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Nitrogen Trading in Lake Taupo An Analysis and Evaluation of an Innovative Water Management Policy

Author

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  • Duhon, Madeline
  • McDonald, Hugh
  • Suzi, Kerr

Abstract

This paper provides an overview and early evaluation of the Lake Taupo nitrogen cap and trade programme, established as part of Waikato Regional Council’s 2011 Regional Plan Variation Five. The policy establishes a catchment-wide cap on nitrogen losses by allocating farmers individual nitrogen discharge allowances and allowing those farmers flexibility to trade allowances amongst themselves and to sell allowances to a public fund while remaining within the overall catchment cap. The Taupo trading scheme is the world’s first agricultural non-point-source water-quality cap and trade scheme. This paper explains the structure and evolution of the nitrogen trading market, and analyses its impact thus far. Research drawn from written material and descriptive quantitative data provides the basis for analysing the policy, while interviews with relevant stakeholders provide insight into the successful, surprising and contentious issues that arose throughout its development and implementation.

Suggested Citation

  • Duhon, Madeline & McDonald, Hugh & Suzi, Kerr, 2015. "Nitrogen Trading in Lake Taupo An Analysis and Evaluation of an Innovative Water Management Policy," Motu Working Papers 209017, Motu Economic and Public Policy Research.
    • Handle: RePEc:ags:motuwp:209017
    DOI: 10.22004/ag.econ.209017
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    1. is not listed on IDEAS
    2. Karen Bayne & Alan Renwick, 2021. "Beyond Sustainable Intensification: Transitioning Primary Sectors through Reconfiguring Land-Use," Sustainability, MDPI, vol. 13(6), pages 1-22, March.
    3. Gebiaw T. Ayele & Bofu Yu & David P. Hamilton, 2023. "Land Use and Climate Change Effects on Streamflow and Nutrient Loads in a Temperate Catchment: A Simulation Study," Land, MDPI, vol. 12(7), pages 1-22, June.
    4. Syezlin Hasan & Line Block Hansen & James C. R. Smart & Berit Hasler & Mette Termansen, 2022. "Tradeable Nitrogen Abatement Practices for Diffuse Agricultural Emissions: A ‘Smart Market’ Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(1), pages 29-63, May.
    5. Hansen, Line Block & Termansen, Mette & Hasler, Berit, "undated". "Effectiveness Of Markets In Nitrogen Abatement: A Danish Case Study," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 260887, European Association of Agricultural Economists.
    6. Daigneault, Adam & Greenhalgh, Suzie & Samarasinghe, Oshadhi, 2017. "Equitably slicing the pie: Water policy and allocation," Ecological Economics, Elsevier, vol. 131(C), pages 449-459.
    7. Kerr, Suzi, 2016. "Agricultural Emissions Mitigation in New Zealand: Answers to Questions from the Parliamentary Commisioner for the Environment," Motu Working Papers 290563, Motu Economic and Public Policy Research.
    8. Spicer, E. Anne & Swaffield, Simon & Moore, Kevin, 2021. "Agricultural land use management responses to a cap and trade regime for water quality in Lake Taupo catchment, New Zealand," Land Use Policy, Elsevier, vol. 102(C).

    More about this item

    Keywords

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    JEL classification:

    • C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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