Mr Kitto, speaking at a field day at Morfield Dairies in Riverton, said DairyNZ was running three projects to improve environmental performance on dairy farms across New Zealand including the Waimea catchment in Southland.
The project had been running for about two years and had been mostly funded from the government programme Jobs for Nature.
"The money ends in June," Mr Kitto said.
The project work includes investigating how to enhance farm management to reduce nitrogen losses on farm, while maintaining profitability.
Hokonui Rūnanga were consulted to understand the cultural health of the Waimea Stream, he said.
About 10,000ha of wetlands needed to be created in Southland to return the area of wetlands removed from the province since 1995, Mr Kitto said.
"We have a lot of experience taking wetland out and we have little experience putting wetlands in, so we are trying to build competency in that."
Due to a need to build confidence and experience, DairyNZ were working with farmers to build several wetlands in the catchment this year, particularly near Balfour, Mr Kitto said.
Wetlands could be expensive to create, but they had the potential to be a very effective tool at reducing nitrogen loss.
Other benefits included buffering peak and low flows, reducing erosive power of rivers, reducing nutrient discharges, improving biodiversity and reducing greenhouse gas emissions.
Research from Niwa showed wetlands intercepting 5% of a catchment area in Southland could reduce nitrogen losses by up to 40%.
A highly-engineered wetland could reduce nitrogen levels by up to 90%, he said.
Wetlands were usually installed on "marginal land" rather than "productive paddocks", he said.
DairyNZ senior farm systems specialist Ron Pellow said the project in Waimea modelled 10 dairy farms, including Morfield Dairies, with different systems to determine their profitability, nitrogen losses and greenhouse gas emissions.
Software Farmax and Overseer were used to model the farms.
Drivers of profitability and nutrient losses investigated included fertiliser programmes, irrigation efficiency, stocking rate and winter grazing.
"There is always opportunities and efficiencies to work on," Mr Pellow said.
