Agricultural production, by its nature, impacts both positively and negatively on the environment. Impacts can be point source or diffuse; however all should be considered in performance measurement. To estimate potential environmental impacts from the use of nitrogen fertilizer, a biophysical model of dairy grazing systems, DairyMod, is used to simulate individual farming practices and determine the likely extent of leaching and run-off from each farm. Although not the only environmental impacts of farming, leaching and run-off are two variables that can be measured and combined with other marketed inputs to determine farm performance.