Réunion Island, situated in the Indian Ocean, presents a unique case study to model regional bio-economic parameters of the dairy industry. It is a good example of a closed system for movement of animals, available labour, consumption of products, and available land. The present study models the dairy sector at a regional (island) level, in close collaboration with key stakeholders, to study the impact of new agricultural policies in terms of changes to subsidy norms, price fluctuations and environment, with reference to nitrogen excess. The model can be used to generate a number of scenarios, to explore the effects of various industry controls, such as fixing the stocking rate according to EU norms, increasing or reducing the milk subsidy, intensification (such as an increase in milk production to 40 million litres per year) and labour and price constraints (such as an increase or reduction in the milk price or a reduction in labour hours). The model is being consulted by the local dairy cooperative as a discussion support tool at a regional scale to look at implications of expanding the sector and its economic, environmental and social impact.