The amount of rubbish diverted from landfill to recycling has "increased landfill diversion across the district to 25%", QLDC solid waste manager Stefan Borowy told councillors at the utilities committee meeting on Tuesday.
The landfill levy had been set at $36 per tonne from July 1.
The levy is used to subsidise waste minimisation schemes.
It had been set with the expectation there would be more waste dumped in the landfill than last year.
However, a "significant drop of 17%" between January and June this year indicated there would actually be less waste dumped than in previous years.
"That may have an impact on revenue over this financial year," Mr Borowy said.
As well as more recycling, especially in Wakatipu, the economic downturn had contributed to a reduction in demand for landfill.
Less construction had meant less fill from old buildings and earthworks, Mr Borowy said.
"If the current downward trend continues . . . there will be significantly less waste sent to landfill in this financial year," Mr Borowy said in his report.
Over the next three months, the levels of waste would be monitored.
Ways to minimise the financial impact would be looked at.
Mr Borowy said it was too early to say how it could be done.
QLDC chief executive officer Duncan Field said it was important to remember the aim of the council was to minimise waste.
The loss of revenue was an issue for council management to resolve.
"Reduced waste is good news," Mr Field said.
Cr Cath Gilmour said there would always be a "tension between the primary goal" of reduced landfill use and revenue from it.
