Nutrient surpluses, inefficiencies in nutrient use, and inevitable leakage of nutrients from grazed animal production systems are putting growing pressure on Australian inland and coastal water resources. While there are some examples of regulatory policy approaches in Australia which aim to reduce nutrient emissions and improve water quality around important and impaired coastal and inland waters, most policy options involve voluntary schemes, often including financial incentives to both industry organisations and farmers to offset the costs of implementing improved management practices. In contrast, much stronger land management regulations have been implemented in the European Union, USA, and to a lesser extent New Zealand.In the near future, greater societal expectations for water quality, stricter standards from international markets, and increasing costs for purchased nutrients will mean that improving nutrient-use efficiency and reducing nutrient losses will be a necessary part of Australia livestock production systems. This is likely to require somewhat varied and difficult choices to better balance production and environmental goals. Policy responses may include voluntary adoption of appropriate nutrient management practices, caps on nutrient inputs, mandatory nutrient surplus targets, limits to stock numbers per hectare, and re-positioning of higher input farms to more resilient parts of the national landscape. Alternatively, society may have to accept that there are unavoidable trade-offs between water quality standards and livestock productivity, with increasing treatment of polluted water at the community’s expense.