UPDATED 12.24pm Prime Minister Bill English says he is concerned about the findings in a new OECD report which highlights environmental degradation in New Zealand, but he disagrees that his Government's economic strategy is to blame.

The OECD's third environmental performance report, released today, said New Zealand's strong growth came partly at the expense of environmental quality.

That was putting the country's hard-earned green reputation at risk, the report's authors warned. Their central concerns were rising greenhouse gas emissions and declining freshwater quality.

Speaking to reporters about the findings this morning, English said: "Yes, we are concerned. That's why there's been so much effort go into measurement of water quality, all the science and research around nitrogen inhibitors and so on, and a high degree of awareness in the farming community about the impact of farming on the environment, but also increasingly the impact of cities on our water quality as well."

He challenged claims that the findings were an indictment on National's economic strategy, which is heavily dependent on exporting primary products.

"I don't agree with that. We've got economic growth which was always going to have a strong agricultural production base."

Intensive farming and urban pollution were identified by the OECD as the main causes of declining freshwater quality. But English said that did not justify cutting livestock numbers or reducing the amount of land being farmed on. Whether farming could keep expanding depended on their environmental practices, he said.

"We are not willing to make rules that slash our agricultural community - that's not going to happen.

"There are a set of rules in place now about effluent loads, nitrogen loads, which are having, I think, a significant impact on the way the farming community deals with the impact on the environment."

The OECD's findings, however, were stark. Its report said the nitrogen balance in New Zealand's rivers had worsened at a greater rate than any other of the organisation's 35 members.

Labour leader Andrew Little said it was "no secret" that farming and land use needed to be better managed in New Zealand.

"The Government and others have known about it for a long time. It's a question of getting on and doing practical stuff that is actually going to fix the problem."

Environment spokesman David Parker said that under Labour, increases in land use intensity would not be a permitted activity. "Through doing that you can immediately stop it getting worse and clean up the ones that are too dirty."

"APPROACHING ENVIRONMENTAL LIMITS"
The OECD's environmental performance report, which assesses New Zealand's environmental gains and losses over the past decade, was released this morning.

The organisation'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.

There were likely trade-offs in continuing to depend on exporting primary products and environmental goals. The report 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."

Finance Minister Steven Joyce said he was aware of the risks associated with growth, and pointed to some of the measures Government was taking to combat this - freshwater quality reforms and introducing a predator-free policy to protect biodiversity.

"FAIL GRADE" FOR CLIMATE CHANGE

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."

Joyce said he was confident that scientific advances would provide a solution to greenhouse gas emissions produced by agriculture.

"It is very hard for New Zealand to turn its back on livestock farming given that is a significant part of what we do.

"But in terms of mitigation, some of the work that is being done by scientists is actually pretty impressive."

In all, 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".

FRESHWATER CONTRADICTIONS

On freshwater, the report praised some of New Zealand's innovations, including schemes to reduce nitrogen levels in Lake Taupo and a joint council-iwi effort to clean up the Waikato River.

It also links the increasing nitrate pollution in rivers and aquifers and rising levels of faecal matter to more intensive farming, and says there are some contradictions in the Government's policy of subsiding irrigators while aiming to improve water quality.

Freshwater scientist Marc Schallenberg, from the University of Otago, said: "The government should take note that the report points out some contradictions between policies like, on the one hand, the [National Policy Statement] which aims to maintain or improve water quality and, on the other, central government's $400M irrigation investment fund.

"As irrigation leads to agricultural intensification, the report states that irrigation projects should focus on increasing water use efficiency rather than promoting more intensification of agriculture and associated water pollution."

- NZ Herald