New Zealand’s farming sector operates on the strength of a powerful national identity: clean rivers, productive land, and export products that carry with them an implicit promise of environmental stewardship. That identity has delivered real commercial value. It has justified price premiums in overseas markets and insulated domestic farming from the level of public scrutiny applied in comparable countries. However, the identity has now decoupled from the evidence.
This research project began with a practical question: Could a market mechanism for nature-based solutions, specifically commercial wetlands and nutrient offsetting, be developed at the catchment scale in New Zealand? During the course of the 2025 Nuffield Scholarship, visits to the United Kingdom, Ireland, the Netherlands, Poland, Brazil, Chesapeake Bay in the United States, and Canada led to a firmer and more important conclusion. New Zealand does not lack the technology, science, or willingness of farmers to improve its freshwater supply. What is lacking are the institutional conditions needed.
Three international examples support this conclusion.
First, the Chesapeake Bay watershed in the United States has demonstrated that intensive agricultural production and improved water quality can coexist, but only when specific institutional conditions are in place: an independent science and extension institution acting as an honest broker, mandatory nutrient management plans with independent compliance checking, public cost-sharing that makes compliance economically viable, sector-neutral regulation with no permanent exemptions, and a unifying governance framework that transcends political boundaries. New Zealand currently has none of these at the necessary scale.
Second, Brazil’s mandatory native vegetation requirements, that 20% of property in most farming regions, enforced by satellite monitoring, demonstrate that blunt, legible, sector-neutral rules applied consistently can maintain farming communities in good environmental standing without destroying the industry. New Zealand’s regulatory culture has historically preferred voluntary guidelines, long phase-in periods, and industry exemptions. The Brazilian comparison suggests that this culture of accommodation has cost New Zealand more than it has protected us.
Third, the United Kingdom’s experience, in which farmers are effectively paid through subsidies to farm differently rather than required to meet environmental standards from their own returns, provides a cautionary example of what happens when environmental improvement depends on perpetual public financial support rather than structural change. New Zealand should not replicate this model.
The critical domestic evidence is equally clear. A systematic national assessment found that almost every region in New Zealand exceeded NPSFM 2020 bottom-line thresholds in at least one key contaminant across nitrogen, phosphorus, Escherichia coli, and sediment, and that in many regions, including Southland and Canterbury, the required reductions are not marginal adjustments (Snelder et al., 2023).
Southland-specific modelling commissioned by Environment Southland found that achieving NPSFM bottom lines alone requires a 47% regional reduction in total nitrogen loading and a 21% reduction in total phosphorus loading. To meet Southland’s own community-agreed freshwater objectives, total phosphorus reductions of 69–70%, E. coli reductions of approximately 90%, and sediment reductions of 24–32% would be required (Snelder, 2021; Snelder & Fraser, 2021). Canterbury faces a 44% total nitrogen reduction requirement under national standards (Snelder et al., 2023). A 2020 review of New Zealand’s Primary Industry Advisory Services (PIAS) system, commissioned by the Ministry for Primary Industries, concluded that the system was well suited to providing advice that delivered private benefits, productivity, efficiency, and profit, but that environmental management advice was inadequately provided (Duncan & Kirk, 2020). The dismantlement of the Ministry of Agriculture and Fisheries (MAF) extension service in the 1980s and 1990s left a vacuum that commercial advisers with conflicting incentives have never adequately filled.
New Zealand’s catchment groups are the most valuable environmental governance asset developed in the past decade. The Edendale Aquifer Group (EAG) in Southland, which the author is a member of, is one of more than 220 such groups nationally. These groups are building the peer-to-peer trust and community ownership that can make practice change possible in farming communities resistant to top-down direction. However, they cannot substitute for the institutional architecture that durable improvement requires.
This report concludes with four specific proposals: establishing a land-grant-equivalent institution at Lincoln University; creating a national cost-share programme for on-farm freshwater works; resourcing and partner catchment groups with professional coordination and independent science access; and committing to sector-neutral environmental regulation with no permanent agricultural exemptions. These are not radical proposals. These are the minimum institutional changes the international evidence suggests are necessary to move New Zealand from its current trajectory–incremental voluntary action against a background of continued systemic deterioration–to a position where nature-based trading mechanisms can function.
However, farming and clean water use are not mutually exclusive. The question is whether New Zealand has the institutional courage to build structures that make both possible.
Jon Pemberton
