Fish and Game Otago chief executive Niall Watson said there would be no significant adverse effects in Otago but the Land and Water Forum was not achieving what it was set up to do.
The forum involved more than 50 environment, recreation and industry groups set up to develop a vision and a way forward for those with an interest in water.
''The Land and Water Forum looked initially like an attractive way of getting some sense about water issues,'' Mr Watson said.
''[The forum] has been soaking up time and energy without delivering for some time.
''In recent times, LAWF involvement has seemed less and less productive [and was] restricting Fish and Game's ability to advocate publicly.
''Fish and Game only wants to work with interested parties.''
Fish and Game New Zealand, well known for its opposition to ''dirty dairying'', formally resigned recently after having its status changed from ''active observer'' to ''active partner''.
Mr Watson said there had been a ''lack of leadership on water issues'' by the Government.
''[They] seem more focused on creating more headroom for intensive agriculture than tackling public concerns over water quality and quantity.''
Otago Regional Council chairman Stephen Woodhead said any impact on the region would be minor.
However, the withdrawal would bring into question the future of the forum, as Fish and Game was a major stakeholder.
''It's a large unwieldly beast ... [and] if you take a key national stakeholder out of the equation then you would have to question its future,'' Mr Woodhead said.
Labour MP for Ikaroa-Rawhiti Meka Whaitiri said in a statement Fish and Game's resignation from the forum was due to the Government's failure to take action on declining water quality.
''Fish and Game's decision to walk away is no surprise. The whole collaborative approach has been found wanting.''
The 2015 Environment Aotearoa report revealed the damaging impact increasing dairy cattle numbers and fertiliser had on the state of our water, she said.
Environment Minister Nick Smith said in a statement he was disappointed Fish and Game was choosing not to continue with the forum.
Its withdrawal did not detract from the Government improving the environmental regulation of freshwater, he said.
''We have increased fivefold the funding around cleanups and we're further committed to more steps on the rules, particularly around fencing of stock into our waterways and ... increasing the amount of funding that is going into freshwater cleanups.''
Dr Smith said the forum was much bigger than Fish and Game and the work would continue.
