Biobanking: You can bank on it

Introduction

On 17 May 2010, Freehills put together Australia’s first biobanking agreement. The agreement, entered into under Part 7A of the Threatened Species Conservation Act 1995 (NSW) (TSC Act), involved 80 hectares of land at Douglas Park in New South Wales. Under the agreement, the landowner received biodiversity credits in exchange for agreeing to undertake management actions to improve the biodiversity values of the site. The credits were traded for $1.7 million.

The offset purchase starts a new period in environmental management by using market mechanisms to put a price on biodiversity and creating economic incentives for preserving high value sites.

The agreement paves the way for landowners interested in creating significant financial value from their land by agreeing to preserve its biodiversity. Developers can also use biobanking as a method to offset the impact of development projects on biodiversity. They may also consider strategic purchases of sites with high biodiversity value to obtain credits for developing comparable land.

What is biobanking?

Biobanking is a voluntary scheme which establishes a market for ‘biodiversity credits’.

Under the scheme, a biobanking agreement is entered into between a landholder and the DECCW Minister. The biobanking agreement imposes management actions on the landowner to maintain and improve biodiversity values on its land in exchange for biodiversity credits from the biobank site. The number and types of credits that can be generated at a site is determined by the Biobanking Assessment Methodology which takes into account various factors (for example: the condition of ecological communities and habitats and conservation measures currently being carried out on the site or that are required to be carried out to improve or maintain biodiversity values).

Credits are used to counterbalance (offset) the impacts on biodiversity values that are likely to occur as a result of development on other lands with similar biodiversity. The suitability of credits for offsetting a particular development is determined in accordance with the Biobanking Assessment Methodology.

Credits can be sold to and traded with persons seeking to preserve biodiversity or to offset negative impacts on biodiversity (for example: developers, miners, local government and philanthropic organisations), effectively generating funds for the management of the site as well as value for the landowner’s property.

Streamlining the approvals process

Threatened Species Impact Assessment

Biobanking allows for potentially more efficient and streamlined development approval by allowing a developer to apply for a biobanking statement in relation to the proposed development. If a biobanking statement is issued, it will not be necessary for the development to be assessed in accordance with the threatened species protection measures provided under Parts 4 and 5 of the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act).

A person proposing to carry out development for which biobanking is available can apply to the Director-General for a biobanking statement in respect of that development. The Director-General may choose to issue a biobanking statement if the development will improve or maintain biodiversity values.

By going through this process, threatened species assessment processes under the EP&A Act are effectively ‘switched off’. Importantly, once a biobanking statement has been issued in respect of a development, the consent authority is not required to take into consideration the likely impact of the development on biodiversity values.

Credit requirements and conditions in the biobanking statement are incorporated as conditions in the development consent or approval, and the development must then be carried out subject to the conditions of the biobanking statement.

Although biobanking legislation has been in place since 2004, the first agreement was made in May 2010. The DECCW is now considering 37 other expressions of interest to create biobank sites and there are currently over 50 accredited Biobanking Assessors undertaking assessments on land in New South Wales. The agreement may encourage other landowners to enter into biobanking agreements, thereby developing the tradeable market for biodiversity credits.

Biodiversity certification

Biobanking complements another key government conservation program known as biodiversity certification. Biodiversity certification is a process enabling the protection of threatened species and biodiversity conservation at an early stage in the strategic planning process.
Under the existing TSC Act, the DECCW Minister may include biodiversity certification in an environmental planning instrument. Areas suitable for development are identified at an early stage in the planning process, and if conservation is included, the effect is to ‘switch off’ the need for threatened species impact assessment for development subject to that planning instrument. 

A new Threatened Species Conservation Amendment (Biodiversity Certification) Bill 2010 (Bill) is currently before the New South Wales Parliament. The new Bill provides for the certification of land, replacing the current arrangement under the existing TSC Act for planning instruments. This will ensure that certification applies to landscape-wide development, regardless of which planning controls apply, or if multiple planning controls apply.

Under the Bill, existing requirements in relation to ‘switching off’ threatened species assessment under Part 4 and Part 5 will also be expanded to include Part 3A assessment of major projects.

The Bill also expressly links biobanking with biodiversity certification. A planning authority applying for biodiversity certification will be required to submit a policy or strategy for implementing conservation measures to ensure the overall effect is to improve or maintain biodiversity. Under the new Bill, entering into a biobanking agreement or acquiring or retiring biodiversity credits are express conservation measures which can be used to form a conservation strategy when applying for biodiversity certification.

Biobanking around Australia

Under the Victorian planning provisions, any development which permits native vegetation removal requires appropriate native vegetation offset. The BushBroker Scheme, managed and implemented by the Victorian Department of Sustainability and Environment, provides a mechanism under which biodiversity offset credits can be generated, secured and transacted.

Offsets must meet like-for-like requirements with the native vegetation removed, and are secured through a vegetation management agreement. Such an agreement attaches to the land and takes the form of agreements under relevant legislation (for example: a section 173 agreement under the Planning and Environment Act 1987 (Vic), section 69 agreement under the Conservation, Forests and Lands Act 1987 (Vic), or a covenant under the Victorian Conservation Trust Act 1972 (Vic)). These agreements may require management actions such as feral animal control, fencing or replanting.

Other states do not appear to have formalised schemes similar to biobanking but relevant legislation may well be put in place to respond to the need to conserve biodiversity in those states.

Biobanking and the EPBC Act

Commonwealth involvement in States’ development control processes is usually triggered when development impacts on threatened species, migratory species and ecological communities. The listing regime under the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) significantly overlaps with the listing regime in various states, including New South Wales. As a result, there is often duplication and inconsistencies between state and Commonwealth planning and environmental assessment processes.

This problem can be addressed through bilateral approvals which identify and minimise duplication in environmental impact assessment processes. To this end, New South Wales has commenced negotiations with the Commonwealth to pursue bilateral approvals for threatened species based on biobanking and biodiversity certification. However, discussions are at a negotiation stage only and there are currently no formal bilateral approval arrangements in effect.

Biobanking: Can your business bank on it?

Landowners

Biobanking can enable private landowners to manage their land for conservation, and allow them to generate value through the sale and trade of biodiversity credits. However, landowners will need to carefully consider whether they understand the obligations they are taking on under a biobanking agreement and ensure that the agreement allows them sufficient flexibility in the way they can use their land in future.

Developers

Biobanking

Biobanking potentially creates a faster, simpler, more transparent means for developers to meet their responsibilities in relation to threatened species in the development approvals process. They now have a choice about whether to use biobanking in relation to land they wish to develop or to use the existing approach to species impact assessment.

Under the current regime, developers can experience significant delays while the existing assessment process unfolds. Biobanking provides them with an increased range of options to potentially streamline their approvals process. If land to be developed has biodiversity certification attaching to a relevant EPI or if there is a biobanking statement in relation to the land, then existing species impact requirements will be ‘switched off’ allowing the development to proceed without further assessment.

If biodiversity credits or certification is obtained, less time will be spent negotiating with government for offsetting the impacts of development. And, once biodiversity credits have been bought, the cost and responsibilities of the offset are managed by landowners wanting to manage their land for conservation, thereby enabling developers to avoid the ongoing responsibilities of the offset.

Biobanking also enables developers to identify at an early stage any potential threatened species constraints prior to purchasing land whilst allowing them to measure the financial impact on the development’s feasibility of any offsets required. They may also be able to generate credits from comparable land which can be used to offset other developments proposed or sold and traded for value on the market for biodiversity credits.

Whether biobanking will provide a quicker, cheaper option for developers is entirely unclear and much will depend on how the market for biodiversity credits continues to develop and how the assessment methodology is applied by DECCW. These developments will determine how onerous obligations are imposed under a biobanking agreement and hence how expensive the credits will be sold and traded for.

Biodiversity certification

Similarly, biodiversity certification has significant potential to streamline and improve the approvals process in relation to threatened species assessment. However, until any formal bilateral agreement is in force between the New SouthWales and Commonwealth Government, developers will still need to ensure they go through the referral process at an early stage of planning as they may still be required to undertake a Commonwealth threatened species assessment even though land has received certification. In using offset measures such as biobanking or biodiversity certification, developers are advised to be aware of EPBC referral measures at an early point in time.

Local government

Biobanking provides local governments with a wider and more flexible range of options to manage and conserve areas of biodiversity. Normal planning practices do not allow long-term conservation of private land except by reservation as a national park, or as council-owned reserves. With biobanking, local governments can potentially manage any land for which biobanking is available. It can also be used as a means of obtaining biodiversity certification under the existing TSC Act for planning instruments or for landscape-wide certification under the proposed Bill.

Biobanking also enables greater transparency about how offsets will work because biobanking agreements use an independent, scientific methodology approved by DECCW. This should encourage greater rigor and transparency in the development assessment process.

As with private landowners, biobanking may also allow local governments to derive value from council-owned land by generating biodiversity credits (which can be sold to philanthropic organizations or developers as determined by Council).

Freehills will be happy to conduct free sessions on biobanking and how this may apply to your business.

More information

For information on possible implications for your business, contact a member of the Environment & Planning team.