Does Complex Hydrology Require Complex Water Quality Policy? Nmanager Simulations for Lake Rotorua

44 Pages Posted: 24 Dec 2011

See all articles by Simon Anastasiadis

Simon Anastasiadis

Motu Economic and Public Policy Research

Marie‐Laure Nauleau

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE)

Suzi Kerr

Motu Economic and Public Policy Research Trust

Tim Cox

affiliation not provided to SSRN

Kit Rutherford

NIWA

Date Written: December 21, 2011

Abstract

This paper examines six different approaches to nutrient management, and simulates the economic costs and environmental impacts associated with them using NManager, a partial equilibrium simulation model developed by Motu and NIWA, the National Institute for Water and Atmospheric Research. We focus 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.

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.

We demonstrate 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.

Keywords: groundwater, Lake Rotorua, model, nutrients, nutrient trading, water quality, non-point source pollution

JEL Classification: C69, Q53, Q57, Q58

Suggested Citation

Anastasiadis, Simon and Nauleau, Marie-Laure and Kerr, Suzi and Cox, Tim and Rutherford, Kit, Does Complex Hydrology Require Complex Water Quality Policy? Nmanager Simulations for Lake Rotorua (December 21, 2011). Available at SSRN: https://ssrn.com/abstract=1975569 or http://dx.doi.org/10.2139/ssrn.1975569

Simon Anastasiadis (Contact Author)

Motu Economic and Public Policy Research ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

HOME PAGE: http://www.motu.org.nz

Marie-Laure Nauleau

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

Suzi Kerr

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand
+64 4 383 4250 (Phone)
+64 4 383 4270 (Fax)

Tim Cox

affiliation not provided to SSRN ( email )

Kit Rutherford

NIWA ( email )

No Address Available

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