The approach has been suggested as a way to help improve water quality and could mean farmers in some areas might have to put significant parts of their land into wetlands or invest in a treatment system, policy and resource planning director Fraser McRae said.
"It'll leave farmers to be innovative in land use and how they address the effect of the land use."
The council's policy and resource planning committee will today consider a report which suggests making land use, such as farming, a permitted activity subject to contaminant discharge standards.
The proposed approach would be an attempt to manage direct discharge from land rather than managing farm activity itself, he said.
"Instead of saying you can't put a dairy farm there . . . what we'd say is, we don't care what you farm, just that you cannot have more than a set standard of sediments coming off the land."
The move came as State of the Environment reporting showed water quality in Otago, like other regions, was not improving.
While provisions for "point source" discharges [those from identified sources such as piped discharges from factories] had generally been effective in reducing contaminant discharge, water quality in lower catchments was generally still unacceptable, he said.
"This situation [is] attributed to the cumulative effects of non-point discharge of contaminants."
Non-point discharge could not be traced back to a single source and was contaminants contained in run-off from rural and urban land.
That discharge was normally controlled by separating farming activity from watercourses and limiting stocking rates and fertiliser application.
Instead, it was proposed the council begin investigating setting standards limiting contaminants in discharges, such as sediments, nitrogen and microbes, with an objective of maintaining swimmable water quality.
"It would let farmers farm."
The concept would not be easy to implement, as while the knowledge of the science was there, the application and technology was not, he said.
Questions about what standards should be set, how sediments, nitrogen or microbes could be measured or how farmers could easily understand the measure, needed to be answered.
It was not an approach being used anywhere else in New Zealand, but preliminary discussions indicated it was achievable, Mr McRae said. The report foreshadowed "quite a bit of work to do", he said.
