This paper describes current initiatives to develop a lake management plan for Lake Taupo, New Zealand. Recently there has been an indication that a shift from dry stock farming to large‐scale dairy farming will occur in the Taupo catchment. The local community has expressed an interest in this shift towards more intensive land use. There is public concern regarding the current state of Lake Taupo's water quality and the ability to maintain environmental quality in the face of increasing development pressures. Concerns about rising levels of nutrients in the lake are supported by trend analysis of lake water quality monitoring data. The Taupo District Council and the Waikato Regional Council have proposed development of a Lake Taupo Management Plan. A number of mechanisms for achieving this process could be explored. These include a plan largely developed by an inter‐agency management group or a more public participatory approach directly involving the community. A general lake planning framework is described and some of the limitations of the process explored. Comparison with experiences at Lake Rotorua, New Zealand, and Lake Tahoe, United States of America, supports a pre‐cautionary approach to the use of predictive ecological models in policy development. The inability of aquatic ecological theory to conform to quantitative approaches in other physical sciences needs to be acknowledged by scientists and conveyed to the public. Until the link between land‐use practice and water quality is better understood, a pre‐cautionary approach to catchment development at Lake Taupo should be encouraged. One cannot assume that common desires for both environmental protectionism, and progressive intensification of land use, will lead to sustainable resource management. The environmental effects of dairy farming indicate that encouraging this land‐use practice will not lead to the desired community expectation of water quality protection at Lake Taupo.