CHRISTCHURCH, New Zealand—This South Pacific country markets itself to international tourists as “100% pure,” but a rapid expansion of its dairy industry is endangering its clean, green image.

The shift threatens to pit the nation’s No. 2 export, tourism, against dairy, its No. 1.

“Agriculture is the major cause of issues we have with fresh water,” said John Quinn, chief freshwater scientist at the country’s National Institute of Water and Atmospheric Research. “Dairying is part of that.”

Seven out of 10 of New Zealand’s monitored rivers—mostly in lowland areas—are now potentially unsafe for swimmers, according to a government report this year on freshwater quality, which highlighted increased nitrogen levels and algal blooms.

Some in the tourism industry, along with some scientists, fear the pivot by New Zealand, long recognized for its sheep and wool, to producing milk from cows to take advantage of soaring demand from Asia contributing to the problem. Rising incomes in the region, notably in China and India, have lifted millions into the middle class and driven up appetite for protein, including milk and other dairy products.