Simple SummaryNew Zealand dairy cows predominantly feed on pasture with protein to energy ratios well in excess of requirements and consequently their urine has a substantially greater concentration of nitrogen compared to cows fed indoors on total mixed rations. The nitrogen excreted directly onto land decompose into nitrous oxide and ammonium, causing global warming and freshwater pollution, respectively. One of the strategies to reduce the environmental contamination is genetic selection for reduced nitrogen excretion. The nitrogen excreted in urine is an expensive trait to measure in cows grazed outdoors. One possible approach to reduce the concentration of nitrogen excreted in urine is by selection for reduced urea nitrogen concentration in milk, which is readily measurable. The primary objective of this study was to quantify the likely correlated responses for milk production and liveweight traits in a selection index including breeding values for concentration of milk urea nitrogen with different relative emphasis in order to evaluate the usefulness of milk urea nitrogen for the purpose of reducing nitrogen excretion. Although a per cow reduction in urinary nitrogen excretion was predicted through selection in this study, the reduction of excretion is negligible at the whole farm level due to the influence of stocking rate, measured as the number of cows grazed per hectare, on the per hectare nitrogen excretion. Therefore, selection for low concentration of milk urea nitrogen is unlikely to be effective in reducing nitrogen excretion of dairy cows in New Zealand.The objectives of this study were two-fold. Firstly, to estimate the likely correlated responses in milk urea nitrogen (MUN) concentration, lactation yields of milk (MY), fat (FY) and crude protein (CPY) and mature cow liveweight (LWT) under three selection scenarios which varied in relative emphasis for MUN; 0% relative emphasis (MUN0%: equivalent to current New Zealand breeding worth index), and sign of the economic value; 20% relative emphasis positive selection (MUN+20%), and 20% relative emphasis negative selection (MUN−20%). Secondly, to estimate for these three scenarios the likely change in urinary nitrogen (UN) excretion under pasture based grazing conditions. The predicted genetic responses per cow per year for the current index were 16.4 kg MY, 2.0 kg FY, 1.4 kg CPY, −0.4 kg LWT and −0.05 mg/dL MUN. Positive selection on MUN in the index resulted in annual responses of 23.7 kg MY, 2.0 kg FY, 1.4 kg CPY, 0.6 kg LWT and 0.10 mg/dL MUN, while negative selection on MUN in the index resulted in annual responses of 5.4 kg MY, 1.6 kg FY, 1.0 kg CPY, −1.1 kg LWT and −0.17 mg/dL MUN. The MUN−20% reduced both MUN and cow productivity, whereas the MUN+20% increased MUN, milk production and LWT per cow. Per cow dry matter intake (DMI) was increased in all three scenarios as milk production increased compared to base year, therefore stocking rate (SR) was adjusted to control pasture cover. Paradoxically, ten years of selection with SR adjusted to maintain annual feed demand under the MUN+20% actually reduced per ha UN excretion by 3.54 kg, along with increases of 63 kg MY, 26 kg FY and 16 kg CPY compared to the base year. Ten years of selection on the MUN0% index generated a greater reductions of 10.45 kg UN and 30 kg MY, and increases of 32 kg FY and 21 kg CPY per ha, whereas the MUN−20% index reduced 14.06 kg UN and 136 kg MY with increases of 32 kg FY and 18 kg CPY compared to base year. All three scenarios increased partitioning of nitrogen excreted as feces. The selection index that excluded MUN was economically beneficial in the current economic circumstances over selection indices including MUN regardless of whether selection was either for or against MUN. There was no substantial benefit from an environmental point of view from including MUN in the Breeding Worth index, because N leaching is more a function of SR rather than of individual cow UN excretion. This study demonstrates that attention needs to be paid to the whole system consequences of selection for environmental outcomes in pastoral grazing circumstances.