Federated Farmers will not appeal against the Environment Court decision confirming Waikato Regional Council moves to protect Lake Taupo from "dirty dairying" and other farming run-off.
The court recently upheld the council's "Lake Taupo variation" to its regional plan, and Federated Farmers said at the time it was likely to appeal.
The council's variation imposes controls on farms arounf Lake Taupo in a bid to protect the lake from nitrogen run-off, setting a precedent for capping nutrient applications in other regions.
Federated Farmers has been a strong critic of making farming a controlled activity under the Resource Management Act.
Yesterday, it said its decision not to appeal was "taken with a heavy heart" after legal advice.
"The implications of the Environment Court decision is gut-wrenching for the farmers affected," said Federated Farmers president Don Nicolson.
He claimed the court decision should have no implications for other regions.
"If other councils think about using this decision in their plans, the federation is ready for a major fight."
The previous Government said some unacceptable trends such as pollution and nutrient run-off needed to be reversed to improve and protect special places such as Lake Taupo, the Rotorua lakes and Lake Ellesmere.
A regional plan to protect Lake Taupo from the effects of nitrogen run-off from farms proposes spending $82 million to reduce the levels of nitrogen running into the lake by 20 per cent over the next 15 years.
Capping the amount of nitrogen farmers can lose from their land would mean each farmer could be given a nitrogen allocation in proportion to their land's present losses.
Some farmers may have to reduce stocking rates and may need to remove stock over the winter months, when animal wastes are most likely to contaminate water.
Mr Nicolson said there was too much emphasis on environmental sustainability in the RMA and not enough on economic issues.
"This decision under the RMA gives councils around Taupo the mandate to dictate stock levels, wiping thousands off the value of each hectare," he said.
Federated Farmers' Ruapehu president Lyn Neeson and Rotorua/Taupo president Gifford McFadden will meet farmers on December 16.
Farms in the region are on light, porous soils and regulators are concerned that nutrient run-off is worsening degradation of the lake's water quality.