New Zealand's international reputation as a green country is in danger as a once-a-decade environmental report card declares it is "approaching its environmental limits".

"New Zealand's growth model has begun to show its environmental limits, with increased greenhouse gas emissions and waste generation, freshwater contamination and threats to biodiversity," read the report from the Organisation for Economic Co-operation and Development's (OECD).  "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."

Even as tourist flock to the green islands seen in "The Lord of the Rings" and "The Hobbit" movies, the environment was suffering because of growth in the farm-reliant economy.  Dairy farming had left many rivers with elevated nitrogen levels, making them vulnerable to algal blooms.

"Greenhouse gas emissions are increasing.  Pollution of freshwater is spreading over a wider area," the authors said.  "And the country's biodiversity is under threat."

The report's authors 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," it read.  "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 report recommends that Wellington bolster its emission trading scheme and expand it to agriculture, which is currently exempted even though it accounts for half of the country's emissions.

"This environmental report card will help us sharpen our future direction and environmental aspirations, as well as learn from the experiences of other countries," said Environment Minister Nick Smith.