Freshwater pollution and increasing greenhouse gas emissions from agriculture are among the biggest challenges New Zealand's environment faces, says a new review.

Photo: Green Ideas editor Greg Roughan

The Organisation for Economic Co-Operation and Development (OECD) has made 50 recommendations in its third environmental performance review, which is held about every 10 years.

It said New Zealand's economic growth model was approaching its environmental limits.

Among its concerns were irrigation, the Emissions Trading Scheme, transport taxes and declining biodiversity.

The OECD recommended the government review its support for irrigation, saying 75 percent of the country's water was used for the practice and freshwater was scarce in some regions.

Nitrogen in waterways had increased in step with the growth in dairy herds, and water quality continued to deteriorate in some regions due to agricultural and urban run-off.

The OECD report said gross emissions of greenhouse gasses in New Zealand increased by 6 percent between 2000 and 2014, compared to a 5 percent reduction in the OECD as a whole.

Nearly half of those emissions came from agriculture, the highest share in the OECD.

It said a clear date needed to be set to include agriculture in the Emissions Trading Scheme, or alternative pricing and regulatory measures should be introduced.

It also said the transport system was highly dependent on roads, and in need of coherent taxes and more investment in low-carbon transport modes.

Public transport, cycling and walking infrastructure received only 10 percent of the National Land Transport Fund between 2012 and 2015, while 78 percent went to investments in roads.

In terms of biodiversity, the OECD said species extinction rates in New Zealand were among the highest in the world.

More than half of amphibians - and roughly a third of mammals, birds, fish and reptiles - were threatened.

New Zealand was a global leader in recovering species and controlling pests, which had helped improve the status of some species, but the OECD review found others that were less of a priority were declining.

The OECD recommended the adoption of a National Policy Statement on biodiversity should be sped up.

Govt and Labour respond

Finance Minister Steven Joyce rejected the claims irrigation was harming New Zealand's environment.

Mr Joyce said the government already kept a close eye on irrigation schemes, as they were regulated under the Resource Management Act (RMA), and tested for their environmental benefits and costs

"We don't get to just do irrigation schemes irrespective of the enviroment, the RMA process as we know is pretty robust and there's a been for some of the schemes a long-winded process for that."

He did not agree irrigation was environmentally harmful.

"What we need to be careful about is always we're balancing immediate economic growth, providing for people's incomes today and providing for their incomes in the future.

"It's important you do both, and we know and we want better environmental outcomes that's how to you move to that progressively, and this is what this government's doing."

The Labour Party said it was no secret that New Zealand needed better farming practices and land use management.

Environment spokesperson David Parker said farmers were doing good work, but clearly more needed to be done.

He said Labour would make sure that increases in land-use intensity were not a premitted activity under the Resource Management Act.

"Any form of intensification of land-use, whether it's got extra cows per hectare, from irrigation or extra fertiliser, unless you are doing it properly you're going to pollute the river, so you've got to do it properly."

Mr Parker said there would be some push towards higher value land-uses in the coming decades, meaning a move away from dairy and towards cropping and horticulture.

OECD backs charges for water

The OECD said water charges were needed to change the way the resource was used.

Its environment director, Simon Upton, said some form of charging for water was a good way of influencing its use.

Mr Upton said the organisation's stance on water pricing was in line with its approach on most scarce resources.

Federated Farmers said pricing on water was very complicated, and did not result in more efficient use.

But Forest and Bird said the OECD recognised that commercial water users were not paying society for the private benefit they get.