Sweeping changes to NSW biodiversity laws make statutory credits the currency of offsets for most development, but provide new offsetting alternatives for some major projects.

The long-awaited NSW biodiversity conservation and land management reforms took effect on 25 August 2017, with the commencement of:

  • the Biodiversity Conservation Act 2016;
  • the Local Land Services Act 2013 (LLS Act) as amended by the Local Land Services Amendment Act 2016;
  • the Biodiversity Conservation Regulation 2017; and
  • the Biodiversity Conservation (Savings and Transitional) Regulation 2017.

This legislative package replaces a wide range of biodiversity related legislation, including the Threatened Species Conservation Act 1995 (TSC Act), the biodiversity related parts of the National Parks and Wildlife Act 1974, the Native Vegetation Act 2003 and parts of the Fisheries Management Act 1994.

The reform process began with an Independent Biodiversity Legislation Review in 2014, which proposed a major overhaul of biodiversity laws in NSW, and included an extensive three-year consultation period with key stakeholders and the wider community.

We set out some key components of the new framework under the Biodiversity Act below, focusing on biodiversity offsets.

There are some very important transitional arrangements in the Biodiversity Transitional Regulation, and we have separately explored these in a separate article.

Biodiversity Offsets Scheme

One of the most significant changes is the establishment of a Biodiversity Offsets Scheme, for the impacts on biodiversity values of many kinds of development under the Environmental Planning and Assessment Act 1979 (Planning Act).

The Scheme is similar to the biobanking offsets scheme under the former TSC Act. Offset requirements and offset outcomes under both schemes are measured in terms of biodiversity credits. However, the biobanking scheme under the former TSC Act was effectively voluntary for proponents to minimise and offset impacts on biodiversity, and there were broad principles by which other kinds of offset requirements and arrangements would be assessed (other than biobanking). By contrast, the intention under the Scheme appears to be that all offset calculations and offset arrangements be addressed in terms of biodiversity credits (subject to our comments below on the Biodiversity Conservation Fund).

So biodiversity credits become the likely offset currency under the Scheme.

The kinds of development covered by the Scheme include:

  • local development with impacts above the Scheme Threshold (ie. development which needs development consent under Part 4 of the Planning Act, except for and State significant development (SSD));
  • SSD and State significant infrastructure proposals, unless there is not likely to be a significant impact on biodiversity values;
  • clearing proposals above the Scheme Threshold as regulated by the State Environmental Planning Policy (Vegetation in Non-Rural Areas) 2017 or agricultural clearing proposals under the LLS Act;
  • biodiversity certification proposals; and
  • development which is assessed under Part 5 of the Planning Act (because it does not need development consent), if the proponent opts-in to the Scheme.

The Scheme Threshold is an objective, risk-based test that assesses a proposal against an area trigger (ie. what is the extent of the impact) and a Biodiversity Values map trigger (ie. does the impact fall within an area of high biodiversity value).

The Scheme adopts a new Biodiversity Assessment Method (BAM) to assess biodiversity values and calculate any biodiversity losses due to development and gains from land conversation. The losses are measured in terms of a specified number and types of biodiversity credits. Only accredited assessors will be allowed to undertake BAM assessments.

In this sense, the Scheme is similar to the former biobanking assessment method. However, the BAM was released when the Scheme legislation commenced, and it is very complex, so the full impact of the new method of calculating offsets is unclear at this time.

It has been suggested that the offset requirements under the BAM are substantially higher for many kinds of projects than they were under the former biobanking legislation.[1]

The processes for determining the biodiversity credit offset requirements for a particular development, for generating biodiversity credits, and for transacting in the credit market, are very similar under the Scheme to those under the former TSC Act biobanking scheme.

Private land conservation

The Biodiversity Act introduces three tiers of private land conservation agreements:

  • (tier 1) biodiversity stewardship agreements (BSAs);
  • (tier 2) conservation agreements; and
  • (tier 3) wildlife refuge agreements.

BSAs are now the primary method for creating biodiversity credits under the Scheme, and are similar to biobanking agreements under the former TSC Act biobanking scheme.

BSAs are voluntary, in-perpetuity agreements with the NSW Environment Minister or Biodiversity Conservation Trust (Trust). They establish a biodiversity stewardship site on which biodiversity credits are generated in accordance with the BSA.

Other forms of conservation agreement have other features which are useful in different situations, but they do not generate biodiversity credits.

Biodiversity Conservation Trust

The Trust will play a key role in the Scheme. While the Environment Minister and the Trust may enter into BSAs, commentary from the NSW Office of Environment and Heritage (OEH) currently indicates that this role will be primarily performed by the Trust.

In addition to negotiating and entering into BSAs with landowners, the Trust may establish conservation and wildlife refuge agreements with landowners.

The Trust will also manage the Fund. Under the Scheme, a proponent has the option to purchase available biodiversity credits or make a payment into the Fund to meet an offset obligation. This will assist when a developer with an offset obligation cannot find the types of offsets which are needed to satisfy that obligation.

The amount of the required payment will be calculated using the Biodiversity Offsets Payment Calculator. It will be more than the estimated price of the required credits, to incentivise developers to find credits instead.

Following payment into the Fund, the Trust will have the obligation to secure the relevant biodiversity offsets in accordance with the rules of the Scheme, which generally require consistency with the offset obligations for which the payment was made.

The NSW Government has stated that the Trust will focus on strategic biodiversity offsets, so payments into the Fund may allow for invest in larger, more viable offset sites.

Biodiversity certification

Biodiversity certification allows offsetting across an entire land release area, usually at the rezoning stage, instead of offsetting on a site-by-site basis, to encourage planning authorities and landowners to avoid and minimise biodiversity impacts where possible.

Standard biodiversity certifications are available to planning authorities and landowners, with "strategic" proposals (as determined by the Environment Minister) available only to planning authorities.

Biodiversity certification proposals will be assessed under the BAM. Offsets obligations:

  • for standard proposals may be satisfied through the retirement of biodiversity credits or payment into the Fund; and
  • for strategic proposals may also be satisfied through reserving land under relevant statutory schemes, adopting development controls (ie. State infrastructure contributions) under the Planning Act or other measures as determined by the Environment Minister.

OEH has indicated that the increased flexibility for strategic proposals will allow for more flexible response to cumulative impacts and the enhancement of biodiversity conservation outcomes.

Ongoing reform

The NSW Government has acknowledged that there is more work to be done, with further details to come on transitional arrangements and other matters, including regulatory mapping for native vegetation, the Biodiversity Conservation Investment Strategy to direct investment by the Trust and new wildlife codes of practice.

Also, while Board members of the Trust have been announced, crucial details concerning the Trust's approach, strategy and overall business plan are not expected until early 2018. Accordingly, it is unclear whether the Trust will have an influential and strategic role in the initial months of the new Scheme.