The country's first state of the environment report in eight years shows agricultural and horticultural land now occupies nearly 42 percent of New Zealand.
Statistics New Zealand and the Ministry for the Environment released the landmark report, Environment Aotearoa 2015, yesterday.
The main area of concern was the decline in the diversity and conservation status of indigenous species.
Farming came under the spotlight, with a worsening in the quality in rivers that run through intensely farmed land.
The report said the extent of agricultural land had not changed substantially since 1996, but its use had become more intensive in a number of regions.
It found a decline in the quality of rivers that run through intensely farmed land and that more than three quarters of the soil under dairy farming operations was badly affected by compaction.
Compaction occurs when soil is compressed, reducing the air pockets between soil particles and making it harder for plants to grow.
The report found that between 1990 and 2012, the estimated amount of nitrogen that leached into soil from agriculture increased 29 percent - mainly due to increases in dairy cattle numbers and nitrogen fertiliser.
Excess nitrogen travels through soil and rock layers into groundwater, rivers and lakes.
Between 1989 and 2013, total nitrogen levels in rivers increased 12 percent, with 60 percent of monitored sites showing statistically significant increases.
Forty-nine percent of monitored river sites have enough nitrogen to trigger nuisance periphyton growth.
This algae growth impedes river flows, blocks irrigation and water supply intakes, smothers riverbed habitats and also disrupts recreational use of rivers