The implementation of Biobanking

Transcription

1 PLAN Thesis project The implementation of Biobanking in the NSW Planning System A review of the Biodiversity Offsets Banking Scheme proposed by the Department of the Environment and Conservation Alessandra Kane Student ID: November 2006

2 List of Figures... 3 List of Abbreviations Introduction Objective Thesis Methodology Biodiversity What is biodiversity? The importance of biodiversity Key Threats to Biological Diversity Methods for conserving biodiversity Framework for approaches to conserving biodiversity Scope of a Framework Other Challenges The use of markets in conserving biodiversity Offsets Biodiversity Conservation in Australia Policies and legislation for the conservation of biodiversity nationally Policies and legislation for the conservation of biodiversity in NSW National Parks and Wildlife Act, Native Vegetation Act Threatened Species Conservation Act Environmental Planning and Assessment Act, Market and monetary mechanism within the EP&A Act 1979 for conservation Mount Owen Coal Mine The Biodiversity Banking and Offsets Scheme Overview of the scheme Operation of the Scheme Biobanking assessment methodology Biobank site identification and Biobank agreement Biodiversity credits Biodiversity Statements certification Legislation Management of the scheme Review of the Scheme Conserving NSW or Constructing NSW? Areas of high biodiversity value Participation by National Parks? Fragmented habitats Biobanking and the Planning System Implementation of the Scheme Conclusion Bibliography Appendix

3 List of Figures Figure Biodiversity and Ecosystems Figure 2.2 -Threatened numbers in NSW Figure Remnant Cumberland Plain Woodlands Figure Cumberland Plain Woodlands: A threatened Ecological Community Figure Projected population growth for the regions Figure Spatial distribution of Australia s population Figure Vegetation clearances in NSW. Figure Policy instruments to protect biodiversity in Australia Figure Types of market instruments Figure Law of Diminishing Returns Figure Wetland Mitigation Banking Scheme Figure List of Acts protecting biodiversity in NSW Figure Map of protected areas through National Parks and Reserve system in NSW Figure Mount Owen Mine biodiversity offset areas Figure The Biobanking Scheme in action Figure Biobanking in the development assessment process

4 List of Abbreviations Biobanking refers to the Biodiversity Banking and Offsets Scheme DEC Department of the Environment and Conservation EP&A Act 1979 Environmental Planning and Assessment Act, 1979 EPI Environmental Planning Instrument SIS Species Impact Statement TSC Act, 1995 Threatened Species Conservation Act,

5 1 Introduction Biodiversity is recognised globally as an integral part of ecosystems and the biosphere, upon which all life on earth depends. Biodiversity is considered to be the variety of life contained within species, genetics and ecosystems with significant benefits to the economy, environment, science and culture. The loss of biodiversity is occurring globally on every continent, through the destruction of habitats, extinction of species and increasing numbers of species and ecological communities that are classified as endangered, threatened or vulnerable. Within Australia and New South Wales (NSW), the number of species, populations, ecological communities and habitats listed as endangered is increasing as a result of broad scale land clearing of flora and fauna habitats to accommodate agriculture and urban development. As the population of NSW continues to grow, balance is required between urban development and the conservation of biodiversity and threatened species. Current best practice approaches to conserving biodiversity are through the establishment of National Parks and nature reserves by public authorities. However, the cost of acquiring land solely for conservation purposes is becoming increasingly high, particularly where habitats with high biodiversity qualities or threatened species are located along the coastal areas of NSW or in close proximity to established urban areas, where prime development land is located. As a solution, conservation of biodiversity is encouraged on privately owned land through a combination of strategies, legislation and funding schemes. Alternative methods such as the use of market mechanisms including offsets and tradeable permit rights for environmental matters are used in NSW, but this is on a small - 5 -

6 scale and market tools relating directly to biodiversity have not been implemented to their full extent in a formal system. The Department of the Environment and Conservation (DEC) recognises the need for urban development to be balanced with halting the loss of biodiversity and the importance of the contribution that private land owners can potentially have in achieving this. As a result, DEC has developed a market based approach scheme known as the Biodiversity Banking and Offsets Scheme (BioBanking), which will be formally implemented through the addition of a new Part 7A to the Threatened Species Conservation Act, 1995 (TSC Act, 1995). Biobanking proposes to allow for the loss or impact of biodiversity as a result of a development, if the damage is offset on a site elsewhere which contains the same biodiversity values. The scheme will create an environmental market specifically aimed at the trading of biodiversity credits to offset development impacts so that there is no net loss of biodiversity. Private land owners that enter into an agreement with the Minister for the Environment to nominate their land as a Biobank site will be able to generate credits through management actions that improve or maintain biodiversity. Where a development is likely to have an impact on biodiversity, a developer may purchase these credits to offset the impact of a development. In addition, the scheme will streamline the process of development assessment by simplifying the assessment of sites containing threatened species, populations or ecological communities. The Scheme will provide a developer with the option of submitting a Biobanking Statement, which outlines the number and types of credits purchased by the developer, demonstrating that the impacts of biodiversity have been considered upfront and have been offset. The alternative - 6 -

7 is to prepare a Species Impact Statement, which must then be assessed in the development assessment process, lengthening the time required for the process. 1.1 Objective This thesis examines the proposed scheme as a market based tool to conserve biodiversity and its potential implementation in the planning system and the development assessment process. The purpose of this thesis is to examine whether the scheme is likely to contribute to the conservation of biodiversity, whether it will hinder or streamline the development assessment process with particular regard to Species Impact Statements and its general implementation in the NSW planning system. The thesis is separated into five chapters to explain the concept of biodiversity, the theory behind the scheme, how it will operate and reviewing its likely success as a market tool for conservation in the planning system. Chapter 2 outlines the concept of biodiversity and the theories for its conservation. The importance of biodiversity is recognised due to its significant benefits to the economy, environment and society. As biodiversity is declining, the key threatening processes are reviewed, as these processes form the basis of many strategies and statutory policies. Chapter 3 explains how biodiversity is best conserved in-situ (or in its natural surroundings) through a combination of protected areas and non-protected areas. Land outside protected areas such as natural parks and reserves are private and are just as important for conservation. However, given the value of land when used for urban development compared to conservation, the need for the use of market mechanisms to encourage the private conservation of land is recognised. By assigning a monetary value to land with high biodiversity values environmental markets encourage its protection by showing landowners that biodiversity is worth conserving. A popular market mechanism aimed at - 7 -

8 achieving environmental goals includes offsets. In the U.S. the Wetland Mitigation Banking Scheme utilises offsets where a development will impact on a wetland. Chapter 4 examines the current legislation in Australia and the use of offsets within the Environmental Planning and Assessment Act, 1979 (EP&A Act, 1979), to protect biodiversity. Currently the use of offsets within NSW is underutilised with no formal structure or market in place. Where they are used this is generally on a case by case basis for developments with a consent authority requiring an impact on biodiversity to be offset as part of a compensatory habitat through a condition of consent by the EP&A Act, An outline of the concept of the proposed Biodiversity Banking and Offsets Scheme from DEC is provided in Chapter 5. The scheme incorporates the theories and tools for conserving biodiversity and implementation in current legislation as discussed in the previous chapters. Chapter 6 of the thesis is a critical review of the Scheme regarding the success of its potential implementation in the NSW planning system and as a tool for conserving biodiversity. This chapter includes published views from the development industry and environmental groups regarding the proposed scheme

9 1.2 Thesis Methodology The proposed Biodiversity Banking and Offsets Scheme has not been finalised at this stage. The Biodiversity Banking Bill has not been gazetted at this time, but was passed by the Lower House of Parliament with amendments on the 18 th October Due to this the assessment of the scheme in practice cannot be undertaken. In addition given the limited use and lack of formal structure within the NSW Planning system regarding the use of offsets, limited case studies were available for review. This thesis incorporates a review of the literature surrounding biodiversity, environmental markets, and market tools for conservation and current best practices in Australia. In addition, informal discussions have been held with the Department of Planning, DEC and Xstrata Coal to source case studies where offsets have been implemented as a condition of consent through the EP&A Act, The Bill was required to undergo an extensive public consultation period as part of the process for the TSC Act, 1995 to be amended. The scheme will create a market in which biodiversity credits can be traded to offset the impacts of a development. This scheme is completely new to NSW and because of this reason and the innovative approach it has taken to biodiversity conservation, a number of key industry and environmental groups have published papers in response to the scheme. The views of these stakeholders have been examined in considering the effect the Scheme will have on the NSW planning system and its likely success

10 2 Biodiversity In order to appreciate the need to conserve biodiversity it is necessary to understand what constitutes biodiversity, why its loss is important and what processes are contributing to the disappearance of species, ecosystems and habitats. 2.1 What is biodiversity? Biodiversity is a part of all life on earth, including plant and animal species and the interactions within and between ecosystems, which form part of the global biosphere. In 1992 the United Nations Earth Summit was held in Rio de Janeiro, which recognised the importance of biological diversity. As a step towards conserving biodiversity, 150 government leaders (including Australia) signed the Convention of Biological Diversity, which defined key terms in relation to biodiversity and the provision of actions to promote sustainable development (The Convention on Biological Diversity, 2006, a). The Convention defined biological diversity and ecosystems as follows: Biological diversity means the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems (The Convention on Biological Diversity, 1992, article 2)

11 Ecosystem means a dynamic complex of plant, animal and microorganism communities and their non-living environment interacting as a functional unit. (The Convention on Biological Diversity, 1992, article 2). In Australia, The National Strategy for Biodiversity adopts the above definition from the United Nations Convention on Biological Diversity. In addition, the strategy defines biological diversity on three different levels: genetic diversity, species diversity and ecosystem diversity. 1.Genetic diversity - the variety of genetic information contained in all of the individual plants, animals and microorganisms that inhabit the earth. Genetic diversity occurs within and between the populations of organisms that comprise individual species as well as among species; 2. Species diversity - the variety of species on the earth; 3. Ecosystem diversity - the variety of habitats, biotic communities and ecological processes (Department of the Environment, Sport and Territories, 1996, Introduction) The evolution of Australia and its separation from other continents has resulted in Australia containing a diversity of animals and plant species, with many species endemic to this country. The Department of the Environment states that 85% of flowering plants, 84% of mammals, 45% of birds and 89% of inshore, freshwater fish are distinctive to Australia (Department of the Environment and Heritage, 2006, a). In addition, Australia has a range of ecosystem types, some examples of which include coastal, estuarine, wetland, arid, semi-arid and alpine environments (NSW National Parks and Wildlife Service, 1999)

12 2.2 The importance of biodiversity Biodiversity involves the variety of life, in which every species is unique. As species become extinct or endangered the capacity for ecosystems to function is diminished. The global biosphere depends on the functioning of ecosystems, of which Australia s biodiversity is an essential component and the importance of which is highlighted by the following: the biosphere is alive and metabolizing, everything is forever changing, renewing, evolving, and it is the interconnectedness and symbiotic functioning of living matter at all levels that maintains the checks and balances. The natural laws that apply in the natural world, particularly those that balance populations and nutrients, maintain equilibrium (White, 2003, p.174 in Worboys et.al, 2005, p. 20). The need for the conservation of biodiversity is evident due to the importance of maintaining the biosphere for the survival of life on earth. However, biodiversity has many other functions which are essential to human communities, as outlined below. Social, cultural, recreational benefits - The health of ecosystems is linked to human health e.g. purification of water, detoxification of wastes through natural processes (World Health Organisation, 2005) - Culture and identity is linked to ecosystems e.g. Aboriginal and Torres Strait Islander People; Indigenous cultures in the Amazon. Ecological role of biodiversity Species play a role which contributes to the healthy functioning of ecosystems so they may provide services such as purifying water and

13 air (for example wetlands and mangrove communities can act as water filters for waste). The loss of a species reduces the ability of an ecosystem to function and may be less likely to adapt to environmental change (Wikipedia, 2006). Economic benefits - Pharmaceuticals approximately 25% of prescriptions are filled by drugs derived from plants (Guruswamy and McNeely, 1998) - Free ecosystem services are valued at over $30 trillion globally (Environment Australia, 2001) - Use of natural resources e.g. forestry, fishing - Ecotourism Scientific importance Species help scientists to understand evolution, their functioning and role. Biodiversity contributes to the control of pests and diseases and maintains genetic resources which are essential for crop production and ability to adapt to change (The Convention on Biological Diversity, 2006, a) Biodiversity is subject to indirect and direct threats, leading to change that may effect the healthy functioning of ecosystems that produces outputs essential to humans. The relationship between change, biodiversity, ecosystems and the reliance by human communities is summarised in Figure 2.1 below

14 Figure 2.1 Biodiversity and Ecosystems. The interaction between biodiversity and ecosystems and the services produced from these are shown (The Convention on Biological Diversity, 2006, b). 2.3 Key Threats to Biological Diversity In 1992 the Convention on Biological Diversity was attended by 150 Government leaders worldwide, symbolising the importance of biodiversity for human life and the unprecedented rate at which it is being lost (The Convention on Biological Diversity, 2006, a) Since this time, further future conferences of the Convention have taken place with a Strategic Plan adopted in 2002 that was committed to achieve by 2010 a significant reduction of the current rate of biodiversity loss at the global, regional and national level, as a contribution to poverty alleviation and to the benefit of all life on Earth (The Convention on Biological Diversity, 2006, b)

15 Despite this target being endorsed by government leaders, species populations are continuing to be threatened, with species becoming extinct at rates 1,000 times more than previously experienced by the Earth, effectively meaning we are responsible for the sixth major extinction event in the history of the Earth, and the greatest since the dinosaurs disappeared, 65 million years ago (The Convention on Biological Diversity, 2006, b, iv). In Australia 107 species are extinct, with Australia having a higher rate of mammal extinction than any other continent; and a further 1500 flora and fauna species are listed as endangered or vulnerable (Young, et al., 1996). In NSW a total of 962 species, populations and ecological communities are listed as endangered or vulnerable with 75 species extinct (NSW Parliamentary Counsel's Office, 2006, a). Threatened Species numbers in NSW No of endangered species/ communities Year Threatened Species - Plants Threatened Species - Animals Endangered Ecological Communities Figure 2.2 Threatened numbers in NSW. This table Illustrates the number of plant species, animal species and endangered ecological communities from While the number of threatened species slightly decreased at the end of 2005, the number of endangered ecological communities continued to increase (Source: Data used from Australian Bureau of Statistics, 2006, (a) to formulate the table)

16 The major threat to biodiversity at a global scale according to Kumar, 1999, p.226 is the activities and overpopulation of Homo sapiens. Overpopulation, deforestation, pollution and climate change are global factors, which lead to the cumulative impact on biodiversity (Wikipedia, 2006). In Australia 11 threatening processes to biodiversity have been identified by Thackway & Cresswell, 1995 b (in Worboys et.al, 2005, p.375) being: 1. Agriculture 2. Grazing 3. Weeds 4. Clearing 5. Fire 6. Feral animals 7. Forestry 8. Mining 9. Salinisation 10. Tourism 11. Urbanisation In NSW, clearing of native vegetation is a major threat to biodiversity with land clearing estimated at approximately 150,000 hectares per year (NSW National Parks and Wildlife Service, 1999). An example of the extent to which vegetation communities are being threatened are the Cumberland Plain Woodlands which are endemic to central NSW. The Woodlands originally covered 107,000 hectares or 30% of the Sydney Basin, but today an area of only 6,400 hectares remains, less than 6% of the original vegetation (Department of the Environment and Heritage, 2006, b)

17 Figure 2.3 Remnant Cumberland Plain Woodlands (National Parks and Wildlife Service, 2004) Impacts from land clearing on the fringe of Sydney for agriculture, housing and hobby farming further threaten the remaining portions of the Cumberland Plain Woodlands

18 Remaining Cumberland Plain Woodlands in Sydney N Not to scale Figure 2.4: Cumberland Plain Woodlands: A threatened Ecological Community. This figure shows the extent of encroachment of Sydney on the threatened vegetation (Department of the Environment and Heritage, 2003) As of 2005 the population of New South Wales was 6,774,200 people, with an additional 1,227,600 people predicted by 2021, thereby providing a further threat from increased urban development (Australian Bureau of Statistics, 2006, a). The NSW State Government has also predicted further growth in NSW with Sydney expected to accommodate a population increase of 1.1 million by 2031 (Department of Planning, 2005). A number of draft regional strategies have been prepared which predict the future growth of NSW regions (refer to Figure 2.3) and provide a planning framework to accommodate the new growth

19 Projected Population up to 2025 Current Population North Coast South Coast Illawarra Lower Hunter Central Coast 0 200, , , ,000 Figure 2.5: Projected population growth for the regions. The NSW Government has provided current and future population projections in anticipation that future population growth will be located within the North Coast, South Coast, Illawarra, Lower Hunter and Central Coast regions (in addition to Sydney) (Source: Data compiled from the Department of Planning draft regional strategies, Department of Planning, 2006 a-e). The current geographical distribution of New South Wales population can be seen in Figure 2.6, with the status of vegetation areas within NSW shown in Figure

20 Figure 2.6 Spatial distribution of Australia s population. As can be seen the eastern coast of NSW is heavily populated (Australian Bureau of Statistics 2006, b) Figure 2.7 Vegetation clearances in NSW. A significant amount of uncleared vegetation is present along the NSW coastal area (Glanzig, 1995)

21 As can be seen in the above figures the amount of vegetation on uncleared land is constrained by the densely populated regions and cleared areas. The predicted increase in population for Sydney and NSW coastal regions is likely to require further clearing of vegetation, which is a key threat to biodiversity. Threats to biodiversity result from direct physical activities, however actions such as poor land use planning, absence of strategic planning, incompatible land uses, inadequate legislation and lack of political support and funding can contribute to the loss of biodiversity (Worboys et al, 2005)

22 3 Methods for conserving biodiversity 3.1 Framework for approaches to conserving biodiversity The United Nations Conference on Biological Diversity recognised that biodiversity is essential for sustainable development, yet the rate of loss continues and must be addressed. The protection of habitats is recognised as the most effective method of protecting biodiversity at all levels, that is, at the genetic, species and ecosystem level (Kumar, 1999). This is generally achieved through the two basic conservation concepts of in-situ and ex-situ conservation, which are defined below by the United Nations Conference on Biological Diversity. "Ex-situ conservation" means the conservation of components of biological diversity outside their natural habitats (The Convention on Biological Diversity, 1992, article 2). (For example by collecting and preserving specimens of selected species in zoos and botanical gardens) "In-situ conservation" means the conservation of ecosystems and natural habitats and the maintenance and recovery of viable populations of species in their natural surroundings and, in the case of domesticated or cultivated species, in the surroundings where they have developed their distinctive properties (The Convention on Biological Diversity, 1992, article 2)

23 (Such as World Heritage areas, National parks and reserves) In either case, the scope of activities for conservation of biodiversity entails protection, maintenance and management, sustainable use, restoration and enhancement (Aretino et al, 2001) Scope of a Framework Kumar suggests that to achieve conservation in-situ the approach needs to be a combination of processes and mechanisms; requiring co-ordination of conservation and land use planning through regulations and institutional mechanisms (Kumar, 1999, p.31). When the scope of biodiversity and this range of approaches are considered, it becomes clear that the conservation of biodiversity is not just a scientific exercise, nor the sole responsibility of scientists. Scientific methods alone (such as seed banks, breeding programs and nurseries) are not enough to halt the loss of biodiversity resulting from human activities. Appropriate policy is required to address the causes that are threatening the key processes of biodiversity. Policy instruments used in the conservation of biodiversity generally fall into three broad types: 1. Legislative instruments, for example: a. which allow for threat abatement plans, b. regulation of activities, such as approvals for land use change, vegetation clearing c. World Heritage areas, National parks and nature reserves, environment protection zones, d. recovery and conservation plans; 2. Voluntary agreements such as conservation agreements; and

24 3. Market-based instruments such as tradeable permits. (Department of the Environment and Conservation, 2006, a) A successful policy for the conservation of biodiversity will include a combination of the above instruments, as outlined in Figure 3.1 below. Figure 3.1 Policy instruments to protect biodiversity in Australia (Department of the Environment and Conservation, 2006, a) Other Challenges Severely fragmented habitats are a particular challenge, with biodiversity at the ecosystem level able to be better managed than concentrated solely on every individual species (Kumar, 1999). To encourage the amalgamation of fragmented areas Kumar 1999, p.29 specifies that local support for biodiversity conservation is critical and desirable. What is needed is to provide new options for a limited or sustainable use of biodiversity by actively involving local people in managing protected areas. As almost two thirds of land in Australia is managed by the private sector, there is a need to provide mechanisms to allow these diverse and spatially distributed

25 sites to be linked, amalgamated and promoted to obtain a coordinated and integrated approach over a wider area (Productivity Commission, 2004). While some legislative and regulatory processes are in place, they apply mostly to public lands and lands under control of government or not-for-profit agencies. As species numbers continue to decline inventive approaches are required to put a system for the conservation of private land into place. Market-based instruments have the potential to harness this opportunity and to encourage conservation by private land owners. A Productivity Commission Report in 2004 into the impacts of biodiversity and native vegetation regulations found: the key advantage of using market-based approaches is that they reflect individuals voluntary decisions and cost-benefit trade-offs. Thus markets promote achievement of native vegetation and biodiversity conservation at least cost and promote innovative solutions over time as individuals have an incentive to identify cost-effective solutions (Productivity Commission, 2004, p. 196). This concept is explained further below. 3.2 The use of markets in conserving biodiversity A market is a concrete place to spend money a spontaneous tool of exchange (Hanley et al, 2001, p.12). Markets which deal directly in environmental products involve the theory of environmental economics. Central to this concept is the need to place a monetary value for environmental goods and services and understanding that the economy is not separate from the environment (Pearce, 1990, p.4)

26 Markets alone are insufficient to address all issues of conservation with a combination of policy instruments recognised as the best approach to conservation (Productivity Commission, 2004). In relation to biodiversity they cannot be solely relied upon to encourage conservation because of the public good aspects of biodiversity, to the time horizon one needs to appreciate the value of biodiversity and to the uncertainties associated with its importance in addition the intrinsic, aesthetic and cultural values in other areas of society have always been protected by legislation, and that will continue to be true in the area of biodiversity (Heal, 1998, p.126). For this reason environmental markets work in conjunction with legislation, as these types of markets are a type of regulation created from the need to address a statutory requirement or an environmental target contained within a strategic document (Collins, 2005). Governments can assist in the creation of markets helping to establish, monitor and enforce the trading rules of the market, but not the market price itself (Hanley, 2001, p.25). Where environmental markets occur, they consist of three different types of market type instruments being price based, quantity-based and market friction as outlined in Figure

27 Figure 3.2 Types of market instruments. A number of mechanisms have emerged from environmental markets which are associated with government actions to support market approaches to the conservation of biodiversity (Collins, 2005, p.6). These types of market based instruments can be applied in a number of different environmental markets relating to environmental issues such as air or water pollution, greenhouse gas emission trading, salinity and energy. In relation to the proposed Biodiversity Banking and Offset Scheme, the market instrument used to aim to balance urban development with conservation is offsets. For this reason the background of offsets and what constitutes a biodiversity offset is examined further below. 3.3 Offsets Offset schemes are currently used where a development will impact on the environment and is required to compensate for this impact by offsetting a portion of land (either on site or off site) so there is no net loss to the environment

28 An offset is defined as: Environmentally beneficial activities undertaken to counterbalance an adverse environmental impact, aspiring to achieve no net environmental loss or a net environmental benefit (WA EPA 2004 in International Council on Mining and Metals, 2005, p.4). The NSW Government in 2002 released a concept paper for the development of a Green Offsets scheme in NSW as an additional mechanism to reduce pollution and environmental impacts from development. The paper outlined the following basic principles for offsets which should be considered in the preparation of any offset scheme: Environmental impacts must be avoided first by using all cost-effective prevention and mitigation measures. Offsets are then only used to address remaining environmental impacts. All standard regulatory requirements must still be met. Offsets must never reward ongoing poor environmental performance. Offsets will complement other government programs. Offsets must result in a net environmental improvement (NSW Government, 2002, p. 4) In addition offsets should be: enduring they must offset the impact of the development for the period that the impact occurs quantifiable the impacts and benefits must be reliably estimated targeted they must offset the impacts on a like for like or better basis

29 located appropriately they must offset the impact in the same area supplementary beyond existing requirements and not already being funded under another scheme enforceable through development consent conditions, licence conditions, covenants or a contract (NSW Government, 2002, p. 4) Offsets can provide an economic advantage over on-site conservation enforced through just regulatory controls. The NSW Government concept paper recognises that a law of diminishing returns may apply as outlined in Figure 3.3 (NSW Government, 2002). The graph indicates that the cost of reducing an impact on the environment (including biodiversity conservation) from a development can increase dramatically as it approaches full/complete conservation (i.e. returning the environment to 100% normal or previous value). At some point the extra cost of mitigation is greater than the marginal environmental value added. Offsets operating in a market provide the opportunity to achieve that final (otherwise high cost on-site) recovery of value by providing the equivalent environmental value at another site

30 Figure 3.3 Law of Diminishing Returns (NSW Government, 2002, p.4). Biodiversity offsets are a method to conserve biodiversity in-situ to compensate for an activity where environmental damage will occur. A biodiversity offset is defined as: Conservation actions intended to compensate for the residual, unavoidable harm to biodiversity caused by development projects, so as to aspire to no net loss in biodiversity. Before developers contemplate offsets, they should have first sought to avoid and minimise harm to biodiversity (Ten Kate et al, 2004, p.13)

31 Offsets are different from managing the impacts of a development on land with biodiversity values. For example, a portion of land that is proposed to be developed which will have an impact on the critical habitat located on the site. The developer may offset this impact by purchasing another portion of land elsewhere with the same ecological characteristics or use on-site offsets. The latter involves conserving the original critical habitat on site and allocating an additional portion of land on site for conservation. The use of biodiversity offsets can have a number of benefits for business, governments, conservation groups and local communities. The benefits can include the following: Provides the opportunity for development impacts to be mitigated, allowing a development which previously might not have been possible. Offsets are a market instrument which encourages conservation without the need to create new legislation (Ten Kate et al, 2004). Conservation groups have the opportunity to acquire more sites for conservation and potentially improve linkages between ecological corridors (Ten Kate et al, 2004). While biodiversity offsets can generate a number of benefits, there are potential risks involved which must be considered in the development of any scheme. Some of the potential areas of concern include the following: Can potentially allow inadequate development to occur where it would previously not have been possible. Cost and liability of an offset particularly in managing and funding offset schemes and the legal liability associated with areas offset in perpetuity (International Council on Mining and Metals, 2005). Inadequate representation of all stakeholders in determining offsets. Difficulty in assigning values to biodiversity and whether offset areas will result in areas that are the same

32 In NSW the EPA is currently trialling pilot (broad environmental) offset schemes to reduce air pollution and water pollution in the Hawkesbury-Nepean River and drinking water catchments for Sydney (NSW Government, 2002). However, no regulated scheme currently exists for biodiversity credits within NSW. Because of this it is necessary to examine international models where offsets are used to specifically target the impacts of a development on biodiversity. The proposed Biodiversity Banking Offset Scheme draws on experience of other schemes internationally, namely the United States Wetland Mitigation Banking Scheme Case Study: US Wetland Mitigation Banking Scheme This scheme uses biodiversity offsets to mitigate the impacts of development on wetlands through the trading of biodiversity credits in an environmental market. It is estimated that half of the 220 million acres of wetlands in the United States remains (Kenny, 2006). To halt the further loss of these important ecosystems the U.S. Army Corps of Engineers created a Wetland Mitigation Scheme under the Clean Water Act. Where a developer proposes to impact on a wetland, a permit is required under the Act from the U.S. Army Corps of Engineers. Where a development will have an unavoidable impact on a wetland, the US Army Corps requires the loss to be compensated by restoring, enhancing or creating a new wetland (Bayon, 2006). This can be done on site or by an offsite offset through one of the following means: 1. Buying credits through a mitigation bank; 2. Make a monetary payment to the US Army Corps who provide the money to non profit organisations who conserve or enhance wetlands; or 3. Pay a third payment to conserve, enhance or create a wetland offsite (Bayon, 2006)

33 A mitigation bank is a bank that holds wetland credits that have been generated from private landowners who dedicate their land solely to the conservation, enhancement or creation of wetlands. A developer will purchase credits from this central bank to offset the impacts of their development. The money used to purchase these offsets is transferred to the private landowner so they maintain the wetland. This process is outlined in the figure below. Figure 3.4 Wetland Mitigation Banking Scheme (Collins, 2005, p.78) The scheme enables the conservation of wetlands as it places a monetary value on wetlands, so that they are seen as an asset. As a result of this a number of businesses have been created dedicated solely to enhance, manage and create wetlands, such as Wildands Inc which manages over 15,000 acres of wetlands (Bayon, 2006)

34 However the scheme has been criticised by environmental groups as the scheme allows credits to be sold before a wetland is operating and with a lack of enforcement by U.S Army Corps. In addition the scheme has been criticised because of the difficulties of offsetting like for like wetlands, particularity where offsets are not in the same area as the site where the wetland is being lost (Godden, Vernon, Whitten et al in Productivity Commission, 2004). These could offer potential lessons for any Australian biobanking scheme

35 4 Biodiversity Conservation in Australia In 1992 Australia signed the United Nations Convention on Biological Diversity, at the Rio Earth Summit, which recognised the importance of preserving biodiversity and its role in promoting sustainable development. Since this time a number of strategic and statutory plans have been developed on a national, state and local level to achieve the conservation of biological diversity. In Australia, a number of strategies and legislation are in force that set the framework for the protection of biodiversity nationally and within NSW. Each piece of legislation has a particular aspect on which the proposed Biodiversity Offsets Banking Scheme was modelled, which includes the objectives for conserving biodiversity, conservation agreements and threatened species assessment. Currently the use of market tools is limited, with no formal piece of legislation creating an environmental market for biodiversity. The closest comparison of the Scheme and the current use of market mechanisms are offsets imposed through a condition of consent in the Environmental Planning and Assessment Act, Policies and legislation for the conservation of biodiversity nationally The Australian Government has recognised the significant contributions that biodiversity makes to culture, the environment, economy and science and the need to protect the essential process of ecosystems for current and future generations. In 1996 the Department of Environment and Heritage prepared the National Strategy for the Conservation of Australia s Biological Diversity. The strategy includes goals and principles to minimise the threats to biodiversity, encourage the integration of natural resource management and conservation and

36 improve co-ordination of these activities across all levels of government and the community. Within the strategy the use of market instruments was stated as an incentive measure to encourage in-situ conservation on land outside the protected areas system. In 2001 the strategy was reviewed by the Australian and New Zealand Environment and Conservation Council (2001), who found the original principle of strengthening conservation areas outside protected areas in the strategy, had only been partially achieved. At this time, market based incentives were not utilised as part of this achievement, with no schemes underway in NSW. While the strategy is an important document for setting the framework in how to conserve biodiversity at the national level, the key legislative instrument is the Environment Protection and Biodiversity Act 1999 (EPBC Act 1999). In combination with a number of other Acts (such as the World Heritage Properties Conservation Act 1983, Ozone Protection and Synthetic Greenhouse Gas Management Act 1989, Environment Protection (Sea dumping) 1981 and Natural Heritage Trust of Australia Act 1997, the Acts ensure that activities which may impact on the ecological processes within ecosystems, habitats and ecological communities are regulated. The EPBC Act 1999 requires approval for any activity, action or project which may have an environmental impact on Commonwealth land, a global environment or an environmental matter which is considered to be of national significance (Department of the Environment and Heritage, 2006, c). The Act identifies threatening processes for biodiversity and allows the nomination of species and ecological communities to be listed as endangered or vulnerable. Currently there are 1580 species and 36 ecological communities listed as vulnerable or endangered by the Act (Department of the Environment and Heritage, 2006, d)

37 The EPBC Act provides for the protection and management of biodiversity at the national level; however as the variety of species, genetic and ecosystems is different across the bioregions the need for individual state policies and legislation is also required. 4.2 Policies and legislation for the conservation of biodiversity in NSW The protection of biodiversity within NSW requires an ecologically sustainable management approach that incorporates scientific knowledge with policies and legislation. In NSW a combination of policies and legislation are currently in force to achieve this, which are listed in Figure 4.1 below. Legislation Threatened Species Conservation Act 1995 National Parks and Wildlife Act 1974 Native Vegetation Act 2003 Wilderness Act 1987 Marine Parks Act 1997 Noxious Weeds Act, 1993 Water management Act Catchment Management Authorities Act 2003 Rural Land Protection Act 1989 Coastal Protection Act 1979 Environmental Planning and Assessment Act 1979 Local Government Act, 1993; Crown Lands Act, 1989 Fisheries Management Act, 1994 Coastal Protection Act, 1979 Figure 4.1 List of Acts protecting biodiversity in NSW (information sourced through NSW Parliamentary Counsel s Office, NSW legislation, 2006,

38 These are supported by a number of state and local policies some of which include the NSW Biodiversity Strategy, NSW Forest Policy, NSW Coastal Policy, NSW Wetland Management Policy, State of the Environment Reports, Local Approvals Policies and local council biodiversity policies. A brief summary is provided below of key statutory legislations which protect threatened species and ecological communities and promote conservation of biodiversity in NSW and in the NSW Planning system. They were a consideration in the preparation of the proposed Biodiversity Banking and Offsets Scheme National Parks and Wildlife Act, 1974 The National Parks and Wildlife Act (NPWS) came into force on the 27 November The objective of the Act is to conserve nature in-situ through the dedication of protected areas. These areas are created and managed through the Act such as national parks, nature reserves, wildlife refuges, state conservation areas and regional parks. Figure 4.2 Map of protected areas through National Parks and Reserve system in NSW (NSW Environment Protection Authority, 2003)

39 Private conservation of land is encouraged through voluntary conservation agreements in Part 4 Division 12 of the Act. A conservation agreement is a joint agreement between the Minister for the Environment and a private landowner to permanently conserve an area containing scientific interest, critical habitat, ecological communities or threatened species (NSW Parliamentary Counsel s Office, 2006, a). A draft agreement is placed on public exhibition and once approved is registered to the title of the land, ensuring in the event the property is sold the management of the land will continue in accordance with the agreement Native Vegetation Act 2003 The Native Vegetation Act 2003 came into force on the 11 December The objective of the Act is to prevent broad scale land clearing of native vegetation. This Act requires approval through consent or a Property Vegetation Plan to clear certain categories of native vegetation on land other than a national park, conservation area, state forestry area or urban area (excluding rural-residential areas). Property Vegetation Plans include vegetation clearing requirements and may include proposals for incentive measures Threatened Species Conservation Act 1995 The TSC Act 1995 came into force on the 22 December The TSC Act 1995 is specifically aimed at the protection of threatened species, populations and ecological communities. This Act allows for the listing of species, populations and ecological communities by the Scientific Committee who assign a status of endangered, critically endangered, vulnerable or extinct. Critical habitats are also listed under the Act

40 To protect and manage these listings the Act includes provision for the preparation and implementation of recovery plans, threat abatement plans and licenses. However marine life is not included under this Act, but separately managed with similar processes through the Fisheries Management Act Where an action is likely to or will impact on a species, a species impact statement is required. Part 6 Division 2 of the Act outlines the contents and Director-General s requirements of a Species Impact Statement (SIS). The need for an SIS is triggered when applying for a license under the TSCA, as a requirement of the Environmental Planning Assessment Act 1979 or Plantations and Reafforestation Act, 1999 (NSW Parliamentary Counsel s Office, 2006, b). However the need for a SIS may not be required in certain circumstances. Part 7, Division 5 of the TSCA relates to the biodiversity certification of Environmental Planning Instruments (EPI). Biodiversity certification is granted if the Minister for the Environment considers an EPI to lead to the overall improvement or maintenance of biodiversity values (NSW Parliamentary Counsel s Office, 2006, b, Cl. 126G). Biodiversity values are defined within this section to include threatened species, populations and ecological communities, and their habitats (NSW Parliamentary Counsel s Office, 2006, b, Cl. 126G). An EPI that has biodiversity certification effectively means that a development which requires consent under Part 4 or Part 5 of the Environmental Planning and Assessment Act, 1979 is considered to be development that will not significantly affect a biodiversity value, and therefore does not require a Species Impact Statement to be prepared (NSW Parliamentary Counsel s Office, 2006, b)

41 4.2.4 Environmental Planning and Assessment Act, 1979 The EP&A Act 1979 is the principal statutory instrument regulating land use in NSW. One of the objectives of the Act is to protect and conserve native plants and animals including threatened species, habitats, populations and ecological communities (NSW Parliamentary Counsel s Office, 2006, c). The Act provides for the protection of the environment and biodiversity values in a number of ways such as environmental planning instruments, implementation of conditions of consent and S.94 Contributions Plans. An Environmental Planning Instrument (EPI) under the EP&A Act 1979 are plans that are made to achieve the objectives of the Act, control development, allow the reservation of land for public purposes and protection of vegetation, flora and fauna (Farrier & Stein, 2006). Part 3, Division 1, Section 26 of the Act contains provisions that relate directly to the protection of the environment in the preparation of an EPI (NSW Parliamentary Counsel s Office, 2006, c). The purpose of this division is to ensure that the regulation of land use, such as the establishment of zones is correctly implemented in the first instance so that biodiversity values are acknowledged and additional controls imposed for their protection if necessary. This is also relevant in identifying categories of developments and land use categories and activities that are suitable for areas of critical habitat, threatened species or ecological communities in EPI s such as Regional Environmental Plans (REP s), State Environmental Planning Policies (SEPP s) and Local Environmental Plans (LEP s). Generally an EPI will contain some sort of provision relating to any of the following; the protection of threatened species, habitats, ecological communities, ecological processes, biodiversity or the environment. Some are dedicated directly to conserving and protecting species or ecological communities such as SEPP 14 Coastal Wetlands, SEPP 19 Bushland in Urban Areas, SEPP

42 Littoral Rainforests, SEPP 39 - Spit Island Bird Habitat, SEPP 44 Koala Habitat Protection, SEPP 71 Coastal Protection, Sydney REP 20 Hawkesbury Nepean River and Greater Metropolitan Regional Environmental Plan 2 - Georges River Catchment. Projects which are considered to be major or of state significance deemed by the Minister of Planning are assessed separately under Part 3A of the Act. The Director-General prepares the requirements for environmental assessment with regard to any relevant guidelines from the Department of Planning (NSW Parliamentary Counsel s Office, 2006, c). Other development applications and the impacts they may have on the environment are considered through the following clauses contained within the Act. Section 78A Development Applications Part 4, Section 78A of the Act requires a Species Impact Statement to be prepared and submitted with a development application if the subject land is part of critical habitat or is likely to significantly affect threatened species, populations or ecological communities, or their habitats (NSW Parliamentary Counsel s Office, 2006, c). Land that is designated as critical habitat is listed under the TSCA, however it is determining if development is likely to affect threatened species, populations or ecological communities that must be determined by the applicant. To do this the Act provides requires the following seven factors to be taken into consideration: a) in the case of a threatened species, whether the action proposed is likely to have an adverse effect on the life cycle of the species such that a viable local population of the species is likely to be placed at risk of extinction,

43 (b) in the case of an endangered population, whether the action proposed is likely to have an adverse effect on the life cycle of the species that constitutes the endangered population such that a viable local population of the species is likely to be placed at risk of extinction, (c) in the case of an endangered ecological community or critically endangered ecological community, whether the action proposed: (i) is likely to have an adverse effect on the extent of the ecological community such that its local occurrence is likely to be placed at risk of extinction, or (ii) is likely to substantially and adversely modify the composition of the ecological community such that its local occurrence is likely to be placed at risk of extinction, (d) in relation to the habitat of a threatened species, population or ecological community: (i) the extent to which habitat is likely to be removed or modified as a result of the action proposed, and (ii) whether an area of habitat is likely to become fragmented or isolated from other areas of habitat as a result of the proposed action, and (iii) the importance of the habitat to be removed, modified, fragmented or isolated to the long-term survival of the species, population or ecological community in the locality, (e) whether the action proposed is likely to have an adverse effect on critical habitat (either directly or indirectly), (f) whether the action proposed is consistent with the objectives or actions of a recovery plan or threat abatement plan,

44 (g) whether the action proposed constitutes or is part of a key threatening process or is likely to result in the operation of, or increase the impact of, a key threatening process ( NSW Parliamentary Counsel s Office, 2006, c, Part 1, S.52A (2)). If an SIS is found to be required, this must be prepared in accordance with Section 109 to 110 of the TSCA. A SIS will contain (among other requirements) a detailed study of the threatened species, populations or ecological communities and the proposed mitigation measures to ensure the development proposal will not have an adverse impact on these areas. In addition if the answer was yes to the seven part test (i.e. the development is likely to impact on a threatened species, population, ecological community) then Section 79B also requires the application to be referred to the Director General of the National Parks and Wildlife Service or the Minister of Planning (depending on whom is the consent authority). The information to be contained with an SIS and the process that must be followed is also found in the preparation of Environmental Impact Statements. An EIS is required when a development will have a signifacent impact on many factors of the environment. As part of the preparation of an EIS, a SIS is included in the report. 4.3 Market and monetary mechanism within the EP&A Act 1979 for conservation Development applications are required through the assessment process to consider the potential impacts on the environment and whether a proposal will be detrimental to the environment. Where developments may be found to have an environmental impact, but the opportunity is provided to counterbalance this through other means the Act provides some flexibility for this to occur

45 Section 94 of the Act permits the creation of S.94 Contributions Plans which outline for local governments types of developments or locations that trigger an increase the demand for public amenities or services within an area. Where this occurs an applicant may provide a dedication of land or a monetary payment in accordance with a S.94 Contributions Plan (NSW Parliamentary Counsel s Office, 2006, c). Where a development does not trigger a S.94 Contributions Plan other provisions are available to address an impact of a development. In relation to biodiversity conservation a development which may impact on a threatened species, ecological communities or critical habitat may use offsets to counterbalance the impacts. Offsets are currently used in the NSW planning system, applied through conditions of consent in accordance with Section 80A. No specific provision is contained with the EPA Act relating to offsets; rather these are negotiated on an individual basis according to the type of development and scale of impact involved. Typically they are used where a development is found to have an impact on a threatened species or critical habitat. Offsets can be on-site, where a portion of the site is dedicated solely to protect and maintain biodiversity values or off-site where an alternative site with the same biodiversity values is purchased by the developer and then transferred to a public authority for management to ensure conservation. The benefits of offsets have been examined in Chapter 3. A case study is provided as an example of a development which has utilised offsets to conserve biodiversity Mount Owen Coal Mine The Mt Owen Mining Complex is located 25 kilometres northwest of Singleton in the Upper Hunter Valley of New South Wales and is operated by Thiess Pty Ltd (Thiess) under a partnership with Xstrata Coal Australia Pty Ltd. The mine consists of two adjacent open-cut coal mines being the Mount Owen Mine and

46 Ravensworth East Mine, with the Glendell Mine proposed to the south (Xstrata Coal & Thiess, 2006). The Mount Owen mine is located on the Ravensworth State Forest (RSF), which is a significant remnant of woodland with 19 threatened fauna species listed through the NSW TSCA 1995 including the Green and Golden Bell Frog of which 240 hectares have already been cleared (NSW Mineral Council, 2006). On the , Development Application was granted approval for an extension to the current open cut mining operations including activities such as increasing the processing rate coal handling and preparation plant to 15 million tones of run of mine coal a year (Department of Planning, 2004). As part of the approved works a further 35 hectares of the RSF and 59 hectares of woodland adjacent to the mine would be disturbed (Xstrata Coal & Thiess, 2006). To offset the impact of the loss of habitat which is associated with threatened fauna a comprehensive Biodiversity Offset Strategy (BOS) was approved. The strategy was prepared through extensive consultation with the Department of Infrastructure, Planning and Natural Resources (now DOP), National Parks and Wildlife Service (now part of DEC) and the Mt Owen Advisory Group (Xstrata Coal & Thiess, 2006). To permit the use of on-site offsets the BOS was incorporated into the development consent through a number of development conditions, which are outlined below. Condition 41 - The BOS must be satisfactorily implemented. Condition 42 Within three years from the the mine must ensure the biodiversity offset areas are secured through a long term measure including rezoning under Singleton LEP 1996, transfer of land for protection to Forests NSW or a Deed of Agreement with the Minister (ref consent)

47 Condition 43 Within 18 months of a minimum of 6 alternative habitats are to be created in the biodiversity offset area for the Green and Golden Bell Frog. Condition 45 A Flora and Fauna Management Plan is required and must include and assessment of the BOS. Condition 46 An annual review is required of the BOS and Flora and Fauna Management Plan to review performance Condition 47 Within three years from and continually every three years and Independent Audit of the BOS and Flora and Fauna Management Plan is required, which is required to be paid for by the applicant. Through the combination of these conditions it aims to implement the BOS and ensure its long-term management by providing security and regular monitoring during the duration of the mine s activities. The Biodiversity Offsets areas cover a total of 415 hectares within six individual offset areas known as the Northwest Offset; Northeast Offset; Forest East Offset; Travelling Stock Reserve (TSR) Offset; Southeast Offset; and Southeast Corridor Offset (Xstrata Coal & Thiess, 2006). The location of the offsets is shown in Figure 4.3. The proposed mining works would remove a total of 94 hectares of woodland and 8 hectares of riparian vegetation, while the BOS would provide a total of 100 hectares of woodland and 17 hectares of riparian vegetation through the total offset area. The BOS was considered acceptable as it provided vegetation communities which were like for like (Hunter Valley Coal Corporation, 2003, p. 12) and would allow for the increase of these vegetation types over time. The Mount Owen case is an example of the use of an on-site to offset the impact on biodiversity and its implementation in the NSW planning system

48 Figure 4.3: Mount Owen Mine biodiversity offset areas (Xstrata Coal & Thiess, 2006, p. 4) 5 The Biodiversity Banking and Offsets Scheme

49 5.1 Overview of the scheme A new approach to the way biodiversity is conserved has been prepared by the DEC. The initiative is known as the Biodiversity Banking and Offsets Scheme or BioBanking and is a voluntary scheme using offsets as a tool to conserve biodiversity in situ (Department of Environment and Conservation, 2006, b). The NSW Government began investigating a scheme in mid 2005 after recognising the need for a regulatory framework relating to the use of offsets, which are currently implemented on an individual case by case basis (Department of Environment and Conservation, 2005). The Minister for the Environment, Bob Debus (Parliament of New South Wales, 2006, a) in his second reading of the Bill to the Legislative Assembly on 8th June 2006 made the following comment regarding the purpose of the scheme: The present threatened species law focuses our efforts on evaluating the impact of each individual development. We need to bring our laws and approach into line with the latest science. The death by a thousand cuts, that is, the cumulative losses caused by hundreds of individual developments, must be reversed. At the same time, of course, we still need the social and economic benefits of development The Threatened Species Conservation Amendment (Biodiversity Banking) Bill (TSCA) was released on 8 June 2006 and at this time has not been passed by Parliament. A number of amendments have been made to the Bill by the Legislative Assembly, with the Bill currently residing with the Legislative Council (a copy of the Bill with amendments are found in Appendix 1). It is anticipated that the scheme will be implemented in mid 2007 with the amendment to the TSCA accompanied by a set of Biodiversity Banking regulations. The scheme is based on the use of an offset market mechanism combined with statutory controls by inserting a new part 7A into the TSCA 1995, to promote the

50 conservation of biodiversity values on private land. For the purposes of this scheme biodiversity values are defined as the composition, structure and function of ecosystems including threatened species, populations and ecological communities (Department of Environment and Conservation, 2006, c). The objectives of the scheme are to provide developers with a choice of preparing a SIS or going through the scheme to offset the impacts of a development and to create a market to provide opportunities for private sector conservation of land. The ultimate goal of the scheme is to conserve areas with high biodiversity values by placing an economic value on biodiversity, providing incentives for conservation actions and disincentives for loss (Department of Environment and Conservation, 2006). The scheme is voluntary and allows biodiversity credits to be produced by landowners who undertake actions to protect and/or enhance biodiversity on their property (Department of Environment and Conservation, 2006, b). These credits can then be sold to developers needing to offset impacts on biodiversity, which is based on the same concept as the U.S Wetland Mitigation Scheme described earlier. Four main components will allow this to occur, being: 1. Allowing landowners and the Minister for the Environment to enter into an agreement (Biobanking Agreement) to create Biobank sites on private land. 2. The creation of biodiversity credits through actions on Biobank sites which improve or maintain biodiversity values (Department of Environment and Conservation, 2006, b). Biodiversity credits will be determined through the use of a Biobanking Assessment Methodology. 3. The purchase and trading of credits once registered

51 4. Using the Biobanking Assessment Methodology to determine the type and number of credits required to offset the impact of a development on biodiversity values. (Department of Environment and Conservation, 2006, b) An outline of the Threatened Species Conservation (Biobanking) Bill and the role of the components in the scheme are provided further below Operation of the Scheme Biobanking assessment methodology To be eligible for purchasing biodiversity credits, the candidate must demonstrate that the proposed project will improve or maintain biodiversity values (Department of Environment and Conservation, 2006, b). To determine if a site will achieve this and hence whether it is feasible to obtain biodiversity credits, a Biobanking Assessment Methodology will be implemented. The Biobanking Assessment Methodology (BAM) is a tool to prevent areas of high biodiversity value being offset by areas of low biodiversity value (Department of Environment and Conservation, 2006, c). The BAM will be used to determine how biodiversity values will be assessed through: the number and class of biodiversity credits that may be created for management actions carried out on a biobank site, and the number and class of biodiversity credits that must be retired to offset the impact of the development and ensure that it improves or maintains biodiversity values. (Department of Environment and Conservation, 2006, d)

52 To achieve this, the tool will consider the size of the area to be impacted, threatened species that will be affected, habitat linkages and condition of the habitat (Department of Environment and Conservation, 2005). The aim of the BAM is to calculate credits for a particular ecological community, so when credits are required to offset the impact of a development, only credits that have the same ecological community or conservation status as the site where biodiversity values are being lost will be used. The BAM is a computer-based tool modeled on the current biometric and threatened species tools used under the Native Vegetation Act 2003 (Department of Environment and Conservation, 2006, b). The tool has not been released for public viewing at this stage. The Bill requires the BAM to be placed on public exhibition and implemented prior to the establishment of the Biobanking Scheme Biobank site identification and Biobank agreement A Biobank site is a conservation area under a conservation agreement that generates credits in accordance with the scheme (Department of Environment and Conservation, 2006, c). In determining whether a site is suitable to enter the scheme, criteria such as location, quality of habitat and potential threats from adjoining lands will be considered (Department of Environment and Conservation, 2006, c). Sites that may be suitable as Biobank sites may include land in environment protection zones specified in LEP s (Department of Environment and Conservation, 2006, b). National Parks, Nature reserves and other protected lands that are managed by DEC will not be eligible as a Biobank site

53 If the site is found to be suitable, the landowner and the Minister for the Environment will agree on a list of management actions that must be undertaken by the landowner to conserve or enhance biodiversity values on the site. Management actions include activities such as controlling or removing exotic plant species, controlling feral animals, planting indigenous vegetation (Department of Environment and Conservation, 2005). By undertaking management actions to conserve or enhance biodiversity values, the site generates biodiversity credits. In order for land to become an official Biobank site the landowner and the Minister for the Environment enter into a Biobanking Agreement, which are similar to Conservation Agreements required by the National Parks and Wildlife Act as discussed in Chapter 4. The Biobanking Bill also requires the Minister before entering a Biobanking Agreement to consider whether the person (whether or not an individual) is a fit and proper person to enter into, and fulfill the obligations imposed by, the agreement (Parliament of New South Wales, 2006, b). A Biobanking Agreement will include details of the management actions to be undertaken, number and class of biodiversity credits and a timing for their creation (Department of the Environment and Conservation, 2006, b). A Biobanking Agreement is a legal agreement to ensure that management actions are carried out for eternity, even after all credits are purchased from the site. Once a Biobanking Agreement has been established it will be registered on the land title so that, in the event the land is sold, the management actions still have to be undertaken as stipulated by the agreement. In addition, the Biobank site will be entered into a register by the Director General of DEC. This register will contain the location and copy of conservation agreements to ensure that only a registered Biobank site can generate credits

54 Potential parties interested in establishing Biobank sites may include not-forprofit organisations wanting to expand conservation lands, and private landowners and Aboriginal people wanting to conserve their land, while generating credits allowing a return Biodiversity credits Biodiversity credits are generated from management actions on Biobank sites. Once a credit is created, they are listed in the register so that the status of the credit can be monitored. A credit will be kept in the database until it is purchased, at which stage the credit is retired (Department of the Environment and Conservation, 2006, b). DEC (2006, c) specifies that credits may be obtained through one of the following means: 1. Creation of a Biobank site to generate credits; 2. Through a broker to help source or set up credits; or 3. Purchasing credits from a landowner who has generated credits from a biobank site. The price of credits will not be regulated by DEC but rather set by the market; that is, landowners will be responsible for the price they receive for their biodiversity credits (Department of the Environment and Conservation, 2006, c). Possible considerations in determining the price of a biodiversity credit are likely to include costs associated with implementing management actions, establishment of conservation agreements, land acquisition, obtaining expert advice, compliance and reporting (Department of the Environment and Conservation, 2005)

55 Potential purchasers for credits include developers wanting to offset impacts from a project, government agencies and non-profit organisations wanting to improve or increase conservation areas. Biodiversity credits may be cancelled by the Director General under certain circumstances, including where a landowner has violated a Biodiversity Agreement by not completing management actions, providing false information when purchasing credits, credits containing errors or at the request of the landowner (Department of the Environment and Conservation, 2006,b ). Where a person violates a Biodiversity Agreement or commits an offence in relation to credits DEC may bring proceedings in Court that carry penalties up to $550,000 (Parliament of New South Wales, 2006, b) Biodiversity Statements certification A Biobanking Statement is the document that is required to be obtained by the person wishing to purchase biodiversity credits. The number and type of credits required to offset the impact of a development will be contained within the statement in addition to any on-site measures required for the development to improve or maintain biodiversity values (Department of the Environment and Conservation, 2006, b). Biobanking statements are issued by the Director General if the applicant can demonstrate that all other cost-effective measures to mitigate impacts have been exhausted and the development will improve or maintain biodiversity values (Parliament of New South Wales, 2006, b). Certain types of development will be unable to purchase biodiversity credits and obtain a Biobanking statement if the land is of high conservation land that cannot be offset elsewhere

56 A Biobanking Statement is submitted to the consent authority when a DA is lodged under Part 4 or Part 5 of the EP&A Act, 1979 (note Part 3A of the EP & A Act 1979 is excluded from the Biodiversity Banking Scheme, unless the Minister for Planning directs a developer to purchase biodiversity credits). Once a Biobanking Statement is submitted with a DA this has the effect of meeting the requirements for an SIS under the EP & A Act, 1979 and TSC Act That is, a SIS is not required and the consent authority does not have to take into consideration the impact of the development on biodiversity values. A biobanking statement issued to offset the impact of a development expires after two years or if there are any changes to the development proposal (Parliament of New South Wales, 2006, b). The purpose of this provision in the amendment is to ensure that the correct amount and type of credits have been purchased to offset the development impacts. Where an offence occurs in relation to the Biobanking Statement, DEC may impose penalties up to $100,000 (Parliament of New South Wales, 2006, b) Legislation The scheme will amend the Threatened Species Conservation Act 1995 by adding a new part 7A to enable the Biodiversity Banking Bill. The content of this amendment are the components of the BioBanking Scheme that have been discussed. In relation to the EP&A Act, 1979 the Bill contains provisions that will affect this piece of legislation either through direct amendments made to the Act or via indirect actions from amendments to the TSC Act,

57 The Threatened Species Conservation Amendment (Biodiversity Banking) Bill will have the following implications for the EP&A Act 1979 indirectly by amending the TSC Act, 1995: Management actions undertaken on Biobanking sites will be exempt from development consent under Part 4 of the EP&A Act Where a Biobanking Statement is submitted with an approved DA the consent authority must require the Biobanking Statement to be complied with as a condition of consent, which will not be able to be appealed in the Land and Environment Court. A review of a determination can be requested by an applicant for a development under Part 4 of the EP&A Act This can occur where additional conditions of consent have been imposed by the consent authority that are inconsistent with the Biobanking Statement or where it requires further action to be undertaken to mitigate impacts on site that have already been addressed in the Biobanking Statement. The Director-General of DEC must refer an application for a Biobanking Statement to the Minister of Planning if the development is of a type that is specified in a State Environmental Planning Policy. Amendments made directly to the EP&A Act, 1979 by the Bill are outlined below. Part 3A - Major Infrastructure and other projects Section 75J is proposed to be amended to allow the Minister of Planning to require a biobanking statement to be obtained for a project, whether or not one was submitted. Part 4 Development Assessment

58 The Bill inserts a new section after 78A (8) and 79B (3) that specifies Part 7A of the TSC Act (being the proposed Biobanking Bill) allows for certain circumstances where development will not significantly affect species, populations, ecological communities or habitats (Parliament of New South Wales, 2006, b). An amendment is made at the end of section 79C (1) as well as amending sections 111 and 112 to state that a consent authority does not have to consider the likely impact of a development on biodiversity values if a Biobanking Statement has been submitted (Parliament of New South Wales, 2006, b). These amendments do not restrict the power of consent authorities in any way of refusing development consent on other grounds such as amenity and character. In addition an amendment to Section 96 of the EP&A Act 1979, is proposed so that when a development is modified the developer is required to obtain a new Biobanking Statement to ensure that the correct biodiversity credits have been obtained and consultation with DEC occurs. The Biobanking Scheme interacts with other Acts, but it will not override the Native Vegetation Act and the requirement of that Act to obtain approval for vegetation clearing Management of the scheme The Biodiversity Banking Offset Scheme will be managed by DEC. The role of DEC will include managing the registry of Biobank sites, credits and Biodiversity Agreements while ensuring compliance with the scheme. Compliance with the Scheme will be enforced through special provisions in the Bill, which grant the Minister special enforcement powers where an offence occurs (Department of the Environment and Conservation, 2006, b)

59 Such powers include requiring landowners who breach biobanking agreements to pay a penalty or rectify the situation at their own cost. In addition the Minister via the Land and Environment Court may repossess a Biobank site where a breach or continuing non-compliance of an agreement occurs and biodiversity values are at risk (Department of the Environment and Conservation, 2006, b). DEC will be responsible for the management of the scheme, however other parties will be involved throughout the process. The Bill allows for the use of Conservation Brokers who will assist landowners in establishing and selling biodiversity credits (Department of the Environment and Conservation, 2006, b). They can also play a role in assisting developers to obtain credits and apply for Biobanking Statements. Examples of Conservation Brokers could include nonprofit organisations, consultants and Aboriginal organisations (Department of the Environment and Conservation, 2006, b). An outline of the role of the Conservation Broker and Biobanking Process is provided below in Figure

60 Figure 5.1 The Biobanking Scheme in action (Department of the Environment and Conservation, 2005, p.8)