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Tom Blundell will take the wicketkeeping gloves and move down the order with Young partnering Tom Latham at the top.
Young, 28, has been close to a Test debut before and was set to play against Bangladesh in 2019 before the final Test in Christchurch was cancelled following the terror attack in the city.
He averages 43.76 in his first-class career with ten centuries, the most recent of which came against West Indies for New Zealand A last week
"It's an exciting opportunity for him at the top of the order and I know he's just looking forward to getting involved after some near opportunities that didn't eventuate," captain Kane Williamson said. "He's been around the environment for some time without getting his first opportunity so I think that's also a real positive. Often you come into teams and it's new, you are trying to get a feel for the group but he's got that feel, he's an experienced player, has played a lot of first-class cricket and to a very high standard and he deserves that opportunity.
"He's pretty calm and relaxed and knows that he just wants to go out and contribute as much as he can to the team so that attitude is a great thing to have."
Watling picked up the injury during his last outing in the Ford Trophy and following assessment in Hamilton it was decided there was too much risking including him for a Test.
"He has seen it all before," Williamson said. "He knows his body better than anybody. Obviously, he has got a sore hamstring at the moment, but he's very confident that he can get back to full fitness quite soon. He himself is aware of the challenges you put your body through over a five-day period, and so it's very difficult to go into a match at a sort of half-fitness.
"He cares about the team more than anybody, so he sees it from that perspective. Through discussion with the management, they found that was the best option. He's a leader in the group, and he showed that through the conversations we had yesterday."
A decision over the rest of the final XI is yet to be made with one of the key debates whether New Zealand go in with a frontline spin option in Mitchell Santner, who was called up in place of the injured Ajaz Patel, or opt for an all-pace attack.
"It's a little bit tricky," Williamson said of the make-up of the likely XI. "Naturally that is always a bit of a challenge playing in New Zealand, and looking at the roles that you might believe have larger factors. It's unique to here more than in other places in the world."