Real innovation sometimes arises from tweaking a model, not designing it from scratch. The Ecosystem Marketplace follows the path of an American conservation model across the ocean to New South Wales and discovers how the ever-innovative Aussies are adapting mitigation banking to suit their needs. The smell of cut Gum and tilled earth permeates the air as native habitats continue to disappear along the east coast of Australia under a rising tide of urban sprawl. 80 species of native plants and animals have gone extinct in the state of New South Wales since Australia was colonized in 1788, and another 1000 species are currently speeding down the same track. Roughly 85% percent of the population in New South Wales now lives within 50km of the East Coast, so it is no surprise that the state's Department of Environment and Conservation (DEC) says it is facing "unprecedented challenges" when it comes to conserving the biological wealth of its coastal areas. The New South Wales government amended their threatened species laws in November 2004 in an attempt to "reverse" further biodiversity losses, signalling a new commitment to integrate conservation strategies into future polices affecting the development of Australia's environmental assets. The government now says it is ready to follow through on the commitment using a customized market-based instrument called biodiversity banking.
The Importance of an Endgame
The first step in designing a new market mechanism for conservation, say those behind New South Wales plans for biodiversity banking, is sorting out what you do and do not want from the scheme. DEC, for instance, did not want a new plan for expanding public lands. Many of the most intact ecosystems are already managed as National Park and State Forest in New South Wales. With limited state funds, DEC instead needed a means of stretching its influence without bursting its pocketbook. The agency thus turned its attention to private land holdings: outlining a protocol for development in areas lacking biological diversity, and a strategy for restoration in areas harbouring it. The next (ongoing) step, then, was to map the concentration of plant and animal species across private lands throughout the state. Toward this end, councils, landholders, catchment management authorities and conservation groups are pooling data about the relative riches of wetlands, heathlands and forests in New South Wales to ensure "plans fit with local knowledge," says DEC. As this data flows in from diverse sources, DEC uses it to identify "green-light", "amber-light" and "red-light" areas throughout the state. Each colour signifies a different level of biodiversity: areas where low biodiversity occurs will be zoned as green-light properties for development; areas where medium biodiversity occurs will be zoned as amber-light properties for development; and, areas where high biodiversity occurs will be zoned as red-light properties for development. "The aim is to secure and improve existing ecosystems rather than create new ones," explains Shona Bates, Principle Projects Officer at New South Wales DEC. DEC thus is drawing a visual map of its endgame for New South Wales, putting numbers and names both to the places where it wants to advance development, and to the places where it wants to see ecological restoration. The next step, then, will be to move from cartography to conservation.
Re-using the Wheel
Australians have long been among the most innovative advocates of market-based conservation schemes (see Betting on Markets: Australia's Five-Million Dollar Experiment with Market-Based Instruments), but in their stockpile of market mechanisms, DEC officials did not have quite the right tool for the fast growth areas they were trying to manage along the New South Wales coastline. Consequently, they looked to see what other ideas might be out there in the fast evolving world of market-based conservation. They soon discovered the expanding mitigation banking industry in the United States. From North Carolina to Northern California, private sector companies are now restoring wetlands and endangered species habitat in exchange for government credits. These companies, or "mitigation banks," then sell the credits on to developers looking to offset environmental damage they have caused elsewhere. While environmental groups actively debate the relative merits of mitigation banking versus other forms of environmental compliance in the United States (see Wetland Mitigation Banking: Environmentalists Express Concerns), many agree the new banking industry has begun fuelling an important shift in the way private landowners view the nation's endangered species (see Wildlands Inc.: Profile of a Company and an Industry). American property owners used to think the presence of endangered species on their land came with a set of onerous responsibilities, leading some to "shoot, shovel, and shut up" rather than call attention to the biological value of their property. With the advent of mitigation banking, however, growing numbers of landowners are coming to view endangered species or wetlands on their land as a set of conservation opportunities rather than obligations. "Now I get people ringing up telling me they saw a threatened species while they were out driving on their tractor [and asking me]: do you think my land could be worth something?" says Craig Denisoff, President of the National Mitigation Banking Association in the US, and Senior Vice President of Wildlands Inc. From across the ocean, the NSW DEC officials recognized this was just the sort of change in mentality that would advance ecological restoration on private lands with high levels of biological richness. "The [U.S. mitigation banking] industry has created a positive market value for high conservation value land, which provided strong incentives for it's ongoing protection without the need for government funding," observes Bates. Accordingly, DEC officials approached Denisoff after a U.S. National Mitigation Banking Conference in March 2005, extending an invitation to fly to Australia to help New South Wales structure a mitigation banking industry of its own.
Custom Fit Conservation
Assessing the Australian landscape, Denisoff says he realized that New South Wales could easily adapt many American approaches to suit their needs and might even improve on the U.S. system with careful planning. In particular, Denisoff highlighted the importance of identifying areas that are critical in the recovery and survival of species and the importance of adequate legislation as a market driver. "One of the problems in the US was that the clean water and the endangered species acts were broad laws that didn't specify or enforce banking strategies" says Denisoff. With the 2004 amendments to the New South Wales Threatened Species Laws, Australian biodiversity legislation is a more general law that will allow for the comprehensive protection of biodiversity, not just endangered species or wetlands. "DEC has developed a model which is specific to the New South Wales context", says Bates. Developers building in green-light areas with low levels of biological diversity won't be required to 'offset' or 'mitigate' the damage they cause. According to DEC, amber-light areas thought to house medium biodiversity will use a "rule-based method…to determine biodiversity loss at development application stage." Developers then must offset these calculated losses in amber-light areas by investing in biodiversity banking schemes that either maintain or improve biodiversity at the larger landscape scale. Red-light areas with high biodiversity values, meanwhile, will be targeted for restoration and investment. While some Australian environmentalists remain skeptical of the idea of offsetting, the red-light areas in the New South Wales scheme interest them. "Any remnant bush is so valuable we can't afford to see it destroyed with the promise of making up for it elsewhere," says Felicity Wade of the Australian Wilderness Society. "But the prospect of keeping good bush intact through creating a market looks like a positive." "Australia is in a very fortunate position," agrees Denisoff. "When mitigation banking commenced in the States, biodiversity had already been severely impacted, Australia is in the unique position to preserve much of what it still has." Adam Ferguson is an Australian freelance photojournalist and writer. He can be reached at firstname.lastname@example.org. First posted: November 7, 2005