In recent months CivicMJD have been engaged by Transport for NSW (TfNSW) to provide valuation advice on Biodiversity Credits for the development of infrastructure within regional New South Wales (NSW). These included valuations of both species credits and ecosystem credits. This being the two main type of biodiversity credits that can be traded in NSW.
The growth of the city of Sydney and its surrounding regions over the past decades has begun to threaten the flora and fauna species throughout Sydney and other regions around the city. These regions include the Hunter, Central Coast, South Coast, Southern Highlands, Illawarra, and Western Sydney regions.
In November 2016, The NSW Government passed new legislation for biodiversity the ‘Biodiversity Conservation Act 2016’, which repealed the former Threatened Species Conservation Act of 1995.
Under the newer legislation enacted in 2016 it has created a scheme named the ‘Biodiversity Offset Scheme’, whereby developers are required to obtain and retire ‘Biodiversity Offset Credits’ if the development requires the clearing of native vegetation in one of the following circumstances:
- In areas that are mapped as ‘Biodiversity Values Map’ or,
- If land clearing exceeds certain area thresholds that vary depending on the minimum lot size.
The developers of this land are then held accountable for the degradation and loss of native flora and fauna habitats through the development of land by property developers.
The Government such as TfNSW is among the institutional group of purchasers of Biodiversity Offset Credits along with other larger developers, mining, renewables, and agribusiness companies. As Sydney has grown it has begun to encroach on these biodiversity areas and the value of the land has had significant increases.
Developers of infrastructure like TfNSW are acquiring these offsets as it unlocks land earmarked for development whilst also protecting and rehabilitating unusable land in perpetuity. The legislation forces developers to offset vegetation clearing that forms part of the development. Developers no longer have the choice of ‘opting in’ as was possible under the old legislation.
The biodiversity credits are used by developers where there is an impact on the natural environment. The developer purchasing credits to offset the impact of development to land that is under a stewardship agreement.
Biodiversity offsets refer to the trading of ‘credits’ between landowners or stewards of biodiverse land (‘sellers’) and developers (‘buyers’) required to offset their impact on the environment mitigation of the impacts on the biodiversity undertaken to the fullest extent. Achieving no net loss and ideally a net gain in biodiversity.
The growth of NSW and its infrastructure program there are estimates that there could be up to AU$9 billion in biodiversity offsets traded annually by 2050 to account for biodiversity offsets of unavoidable environmental impacts of development.
NSW has a biodiversity offsets scheme that requires developers who are building on threatened ecosystems to conserve biodiversity ecosystems and species elsewhere in the state by buying and selling biodiversity credits. This ultimately protects areas of biodiversity providing dedicated areas of land having an overall benefit to the natural environment of NSW.
The NSW Government has also established a biodiversity stewardship scheme, which remunerates landowners a fee annually to set aside biodiverse habitats which generate biodiversity credits. The NSW government will invest in a fund that will increase the supply of biodiversity credits as demand increased due to the state’s energy and infrastructure pipeline. Due to this shift in demand biodiversity credits are becoming difficult to source as more developers look to offset their environmental impact.
There are online registers that are used to source the transactions to use as comparable evidence thus establishing a market value of each different type of biodiversity credit. CivicMJD have provided valuation advice on several regional infrastructure project that are currently being undertaken by TfNSW. We envisage that these types of valuations will continue as development continues to impact the environment.