In less than a decade, investment in environment dropped to just one percent of GDP
Israel's investments in transportation reflect a preference for private over public transportation.
The Environmental Protection Ministry and the central bank have put together an index to help measure economic growth, taking the spotlight off gross domestic product, which does not factor in environmental damage.
According to the index, Israel is behind in many areas including air quality, public investment in environmental protection, investment in public transportation and protection of natural resources.
Economists from around the world are to meet in New York next month for a UN-sponsored conference to discuss increasing environmental and social considerations in economic growth plans.
"Today's methods of measuring economic growth don't tell us what will happen in the future and how we'll be able to protect our environmental resources. So we need more indexes, and we have to change the economic language," Environmental Protection Minister Gilad Erdan told Haaretz on Thursday.
"It's clearly in the national interest to use natural resources and transportation systems more efficiently. But we shouldn't mix up the means with the goal. Our goal is to improve happiness and human welfare, not numbers about economic growth."
According to the ministry, spending on environmental protection has fallen to 1 percent of GDP over the past decade, one-third below the number in developed countries.
Israel's investments in transportation reflect a preference for private over public transportation. The country invests almost NIS 6 billion every year in infrastructure for cars, as opposed to less than NIS 4 billion in public transport. As a result, car use has increased in the past decade by 46 percent.
Most of the investment in public transportation is in trains (60 percent to 75 percent ), although Israelis take about 654 million bus trips annually, compared with about 40 million train trips.
Another critical issue is land use. Despite Israel's severe lack of land, dense construction (urban construction of at least three stories ) has declined from 58 percent to 50 percent of all housing from 2000 to 2010.
"The area where we have a relative advantage is clean-tech industry," said Bank of Israel Governor Stanley Fischer, speaking last week at Israel's first convention on ecologically sound economic growth, organized by the Environmental Protection Ministry. "I have the impression that we have lost the lead in these areas and we should return to a leadership position."
Air quality has improved in Israel over the past 10 years. But the ministry notes that pollution, which comes mostly from cars, is still high compared to OECD countries.
The news is better regarding water quality: The rate of dissolved organic carbon, a measure of water pollution, has fallen 67.9 percent over the past decade thanks to the construction of water-purification facilities and increased supervision of polluters.
But the Environmental Protection Ministry/Bank of Israel index notes that the many ecological areas where Israel is behind other OECD countries augurs a decline in another key area - biodiversity.
The ministry found in a survey that about half of Israelis are not satisfied with the country's green spaces and the degree of cleanliness around their homes.
The conclusions from the new index are underscored by the findings of another study, the Israel Sustainability Forecast for 2030. The study - by the Environmental Protection Ministry and the Jerusalem Institute for Israel Studies - seeks to craft a policy for sustainable development based on a comparison of indexes with other countries.
According to Sustainability 2030, as the study is known for short, the garbage volume in Israeli cities is growing 2 percent a year and is relatively high for an OECD country.
In terms of transportation, Sustainability 2030 found that Israel will soon face a major environmental problem due to car use, which will increase 65 percent over the next two decades. This means expanding existing roads and developing new ones - and more air pollution.