NSW biodiversity reforms 2016 – Offsets and ecologically sustainable development - EDO NSW

NSW biodiversity reforms 2016: issue 2 – Offsets and ecologically sustainable development

How does the NSW Government’s proposed biodiversity reform package stack up against the principles of ecologically sustainable development?

This is the second of six key issues we’ve identified in the reform package. View all six issues here.

According to the information on public exhibition, a key goal of the new laws is to ‘facilitate’ ecologically sustainable development (ESD), and the primary way of doing that is by expanding the biodiversity offset market.

So, before analysing the reform package through the prism of ESD, it is worth taking time to explore how the proposed biodiversity offsetting mechanism will work compared to current offsetting.

Offsetting under the new reform package
Offsetting already occurs every day in NSW, under a variety of legal regimes and policies. The proposed reforms aim to establish a single scientific method for assessing impacts at a development site and calculating how many biodiversity offset credits would be needed to offset that impact.

Of all the offset methodologies developed to date – including the Environmental Outcomes Assessment Methodology (EOAM), the Biobanking scheme, Biocertification and the Commonwealth offset policy – the NSW Government has opted to base its reforms on the tool with arguably the weakest offset standards,  the NSW Offsets Policy for Major Projects.

As a result, under the new biodiversity assessment method (BAM), the direct ‘like-for-like’ offsetting requirements are relaxed and can be circumvented. For example, offsets do not need to be of the same species or vegetation type as the one being impacted. We predict that a new option to pay money in lieu of a real world, or direct physical offset, is likely to result in net loss of certain threatened species and communities. Furthermore, under the proposed regime, offset areas and set-asides may be cleared and offset again later on, rather than protected in perpetuity.

We are currently getting expert advice on the BAM, but key concerns include:

  • Lack of effective 'red lights', as significant and irreversible impacts are as yet undefined.
  • Application of the BAM will be determined by 'BAM thresholds' that have not yet been confirmed, but could mean large areas of clearing may not be assessed by the BAM, including in endangered ecological communities.
  • Important information is missing from the documents on public exhibition.
  • There are significant changes (reductions) in number of credits required to offset certain impacts, and it is not yet clear why.
  • The BAM incorporates the highly criticised Swamp Offset Policy.
  • The BAM does not include salinity, soil, water assessment modules like the current EOAM.
  • Increasing use of like for like variations and supplementary measures.
  • No guarantee Conservation Trust will actually be able to offset as required.
  • Mine rehabilitation - credit for rehabilitation when really should already be required to do this.

The revised Biocertification scheme for large areas of land under the new laws removes the requirement to ‘maintain or improve environmental outcomes’. Instead, it applies the BAM and allows broad discretion to impose conditions. It will have an aim of avoiding ‘serious and irreversible’ (currently undefined) environmental outcomes, but with greater emphasis on streamlining approvals and expanded offset options. There will also be financial incentives and further relaxation of offset rules for planning authorities that undertake a new category of ‘strategic biocertification.’

These proposed changes represent a relaxation of offsetting rules, and will significantly reduce the ecological integrity and effectiveness of offsetting in NSW.

Testing the reforms against the principles of ecologically sustainable development
Will these proposals encourage ecologically sustainable development, or encourage development at the expense of the environment? Below we test the proposed reforms against the four key principles of ESD.

The precautionary principle
To properly apply the precautionary principle, public and private decisions should be guided by ‘careful evaluation to avoid, wherever practicable, serious or irreversible damage to the environment, and an assessment of the risk-weighted consequences of various options.’ [1]

There are some welcome aspects of the reform package that apply a precautionary approach. For example, the requirement that developers demonstrate how they have tried to avoid and mitigate negative impacts on the environment.

However, more importantly, the proposed regime fails to enshrine the principle to avoid serious or irreversible damage. The clauses that get nearest refer to ‘serious AND irreversible’ impacts – a more lenient definition – and avoidance of such impacts is discretionary for major projects. That means for the most significant projects, there are no red lights, even where a project could cause local extinctions.

Inter-generational equity
Inter-generational equity is the principle that the present generation should ensure that the health, diversity and productivity of the environment are maintained or enhanced for the benefit of future generations. 

Two aspects of the reforms suggest that they are unlikely to ensure inter-generational equity: (i) the proposed regime can allow local extinctions and irreversible impacts; and (ii) the removal of mandatory soil, salinity and water impact assessments under the new vegetation laws can allow declines in the health and productivity of the landscape.

By allowing extinction and degradation and increasing carbon emissions through land clearing, the proposals do not safeguard the environment for future generations.

Conservation of biological diversity and ecological integrity
ESD requires that the principle of conservation of biological diversity and ecological integrity be a fundamental consideration. The proposed regime relegates biodiversity conservation to just one of many considerations, rather than a fundamental one.

For example, there is discretion for decision makers to reduce the number of offsets required on non-scientific grounds. Under the proposed system, self-assessed clearing can occur in endangered ecological communities, and set aside areas need not be of equivalent biodiversity value. Development can also be approved in areas of outstanding biodiversity value (ie critical habitat).

Improved valuation, pricing and incentive mechanisms
The proposed reform package zealously embraces the principle that ‘environmental goals, having been established, should be pursued in the most cost effective way, by establishing incentive structures, including market mechanisms....’[2

In fact, the whole package is about removing regulatory controls and relying almost entirely on a market mechanism – an offsets scheme – to provide desired environmental outcomes.

In addition to the weakened offsetting standards proposed, our analysis suggests that there is a lack of clearly established environmental goals to ensure that the proposed pricing and incentive measures will actually deliver desired biodiversity outcomes. 

The principle also states that ‘environmental factors should be included in the valuation of assets and services.’ The proposed scheme does not attempt to effectively and comprehensively value the ecosystem services that biodiversity provides, such as the value of stable soils, reduced salinity, cleaner water, and the pollination and pest control services provided by biodiversity. Paddock trees are simply seen as a financial burden on farmers for obstructing certain farm machinery and activities such as centre pivot irrigation, rather than having any asset value. The proposed scheme allows broadscale clearing of paddock trees without consent.

Furthermore, the new option for developers to pay a single payment into an offset fund administered by a new Biodiversity Conservation Trust in lieu of finding and managing a direct offset, arguably does not satisfy the principle that users pay prices based on full life cycle costs including the use of natural resources and assets. This puts the burden of avoiding extinction on the Trust money without stopping to find out if that is actually possible through offsetting.

In summary, ESD is front and centre in the rhetoric and objectives of the proposed biodiversity reforms. But will the relaxed clearing rules, poorly structured offsets scheme and deficiencies in meeting ESD principles be balanced by the potential gains of investment in private land conservation? We’ll look at this question in the next blog, Private land conservation and funding.

Next in this series: Private land conservation and funding

About the reforms

The NSW Government has released a draft law and policy package that represents a serious retrograde step for biodiversity, as it involves removing many of NSW’s long-held environmental protections.

Public submissions on the reforms close on Tuesday 28 June 2016. Find out how to get involved via the links below.



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[1] Protection of the Environment Administration Act 1991, S6(2)(a)

[2] Protection of the Environment Administration Act 1991, S6(2)(d)