Biodiversity Offset Scheme

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The Biodiversity Offset Scheme

The NSW Government has committed in legislation to provide measures to offset biodiversity lost due to development, and introduced a market based Biodiversity Offset Scheme.

Under the legislation, proponents undertaking development which involves clearing of native vegetation are required to secure biodiversity offsets (in the form of credits) as a condition of their development going ahead. A proponent is not required to own the land that is the offset site, but can fulfill their offset requirements by paying another landowner to protect and manage biodiversity on their land.

For example, a development such as a mine may require an area of native woodland to be cleared. To offset the clearing, another area of similar woodland can be protected and managed. This process is managed under the Biodiversity Offset Scheme and the protected land is referred to as a Biodiversity Stewardship Site.


What is the opportunity for landowners?

The legislation provides opportunities for landowners to generate income and profit from the protection and management of biodiversity on their land by entering into a Biodiversity Stewardship Agreement and generating biodiversity offset credits.

These credits can then be sold to developers who need to offset their land clearing or to those seeking to invest in conservation outcomes such as philanthropic organisations and government.


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History of Biodiversity Offset Schemes in NSW

In Nov 2016 new legislation was passed in NSW regarding biodiversity management following a major review in 2014 of the previous Biobanking Scheme, and the Biodiversity Offsets Scheme threshold was extended to include smaller developments.

The NSW Government has committed $240 million over five years to support conservation on private land and $70 million for each following year.


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The Process for Landowners

Assessment

An initial assessment is undertaken by an accredited assessor to ascertain the potential credit value of a site. If the initial assessment determines the likely presence of credits, a full assessment is carried out to determine the type and quantity of credits and the ongoing passive and active management actions.

Register the Credits

When the credits created from the BSA are approved they are posted on the OEH register.

Finding a buyer for your credits

Credit owners typically have to find a purchaser by 1) actively searching for a buyer yourself; 2) use a third party like BDS to find a buyer, or 3) wait for a buyer to contact you from the OEH register.

Negotiate a sale transaction

The negotiation can be done by yourself or you can use a third party such as BDS to negotiate a sale, it is managed through a series of forms submitted to the OEH, and the timeframes involved can vary significantly.

Total Fund Deposit (TFD)

On the sale of credits from the site, the calculated cost of the ongoing management actions (TFD) must be deposited into a trust fund. This is paid back to the landowner in perpetuity to manage the site. Any proceeds from the sale of credits over and above the TFD amount are retained as profit by the landowner.

Manage the ongoing actions

Ongoing reports and audits are required for Biodiversity Stewardship sites to ensure the management actions under the Biodiversity Stewardship Agreement are being met.