28 July 2006
Key Points:
Biobanking will allow developers to buy credits to offset the adverse ecological impacts of their developments and use biobanking statements as alternatives to the current threatened species approval process.
The new biodiversity banking and offsets scheme proposed by the NSW Department of Environment and Conservation (DEC) will allow developers to buy credits to offset the adverse ecological impacts of their developments and use biobanking statements as alternatives to the current threatened species approval process. The scheme will also provide for the protection of high value ecological habitat through the designation of biobank sites and will establish a free market allowing environmental groups and other interested parties to buy and trade credits.
What is the biobanking scheme?
The Threatened Species Conservation Amendment (Biodiversity Banking) Bill 2006 is proposing to amend the Threatened Species Act 1995 to establish a scheme which will:
Importantly, biobanking agreements will be registered on the title of land (which generates the biodiversity credits) and will generally be in perpetuity. This means that the biobanking agreement will be binding on successors in title to the land (in a similar way to a restrictive covenant) who will be obliged to preserve the habitat designated as a biobank site.
The DEC will hold the relevant registers and regulate the scheme.
How will it work?
The easiest way to explain the biobanking scheme is to use an example. Landowner A owns a property with 100 hectares of a high conservation value bushland eg. Cumberland Plain Woodland. He decides to enter into a biobanking agreement which will designate the bushland as a biobank site and authorise him to undertake weed control, pest control and habitat protection measures.
Landowner A's biobank site generates biodiversity credits as his management actions improve the biodiversity values at the site. The biobank site and biodiversity credits are registered on the DEC's registers.
Landowner B is proposing to build a new residential development which will lead to the destruction of 10 hectares of Cumberland Plain Woodland. Landowner B uses the biobanking assessment methodology to work out the number of credits needed to offset the ecological impact and purchases the credits from Landowner A. The sale transaction is registered and Landowner B retires the credits from the scheme to offset the development's impact.
Landowner A is assisted with future management of the biobank site with funding from the Biobanking Trust Fund which is funded by a proportion of the sale proceeds generated from the sale of the credits.
Streamlining the development consent process
The Bill arguably provides for a more streamlined procedure allowing the developer to apply to the Director-General of the DEC for a biobanking statement in relation to its development proposal (provided that it does not involve the clearing of native vegetation which is regulated under the Native Vegetation Act 2003 or it is otherwise excluded under regulations).
A biobanking statement will only be issued if the development is shown to improve or maintain biodiversity values (unless it is a development under Part 3A of the Environmental Planning and Assessment Act 1979 ("Planning Act") where the Minister can direct the Director-General to issue a statement regardless of the impact on biodiversity). The proponent will generally have to demonstrate that all cost-effective measures are being carried out on-site to minimise any negative impact of the development on biodiversity. Developers will therefore still have to take active steps to avoid biodiversity impacts where possible.
The advantage of this route is that the developer will not need to comply with the threatened species assessment provisions under the Planning Act and the consent authority or determining authority is not required to (but may) take into account the impact of the development on biodiversity values in considering the merit of the proposal.
After the biobanking statement is obtained the consent authority or determining authority must incorporate the credit requirements and any other conditions of the biobanking statement into the development consent or approval.
Initially, the biobanking scheme will be optional for participants during a trial period. However, the Bill makes provision for a state environmental planning policy to make biobanking mandatory for certain classes of development or specific developments.
Who will benefit?
It is likely that biobanking will be of most benefit to developers pursuing small or medium scale developments in areas where any ecological impact will be relatively easy to offset. The scheme may also benefit large scale infrastructure and utilities companies that have no alternative routes for their pipelines, cables, roads etc. The scheme is not likely to be applicable, however, if the proposed development could impact very rare ecological communities or species or communities which have been over-cleared in the past as it would not be possible to generate a sufficient number of biodiversity credits.
Under the current proposed scheme anyone is eligible to buy credits. This will open the market up to environmental and other philanthropic organisations or even government bodies who may want to buy and retire credits to achieve conservation outcomes. Conservationists and government bodies will also welcome the fact that biobank sites must be maintained in perpetuity.
Conclusion
The Bill is currently in its second reading stage in the Legislative Assembly and may well be amended before it reaches the statute books. The scheme should be applauded for its flexibility and willingness to rely on market forces. However, such flexibility and uncertainty may also lead to a significant degree of risk for participants, particularly during the trial stage of the scheme. The DEC also has a large amount of discretion and special enforcement powers (with high penalties for non-compliance) which need to be factored into any decision to pursue this route over the existing threatened species assessments.
The biobanking assessment methodology will be crucial to the success of the scheme and will be based on the biometric and threatened species tools developed for use under the Native Vegetation Act. With the current legislative uncertainty and no trial results it is difficult to predict whether biodiversity banking will be a holistic solution or whether some ecological habitats will benefit at the expense of others.
For further information, please contact Claire Smith.
