Sir John Harman, chairman of the Environment Agency, warned the conference that sheepdip chemicals were having a serious impact on aquatic life in Wales’s rivers.
This would undermine angling, which attracted 56,000 visitors a year, who contributed about 65m to the rural economy.
“We accept that a ban on synthetic pyrethroids is not practical, but we can’t go on destroying aquatic habitats,” Sir John said.
“We have to see how much further we can go to improve dipping procedures and post-dipping management.”
He was anxious that the agency worked closely with farmers and landowners to ensure that the right advice was available.
The sheep industry also needed research to see if other chemicals were effective against parasites, like the scab mite, but less damaging to the environment.
Climate change would alter farming practices.
The introduction of maize into new areas could lead to soil erosion and reduced water quality.
Poaching could result where the grazing season was extended.
The environmental impact must be managed through a mixture of advice, incentives and regulations, which had a vital role, but needed to be applied pragmatically.