A nutrient balance model was developed for the Municipalities of Hanover, La Broquerie, Roland and Sifton in Manitoba. The model tracks and estimates all nutrient (nitrogen and phosphorous) inputs, outputs, and losses to the environment for the agricultural industry. The objectives of this study were to: evaluate the reliability of such a model at both the municipal and farm levels; determine gaps in the knowledge base necessary to implement a nutrient balance model as a planning or regulatory tool; and to provide a preliminary assessment of the nutrient balance in four municipalities that represent a matrix of high and low density crop and livestock production. Four farms in each of the four municipalities were also used to evaluate the budget model. The purpose of these farm budgets was to further test and evaluate the many estimates of nutrient losses that naturally occur in the nitrogen and phosphorous cycles. An extensive literature review was conducted to review previous work on nutrient budgets. The nutrient flows in an agricultural ecosystem, including inputs, outputs, transfers and losses from the plant, animal and soil pools were investigated. The literature review focused primarily on the central-northern Great Plains area of North America to ensure that the data would be applicable to soil and climate characteristics of Manitoba. Considerable data for the municipal model was obtained from the 2001 Census of Agriculture, Manitoba Crop Insurance Corporation records, and a proprietary spatial Grain Flow Model developed by Warkentine and Associates, a local consultant with specialized expertise in the analysis of grain flows in Western Canada. Primary data for the farm-scale budgets was provided by the cooperating farmers. Extensive interviews were also conducted with fertilizer dealers to verify current fertilizer practices by crop producers in Manitoba. The study found that in areas such as Hanover and La Broquerie, which have a significant intensive livestock industry, the importation of large quantities of nutrients in feed is contributing to a build-up of nutrients in the soil on a regional basis. Manure, however, is not the only source of nutrients that must be considered. The farm case studies confirmed previous studies indicating an excessive buildup of nutrients in soils from the over-application of chemical fertilizers is common. Notwithstanding the apparent increase in nutrients in these municipalities due to manure, the environmental risks to water resources may not have increased proportionally. The literature review found that the loss of nutrients from fields receiving inorganic fertilizers can be greater than fields receiving manure. Both sources and transport factors have to be considered in assessing transport risk. Better farm management practices are needed to prevent a build-up of available soil nutrients, regardless of the source of crop nutrients and the size of the farm unit. Regulations to address this issue should be consistent with this principle. Annual soil testing, for example, is practiced by approximately ten percent of producers on approximately one-quarter of their fields in any one year. The losses of nitrogen and phosphorous to the environment comprise a significant component of the nutrient cycle. Nitrogen losses were equivalent to 35 to 79 percent of outputs, and phosphorous losses were between two and 16 percent of outputs. Some loss of nutrients is a natural part of the nutrient cycle. Further research is necessary to quantify the various losses under a