A study has shown that billions of dollars could be saved if action on climate change is taken sooner, including phasing the agriculture sector into the Emissions Trading Scheme (ETS).
The Climate Change Impact Report commissioned by Westpac was released on Wednesday and shows that $30 billion can be saved if early action is taken to keep global warming to less than 2degC.
- Where climate change will hit NZ hardest revealed in new interactive map
- How you can prepare for the effects of climate change in NZ
The average Gross Domestic Product growth is forecast at 2.015 percent per year until 2050 if industries take early action on addressing climate change but if action is delayed this falls to an average of 2.005 percent, the report shows.
The research carried out by EY and Vivid Economics models two scenarios differentiated by the introduction of agriculture into the Emissions Trading Scheme.
The "central scenario" would include phasing the agriculture sector into the emissions trading from 2020 to 2030 while the "shock scenario" models a rapid decarbonisation from 2030 with agriculture phasing into the ETS within only 2-5 years.
The agriculture sector contributes nearly half of all New Zealand's greenhouse gas emissions.
A longer transition period into the ETS would reduce economic impacts on the agriculture sector, the report found.
The "central scenario" would also include the capping of international trading to 20 percent of national greenhouse gas emissions, more electric vehicles, the purchasing of carbon credits and increased forestry growth.
Westpac New Zealand chief executive David McLean says the research shows New Zealand needed to accelerate its response.
"The alternative is waiting and taking action later, but that is likely to require more drastic changes in behaviour and over the long-term hit people harder in the pocket."
The report highlighted that sectors that can decarbonise the easiest will fare the best including energy, transport and manufacturing.
Households would face higher prices for carbon-intensive products such as meat and air travel, while less carbon-intensive goods and services like bread and internet connections would be relatively less expensive.
Under both scenario's New Zealand could transition to a net zero emissions economy while continuing economic growth.