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The Organisation for Economic Co-operation and Development's environmental performance report, which assesses New Zealand's environmental gains and losses over the past decade, was released this morning.
The OECD's environmental directorate, which compiled the assessment, is led by former National MP and Environment Minister Simon Upton.
The report, which follows reviews in 1996 and 2007, said that New Zealand had an international reputation as a green country, and fared well in terms of environmental quality of life.
But the country's growth model, based on export of primary products, was "approaching its environmental limits".
"Greenhouse gas emissions are increasing. Pollution of freshwater is spreading over a wider area. And the country's biodiversity is under threat," the authors said.
The report's authors said there were likely trade-offs in continuing to depend on exporting primary products and environmental goals.
They cited an OECD study which showed that if New Zealand's GDP took into account environmental costs, the economy would actually be shrinking.
"This may indicate that New Zealand's strong growth has come partly at the expense of environmental quality, a dynamic that puts the country's 'green' reputation at risk."
"This could be detrimental to the competitiveness and attractiveness of the economy in a global market as consumer and investor preferences shift towards sustainability and strong environmental performance."
The review is particularly critical of New Zealand's record on climate change, saying it has the highest share of emissions from agriculture among the 35 OECD member countries.
Its gross emissions per capita and per unit of gross domestic product remained among the five highest in the OECD.
The main tool for combating climate change, the Emissions Trading Scheme had "limited effectiveness" and "needs to be strengthened" by making agriculture accountable for its emissions, the report said.
Massey University's Ralph Sims, the director of the Centre for Energy Research, said the assessment amounted to "another fail grade" by the OECD, "especially regarding our greenhouse gas emissions".
"Surely by now the Government must have received the message, loud and clear, that we are not doing our fair share to prevent the global temperature rising above a level where we will all be worse off, and that the costs of climate impacts will soon become highly significant issues."
The report's authors make 50 recommendations for improvement.
One of the key recommendations is to make better use of economic tools such as taxes and allocation prices. Such tools had been under-used in New Zealand compared to other countries, the authors said.
They said the Government should consider a price on water allocation, currently the subject of a major political debate.
New Zealand's transport fleet was highly dependent on roads, the report said, and the Government should consider a more "coherent system of fuel and vehicle taxes and charges".