Researchers in a state science company are developing an accurate objective measurement system for the amount of nitrous oxide being lost from farm pastures.
Nearly half of the nation's greenhouse gas emissions come from agriculture, much of it from methane form livestock.
But nitrous oxide -- which is 310 times more potent than carbon dioxide as a greenhouse gas -- makes up nearly one third of the farm sector's emissions: about 16 percent of it comes from soils in the form of nitrous oxide.
Under the Kyoto Protocol New Zealand is committed to reducing greenhouse gas emissions to the 1990 level over the period 2008-12, or alternatively paying for its excess emissions.
A big fertiliser company, Ravensdown, claimed in 2005 that if about half of New Zealand's dairy farmers used its brand of nitrification inhibitor - which slows the leaching of nitrogen from the soil - then total agricultural emissions of a potent greenhouse gas could be reduced to the Kyoto Protocol requirements.
Its claims were based on a report by two Lincoln University researchers that nitrous oxide emissions would be reduced by up to 75 percent. They developed the eco-n nitrification inhibiter with $4 million funding from Ravensdown.
Critics later said that some claims for eco-n, and a rival product, DCn (Ballance) had been over promoted.
Today, National Institute of Water and Atmospheric Research (Niwa) scientists said they were testing the effectiveness of the products' active ingredient dicyandiamide (DCD) on a Methven dairy farm.
"A lot of dairy farms are intensively managed," said Niwa principal scientist Mike Harvey.
"The amount of nitrogen involved is large, when compared to sheep farming.
"With changing land use and a greater intensity of nitrogen in the system, it seems inevitable that nitrous oxide emissions will rise."
Over the past four years, the Niwa scientists have been working with Landcare Research and Agriculture Canada on a system that makes continuous atmospheric measurements of nitrous oxide emission rates from farmland, using a laser scanner to monitor one-hectare plots of land.
Because nitrous oxide emissions - such as from the urine of dairy cows - and be patchy and vary over time, such measurements have previously been difficult.
Dr Harvey said the system could play an important role in independently verifying the mitigation potential of greenhouse gas inhibitors such as DCD.
"There is economic benefit to farmers from more effective use of nitrogen," he said.
"There are also benefits to the country from being able to reduce our greenhouse gas emissions and this technique helps to verify those reductions."
Five one hectare plots on Craige MacKenzie's dairy farm in Methven, in mid-Canterbury are being measured and compared, with some plots being treated with DCD after grazing, and others selectively treated.