University of Canterbury Professor Euan Mason said New Zealand had allowed unrestricted imports of credits, including many from Eastern Europe, becoming "a dumping ground for worthless credits."
"No other country with a carbon trading scheme behaves in this way," he said in a statement. "They recognize that some credits are doing nothing for the environment and they restrict them."
New Zealand's agricultural sector was given "a free ride" despite contributing about half the total national emissions, he said, calling the cap and trade scheme "irrational."
The New Zealand government has drawn criticism for announcing last year that it would not sign up to a second commitment period on greenhouse gas emissions under the Kyoto Protocol, the official Chinese news agency Xinhua reported.
"We have progressively weakened our ETS so that New Zealand has not changed much in the face of climate change and now, when it is clear that the consequences of our failure are approaching, we have withdrawn from Kyoto," Mason said.
The country had failed to plan for the future, he said, and faced a huge rise in emissions in the 2020s when forest plantations planted in the 1990s would be harvested.
New Zealand could be greenhouse gas neutral by planting trees on 6 million acres of eroding land, he said.
"This would make New Zealand the first OECD [Organization for Economic Co-operation and Development] country to be fully greenhouse gas neutral for between 60 to 100 years."