The council has passed a draft policy change for new dairy farms, associated dairy support grazing, and their related activities, to be classified as a discretionary activity that requires resource consent conditions to be complied with before it is carried out.
Any of the land uses and activities would also have to have a minor or less than minor effect on the environment to meet the requirements under the draft.
The regional council said the purpose of the policy was not to prevent the establishment of new dairy farms but to ensure each new development was sustainable from an environmental, social, economic and cultural view point, and to provide a planning framework for the sustainable growth of the dairy industry in Southland.
A recent state of the environment report on water quality in rivers and streams in Southland showed water quality was below standards set in the water plan.
The council recognised intensification of agriculture, primarily through an increase in number and intensification of dairy farms, especially on heavy and very light soils, was contributing to the degradation of water quality.
The new rules would be challenging for some in the farming community but it was important to note the changes were only in draft form, chairwoman Ali Timms said in a statement.
While the rules were likely to come into effect before Christmas, there would be ongoing consultation with key stakeholders, including a submission process until the end of March next year.
Those to be consulted included DairyNZ, Fonterra, Federated Farmers, Fish and Game and Te Ao Marama Inc.
Dairy effluent discharges were already a consented activity in Southland, but the council wanted to ensure new land-use conversions were able to meet standards, in that they would not be detrimental to the environment, before they began operation, Ms Timms said.
Making it a discretionary activity allowed for future development but in an environmentally sustainable manner, chief executive Ciaran Keogh said.
"We have effectively used up the ability for the environment to absorb wastes but haven't realised the full potential for development in Southland but we needed to establish a mechanism for management of off-farm effects," he said.
Land use changes for dairy would have to meet certain criteria, including having a farm management plan, nutrient management plan and a winter grazing plan based on soil risk parameters.