in nitrate loss per farm and some mitigation of phosphorus through planting riparian management and fencing streams. 10

11. Current State of Water Quality
Draft - Confidential
Current State of Water Quality
Meeting Proposed National Bottom Lines in Upper Waikato
Key Messages
The table highlights the current state of water quality for 18 long term water quality monitoring sites in the Upper Waikato.
These are locations where we have data for determining current water quality and for which limits would apply for future development scenarios.
The attributes that are relevant to the National Objectives Framework include:
Nitrate for ecosystem health
Chlorophyll-a, nitrogen and phosphorus for ecosystem health of the hydro lakes
Periphyton is not an issue in the main stem or tributaries because channels are predominantly deep with soft bed material, which does not provide substrate for attached forms of algae
Algae grows as Phytoplankton (suspended in the water column) the abundance of which is measured by Chlorophyll-a concentration, which is stimulated by N & P
E. coli for human health (secondary contact) - indicator bacteria
Currently, proposed national bottom lines are met for ecosystem health at all sites in the Upper Waikato.
Bottom lines for human health for secondary contact are not met at only one site in the Upper Catchment.
This means that the NPS (maintain or improve existing water quality in the catchment) is more binding than NOF bottom lines.
Although it is not covered in the analysis, we do know that there are other sites breaching the bottom line for e.coli in Waipa. Furthermore, in the lakes in Lower Waikato, bottom lines for Chlorophyll A may be breached in the peat lakes of the main stem and larger lakes.
The vision and strategy sets more stringent objectives including swimmabilty and mahinga kai.
These objectives require a greater level of improvement in water quality than would be required as a result of the national bottom lines or to maintain or improve water quality.
Therefore, the vision an strategy objectives would result in increased levels of economic impact than have been identified in the regional study we are discussing here. 11

12. Nitrate loads are increasing in the catchment.
Draft - Confidential
Nitrate Trends at the Narrows
Key Messages
Although we are comfortable that we do not breach NBL currently, there are strong trends for nitrate and TN in the Waikato catchment.
This could result in some sites falling from the C to D band over time. For example TN, TP and Chl-a at Hamilton (Narrows) is at 60% or more of the D-band threshold. At this site nitrate-nitrogen is trending upwards at approximately 4% per year ( trend).
Despite increasing nitrate at many sites on the Waikato river, there have been reducing trends in Chl-a. We do not currently understand this inconsistency, but we assume that in the long run, if nitrogen loads continue to increase, chlor – A would also increase. This is because differences in Chla-a between sites is well explained by differences in nutrients (both N and P).
The current rate of change reflects two processes:
Rapid catchment response to intensification of land use during the last 20 years;
Slower catchment response to historical land use changes due to the movement of a component of the flow through the groundwater system (known as a “lag”).
The lag means that if intensification stopped, the trends would continue, albeit at a reduced rate.
The length of time that the trends will continue is associated with the “travel times” for groundwater.
A lagged response means that the future contaminant loads and concentrations will be larger than the current – this is referred to as the “load to come”.
Chemical dating of groundwater and modelling indicates that travel times are in the order of 50+ years for most of the Upper Waikato tributary sites.
Estimating the eventual load of nitrogen (when the catchment comes to equilibrium) is very difficult because we do not have a good history of land use change and ground water flow is complex.
Nitrate loads are increasing in the catchment.
How long the trend will continue is unknown, due to the complication of ground water lags. 12

13. Water Quality Modelling
Draft - Confidential
Water Quality Modelling
Accumulates and Attenuates Annual Loads
Key Messages
A catchment model was used to account for all sources of contaminants in the catchment and to reconcile these with the loads observed at each of the water quality monitoring stations.
Sources include the point sources (municipal and industrial wastewater + geothermal) and the diffuse loses from farms.
The loads are less than the inputs due to attenuation of contaminants within the catchment.
Attenuation is caused by natural processes in the catchment that remove contaminants by:
sedimentation and burial;
de-nitrification;
microbial dieoff.
Attenuation means the catchment source load (the loss from the land) is more than the “Realised load” – the load at a the water quality monitoring stations.
Attenuation provides a degree of resilience to the effects of land use/contaminant discharge but is variable between different catchments and its quantification is therefore important.
Reference notes
Point sources were supplied by Waikato Regional Council. Total is about 8.5% of load at the Narrows for N, although locally their contribution to loads can be larger (e.g. Tokoroa waste is about half of the load at the Mangamingi Stream).
The load at the Lake Taupo outlet was assumed to remain at the current measured value. 13

14. Draft - Confidential
Attenuation and Lags
Key Points
The realised load is a result of the source load plus two processes: lags & attenuation.
Realised load could result from large attenuation and small lags OR vice versa.
Estimates of attenuation are uncertain as confounded by groundwater lags.
Key Messages: The problem with estimating the true attenuation
The lag in nitrogen delivery is important because it effects the estimation of attenuation.
We can estimate the catchment source load and the realised load.
However, attenuation is difficult to evaluate accurately as confounded with effect of lags, which are uncertain.
The same realised load could result from large attenuation and small lags OR could be resulting from large lags and smaller attenuation.
Assessment point “realised” load 14

15. Attenuation Scenarios
Draft - Confidential
Attenuation Scenarios
Nitrate at the Narrows
Key messages
We expect the nitrate to continue increasing into the future as groundwater is contributed from the more distant parts of the catchment that have been subject to past land use intensification.
However, we do not know at what rate the nitrogen will continue to increase (i.e. we do not know what the future trajectory of the nitrogen concentrations will be or what the “load to come” is).
Therefore there is uncertainty about attenuation and consequently three scenarios have been analysed in the economic modelling.
The approach in the Upper Waikato Study has been to model three attenuation scenarios: low, low-moderate and high.
We know that the highest attenuation is represented by calibrating the attenuation factor to match current realised load.
There are differences in this between subcatchments, but on average this is 50%. For example, the current realised load at the Narrows is about 50% of all the estimated inputs.
For low scenario attenuation was set at 20%. There are two sub-catchments where the current realised load is more than 80% of the source load (i.e. attenuation is less than 20%).
This indicates that such low values are not impossible, but its considered to be somewhat less likely on average across the catchment.
The medium scenario set attenuation at 30% is low relative to values that have been adopted by other regions (e.g. Horizons was 50%).
However, given the slow response of the system, it is somewhat more likely as it is reasonable to expect some load to come – and an attenuation of 30% is consistent with this.
Three attenuation scenarios are analysed in the economic modelling as there is uncertainty on what the “load to come” will be. 15

16. Impact of Water Quality Objectives
Draft - Confidential
Impact of Water Quality Objectives
Overview of Scenarios
Evaluates the economic impacts of meeting water quality objectives in Upper Waikato
Policy Scenarios
Simulations
Policy Scenario
Attributes
Baseline
(No policy)
Sub-catchment meets proposed national bottom lines (NBL) for Chlorophyll-A and nitrate toxicity concentrations.
2. National Bottom Lines (NBL)
Chlorophyll-A and nitrate toxicity concentrations to meet C band (Maintain above D band at all relevant sites, allowing flexibility upstream at and above the C band).
3. Maintain overall across catchment with flexibility
Average Chlorophyll-A and nitrate toxicity concentrations maintained across the catchment allowing flexibility at sites.
4. Maintain at all sites
Chlorophyll-A and nitrate toxicity concentrations to be maintained at or below historic medians at all relevant sites .
Assumptions
Scenario
a. Attenuation
High
Low – Moderate
Low
b. Dairy conversions
No conversion
25,000 ha converted from exotic forestry to dairy production
c. Trading
Based on the
chlorophyll-A level at Narrows.
Trading vs. flat caps
Key Messages
The baseline scenario models and matches the current land use in the Upper Waikato catchment.
The modelling considers the baseline and three policy scenarios:
National Bottom Lines:
Requires chlorophyll-A concentrations at the five relevant sites to be above the D band. Nitrate levels are required to be above the D band at all monitored sites.
Maintain current water quality overall across the catchment with flexibility for unders and overs between sites:
This closely reflects the existing NPS-FM which would allow some sites to degrade.
Requires average chlorophyll-A and nitrate toxicity concentrations to be maintained across the catchment allowing flexibility at sites.
Maintain water quality at all sites in the catchment:
This is more stringent than the NPS-FM and would provide a lower bound of the Vision and Strategy, which would be more stringent again.
Requires that the chlorophyll-A levels at the five relevant sites are maintained at or below their historic medians. Nitrate levels must not surpass their historic medians at all sites.
For each of the policy scenarios, assumptions regarding attenuation, forestry and trading were simulated.
The high attenuation scenario is consistent with short lag times between N loss and its expression in waterways, and thus infers that there is a minor N load to come.
In contrast, the low attenuation scenarios are consistent with long lag times between N loss and their expression in waterways, and thus infer that there is a significant N load arising from past agricultural production yet to arrive.
Two assumptions are simulated for dairy conversion: no conversion and 25,000 ha converted from exotic forestry to dairy production.
Only the results under dairy conversions are presented in the following slides, as conversion of 25,000 ha is considered as possible under current water quantity constraints.
Reference notes
Chlorophyll-A monitored sites include Ohaaki, Ohakuri, Whakauru, Waipapa, and Narrows. 16

17. Impact of Water Quality Objectives
Draft - Confidential
Impact of Water Quality Objectives
Impact on Land Use in Upper Waikato
NBL
Maintain Overall with Flexibility
Maintain at all Sites
Key Messages
The proposed bottom lines for nitrate toxicity and Chlorophyll-A are each currently met and would only be breached with dairy conversions of 25,000 ha and low attenuation. However, 22,000 ha of forestry could be converted to dairy, without breaching bottom lines.
National bottom lines is an irrelevant scenario in Upper Waikato as water quality cannot degrade under NPS-FM and Vision and Strategy.
NBL will not impact Upper Waikato, but may potentially impact in the catchments downstream.
Maintaining and improving water quality is more stringent than meeting proposed bottom lines. However, it is impossible to test the impacts of NPS-FM as it will depend on how councils decide on how and where to manage freshwater.
Therefore, two objectives were tested:
Maintain water quality overall across the catchment with flexibility between sites – this closely reflects the existing NPS.
Maintain water quality at all sites in the catchment – this would provide a lower bound of the Vision and Strategy.
The results of the modelling for these scenarios are highly sensitive to attenuation. Under both objectives, land use change and mitigation on dairy farms is required under the low-moderate and low attenuation scenarios due to the load to come.
However, change is more significant when water quality is maintained at all sites. This highlights the value of allowing flexibility for overs and unders in sites across the catchment.
Present agriculture would need to decelerate or de-intensify to maintain current water quality. Considerable increases in on-farm mitigation would be required, i.e. stand-off pads on at least 75% of dairy farms.
Substantial afforestation (19-49%) would be required as the available mitigations simulated in each land use are insufficient in their effectiveness on hill country to meet the objectives, without significant land use change.
Forestry conversion would be constrained due to the increased levels of afforestation required.
Reference notes
Dairy conversions would result in approx. 15% increase in dairying in the Upper Waikato.
Results are optimised and based on most efficient land use change and mitigation.
Proposed bottom lines for ecological health currently met.
Only breached under low atten.
No change to land use and some conversion to dairy.
Highlights value of allowing flexibility for unders & overs at sites across the catchment.
Maintaining water quality at all sites under low attenuation would require significant land use change & mitigation on dairy farms. 17

18. Impact of Water Quality Objectives
Draft - Confidential
Impact of Water Quality Objectives
Impact on Agricultural Production in Upper Waikato
Key Findings
Maintaining water quality under low-moderate & low attenuation would severely impact agriculture.
Beef & lamb would fall by > 25%.
Cow numbers, milk production, & labour would fall by 8-25%.
A lack of effective mitigation practices on sheep, beef, and dairy land, when combined with a large N load to come, necessitates afforestation to maintain water quality.
Key Messages:
Levels of agricultural output indicate the degree of land-use change required within a given policy.
Low attenuation scenarios mean that large land use changes occur and this has a large subsequent effect on production.
Again, the impacts are less severe by allowing flexibility for unders and overs across the catchment.
Large losses in lamb and beef reflect the land change from sheep and beef to forestry.
A lack of effective mitigation practices on sheep, beef, and dairy land, when combined with a large N load to come, necessitates afforestation to maintain water quality under both objectives. 18

19. Impact of Water Quality Objectives
Draft - Confidential
Impact of Water Quality Objectives
Impact on Operating Surplus in Upper Waikato
NBL
Maintain Overall with Flexibility
Maintain at all Sites
Key Messages
Operating surplus indicates the overall cost on farm and forest of a given policy simulation.
The costs of maintaining water quality overall across the catchment with flexibility are up to $70M (-13%) per annum, and at all sites are up to $122M (-22%).
There are potential flow on effects of the policy, e.g. reductions in tonnes of milk would impact on processing and on-farm labour, which are not considered in this model.
Maintaining water quality is a more stringent scenario than meeting bottom lines in Upper Waikato.
There is uncertainty about attenuation. With lower attenuation and longer lags, the costs of maintaining water quality become substantial, particularly when maintaining at all sites.
This highlights the value of allowing flexibility for sites to be under and over across the catchment.
It is worth noting again that the objectives of the Vision and Strategy are even more stringent than maintaining current water quality. Therefore, the costs of maintaining water quality are a lower bound on the potential costs of the vision and strategy.
Reference notes:
Operating surplus is net cash income less farm working expenses. It is the cash available from dairying after paying for farm working expenses only.
Without any policy, the 25,000 ha of forestry conversion would add $56m to operating surplus in the catchment.
Cost of maintaining water quality:
Overall with flexibility: Up to $70M (-13%) per annum;
At all sites: Up to $122M (-22%) per annum. 19

20. Strengths of approach Widely used (10 applications in Australasia)
Simple structure aids clarity and interpretation
Flexible structure allows model to include different processes according to problem and data available
Include more data as it becomes available
Large problems can be solved
Linkage with other models is possible
Data collection can be done independently
All polluting activities can be incorporated

21. Limitations of approach
Calibration can be an issue
Use of representative farms
Quality of input data
Focus on equilibrium (policy, climate, hydrology)
Coarse description of behaviour
Limited capacity to scope with viability
Limitations are well understood, account for them

22. Reasons for use Project team had experience with this method
Value shown in peer-reviewed studies
Value shown in other catchment studies
Capacity to integrate very diverse processses
Capacity to deal with multiple pollutants
Ability to deliver required outputs (eg. cost of alternative targets)
Broad understanding of limitations
Part of the puzzle (e.g. NMV, IO, CGE)