Fish and Game Otago says it intends to develop a large wetland at Henley.
Any benefits from allowing commercial trout farming would be "heavily outweighed" by the risks to New Zealand's wild trout fishery, Otago Fish and Game chief executive, Niall Watson, says.
Otago's fish stocks are in excellent condition, water quality in the region's rivers and lakes is good, and sales of fishing licences are strong.
Otago Fish and Game Council has told the chairman of its national council it has no confidence in its chief executive Bryce Johnson.