A New South Wales parliamentary inquiry has recommended widespread changes to planning methods to ensure communities and the environment are protected from the impacts of climate change. 

The multi-party committee, chaired by Greens MLC Sue Higginson, set out to investigate how to protect nature and communities from climate change impacts with a focus on fires and floods.

Claire Haywood, a resident of Culburra on the state's south coast, highlighted the dilemma of a nearby so-called zombie historic housing development gaining approval for construction, despite it resulting in clearing 47 hectares of native forest.

The proposal for West Culburra was referred to the Commonwealth for consideration under the Environmental Protection and Biodiversity Conservation Act due to its potential impact on listed threatened species.

It was one of 11 case studies in the report highlighting the need for local councils and communities to have a greater say on developments likely to generate a net loss of native habitat.

Native habitat is required for carbon storage and the protection of biodiversity.

Culburra sits within Shoalhaven City Council which is facing an operating deficit of more than $37 million after a series of climate emergencies, from bushfires to floods, resulting in widespread damage to homes and community assets.

The committee noted in its report that the impacts of climate change "falls heavily on local communities" and recommended that the NSW government support the retention of local government planning powers.

These powers are becoming increasingly centralised, justified by lagging housing targets.

Property Council of Australia NSW executive director Katie Stevenson said the council welcomed the recommendations and the need to make resilient communities.

But she said a balance between the environment and housing supply needed to be carefully struck.

"It's vital that they are implemented carefully without adding delays or costs, especially when NSW urgently needs more homes and jobs," Ms Stevenson said.

NSW Planning Minister Paul Scully said in a statement that his government had acknowledged the report and would consider its findings.

Climate change missing in legislation

The report outlined that climate change was not mentioned in key planning legislation.

The Climate Change (Net Zero Future) Act was only established last year to meet emissions reduction targets of net zero by 2050.

NSW Minister for Climate Change Penny Sharpe issued a ministerial statement warning that New South Wales was not on track to meet the targets and warned decision-makers to consider them when approving developments.

The report recommended the Environmental Planning and Assessment Act 1979 contain provisions ensuring that developments met emission targets.

The Environment Protection Authority has previously called for applicants of large-emitting projects to address how they will calculate emissions, identify measures to reduce emissions and align with climate change legislation.

Zombie DAs addressed

In the report, Ms Higginson said the historical developments communities often had to face were not consistent with the "current realities of climate change".

Some of the so-called zombie development consents across NSW were approved up to 40 years ago.

The report recommended planning laws be amended to allow councils to revoke old consents in the public interest without compensation, and to increase the physical commencement threshold for a development to go ahead.

Ms Haywood said it would be the "bare minimum" for the government to adopt.

A Lower House inquiry examining historical development consents will hand down its recommendations next year.