An independent review of the Overseer farm management tool concluded that the software package is far from ideal for Council water quality management.

Providing a relatively coarse view of nutrient loss from farms, Overseer can help farms in improving on-farm practice. But, according to Parliamentary Commissioner for the Environment Simon Upton, “it can no longer be a central pillar of freshwater quality management.” It was never designed to do that job.

A new framework is needed.

The overarching problem is broader than technical deficiencies that result when a tool is pressed into service for which it was not designed.

Even a perfect version of Overseer, or its successor, would not be enough on its own.

In this better version, farmers would detail on-farm practice in auditable ways: stocking rates, paddock and shed locations, effluent practice, fertiliser application, local streams and more. It would account for the farm’s topography, soil characteristics, underlying hydrology and geology. And it would provide a reasonable model of the effects of on-farm practice for a variety of pollutants in neighbouring streams and the aquifer.

On its own, this would be an improvement. Farms and councils would have better information on which to base practice and regulation.

Better nutrient and pollutant modelling is certainly possible. Land and Water Science have developed an excellent modelling tool to estimate the effects of agricultural land use intensity on nitrogen, phosphorous, E. coli, sedimentation and more. Combined with farm management software allowing farmers to provide details of on-farm practice, the system could provide a far more accurate picture – and one more fit for purpose.

But consider an overburdened water catchment where nitrate loss to the aquifer is unsustainably high and E. Coli levels in the river are beyond safe limits.

Environmental scientists tell you that the burden must drop by a quarter.

The improved system could tell you which farms contributed most to those loadings – and hopefully would also have the local wastewater treatment plant considered in the mix as well. And it could tell farmers what changes might reduce nutrient outflow. But it could not tell you the best places to target to bring the catchment back to sustainable levels.

That requires something more.

If Council required every farm to reduce its outflow by a quarter and required the wastewater treatment plant to achieve the same reduction, the improved modelling tool could help the catchment to hit its target.

But the cost of achieving that 25% reduction can vary enormously across farms. Some would already have implemented best practice. Further reductions for them would prove very costly. Others would be farther from best practice and could achieve reductions more cost-effectively. And reducing outflow from the wastewater treatment plant could cost a tenth as much as on-farm reductions – or ten times as much.

A fit-for-purpose system needs more than just better hydrological and geophysical modelling. It also needs to encourage reductions in the places where those reductions are most cost-effective.

In many catchments, the job will be big. Failing to find the best ways of bringing down the burden does not just mean imposing unnecessary cost. It also risks eroding support for improving environmental quality.

If the regulations necessary to achieve environmental goals would bankrupt many of those who are subject to the regulations, because the regulatory system has not been able to find the lowest-cost ways of reducing emissions or ways of sharing the burden of getting there, the system becomes politically fragile. And if those subject to the regulations expect that a change in government would bring an end to a costly regulatory system, they will not make the investments necessary to reduce freshwater pollution over the longer term.

Combining better environmental modelling systems for on-farm practices with an Emissions Trading Scheme for nutrient outflow provides a promising way forward.

Lake Taupō’s nitrogen trading scheme has had some success in reducing the burden in that catchment. It was world-leading when adopted in 2011. Cap-and-trade systems had previously dealt with large emitters like coal-fired electricity generation plants rather than smaller diffused emitters. Taupō showed it could work for diffused emissions as well.

Technology has improved over the decade since the scheme was implemented. Smart-market trading platforms can make trading emission rights far simpler, while embedding environmental constraints directly into the system.

Building this kind of better system would be a substantial job. But it is a job worth doing. This week, the New Zealand Initiative released a report showing, at a high level, how that system could work.

Councils are going to need a sharply augmented version of Overseer, or an entirely new system for agricultural emissions anyway. The Ministry for the Environment should ensure that any new Overseer includes the potential for nutrient trading as part of the design, so we have a system that will be fit for purpose over the much longer term.