Cash-strapped governments around the world are turning to mechanisms that preserve endangered species by incorporating the cost of habitat destruction into the cost of development. The Environmental Law Roundtable of Australia and New Zealand (ELRANZ) is building policy from the ground-up by making sure everyone is involved.
27 April 2011 | Australia’s states and territories have been experimenting with market-like mechanisms that preserve biodiversity for years. Southern Australia’s BushBroker/Tender programs, for example, provide enduring and active examples of effective innovation, while other states have initiated pilot programs that test the effectiveness of mitigation banking in different regions.
Indeed, every Australian state and territory has either implemented policy on mitigation banking or is drafting it, and now the federal government is following suit.
But the feds find themselves in the unenviable position of having to synchronize policies that have evolved in isolation – something that can either elevate us all to agreed-upon best practices or drive us down to the lowest common denominator.
Australia’s National Environmental Law Association (NELA) is aiming for the high road, and it wants to include neighboring New Zealand as well. That’s why NELA teamed up with New Zealand’s Resource Management Law Association (RMLA) to launch the Environmental Law Roundtable of Australia and New Zealand (ELRANZ) in 2008.
One of its first tasks was to publish a manual that provides resources and sample approaches to building on-the-ground projects, saying “Within the environment and planning law and policy disciplines, there is a need for raising awareness of best practice facilitation, creative visioning, meaningful stakeholder participation and other consensus building techniques.”
Since then, ELRANZ has aimed to engage a full range of stakeholders in the policy development process in both Australia and New Zealand. Last year, it became an important component of NELA’s National Conference in Canberra – thanks largely to support from the International Union for the Conservation of Nature (IUCN).
The Canberra conference helped ELRANZ push the concept of biodiversity banking into the public eye – something that convener John Hayden hoped would contribute to the harmonization of policies across both countries and a model valuable to the IUCN and others.
From Many One: Stakeholder Involvement
ELRANZ isn’t so much promoting national policies in either New Zealand or Australia, but rather aiming to improve cohesion between states’ operations and encouraging the development of more efficient and effective offset systems and markets across the two countries.
These programs aim to engage a full range of stakeholders, which allows Australia to recognize many potential functions and roles for a national-level policy. This is arguably occurring earlier in schemes’ development than witnessed elsewhere and lends distinct optimism for emerging policy.
If the collaborative processes such as ELRANZ and its outcomes are allowed to translate up into real policy results, then a mature, comprehensive and effective national-level Australian policy could be expected. Such a responsive, progressive policy has the potential to move Australian industries forward more quickly than previously seen elsewhere. Stakeholders are capitalizing on opportunities to learn from other schemes where policy has taken time to develop and full benefits have been delayed by policy latency.
Building on the potential from getting the Round Table participants ‘round the table’, the ELRANZ session in Canberra brought to light the issues a unified policy would need to address. Improved cohesion and efficiency is desired, and this became even clearer when the many perspectives present at the Round Table had a chance to express why a national policy is desirable, drawing on their varying experiences.
Those interacting with offsetting in a legal capacity are pursuing national policy that improves legislative equity between jurisdictions, streamlining case law. Environmental resource managers and consultants wanted to see a policy supporting practical applications and facilitating inter-regional trading.
Despite extensive interest, even the established schemes of the United States are still exploring and piloting platforms for trading offsets between regions, making Australia’s inter-regional interest potentially ambitious. Round Table participants that actively pursuing offsets professionally, require policy that avoid the inefficiencies of requiring multiple offsets for project that impact both state and federally protected values, or cross federal and state lines. Such practical concerns give policy makers real issues to address but most importantly provide insight into how to achieve truly functional policy. While inter-regional trading remains an evolving process internationally, Australian policy may be well positioned to offer progress for addressing this.
One of the largest entities with stakes in the shape of national policy is the Department of Defense, represented at the Round Table. As one of the nation’s biggest landholders, the Department is placed to be a major component of offset supply and demand, even if most trades remain internal. Most importantly, the Department expects national policy to offer much needed reassurance that offsetting work they do ‘counts’ – both economically and for reputational relationships with the community. Without it, this potentially significant player in the offset market could remain detrimentally dormant, hamstringed by operations spanning state and federal geographic boundaries. In this regard, the policy needs expressed at the ELRANZ most of all reflect the desire for mitigation and offsetting to take full advantage of economies of scale and wider-scale planning and achieve optimal efficiency.
Broader scale policy issues were also prominent: a definitive qualification regarding what is and is not acceptable as an offset and establishing a common language amongst the variations current stakeholders are communicating across. If the ideas and opinions of the Round Table are some indication of the form policy may take, then these are points to take note of. Some reflect well-established international trends, such as the need for clear definition and entrenchment of offsets being like-for-like. Representatives present used terms such as ecological lift, net environmental benefit and additionally in relation to how an offset should be quantified.
Formalizing values or areas not open to offsetting was an important issue for a number of stakeholders. This no-go area idea generates much discussion in both New Zealand and Australia, but interestingly is rarely a significant component of the overseas policies both countries look towards as examples. Very real concerns for preventing ‘commercial trade-offs’ parallels this, and is such strong a sentiment in the region that it is hard to imagine a policy neglecting to directly consider this. Therefore the no-go-area aspect of offset policy may be one that the Australasian region pioneers for international policy best practice.
The mitigation hierarchy is one of the most notable components of international best practice. Round Table agreement was widespread regarding the necessity for strict adherence to achieve a legitimate offset. Opinions were more varied when talk turned to specifically how the sequence should be followed and actions selected. Legal representatives questioned the strength of current obligations to follow the sequence. They called for clarity in how such decisions are made, moving from one step to another. Principles of maximal feasibility and economic analysis were amongst those discussed. The urgent need for national guidelines and clearer policy were the only consensus observable. Without this clarity offsetting and offset policy expanding would largely falter economically. In combination with concerns for ‘avoid only’ areas, it will not be enough for mitigation hierarchy policy to stop at requiring the sequence be followed. It must establish a strong, transparent decision-making process to be effective.
Participants agreed that such macro-level, overall ideas appear well established – it was now time to address more specific issues such as metrics and national guidelines. These topics generated the most interest, being what most participants had hoped to gain insight on from the event. Even with only tabling these aspects at the Round Table, to many it was the networks, connections and exchanges of ideas possible after discussions closed provided the most fertile sources for progress.
Stakeholder and Government
The Round Table discussions are an interesting measure of the pace the market is moving. It indicates considerable momentum present across Australia and New Zealand. National-level policy discussions timely and stakeholders are showing they are willing and able to engage on this level. From the Round Table the contribution of stakeholders emerges clearly in many regards. Equally highlighted is the far less clear-cut role for government and legislation.
Of the issues raised during the Round Table none divided opinion more notably than the role of government and issues of liquidity. Private-sector representatives presented achieving adequate levels of market liquidity as the major issue to overcome. They highlighted that if only a few trades occur, then the industry will remain small and weak and the advantages of the market will remain elusive. Liquidity problems may be a result of the unit traded – the design of the credit. Australia most advanced trading system is in the state of Victoria where their smaller variety of more well defined ecosystems (compared to areas such as Queensland and New Zealand) has lead some participants to question the reliability of assuming comparative success in other regions through applying the Victorian model. Instead perhaps larger credit markets (such as Queensland) require a more tightly defined unit or credit, where the smaller Victoria market can focus on operating under a tight process of measurement instead (such as the Habitat Hectares approach currently in use). Naturally, these different approaches suggest differences in trading, scientific weighting and systems’ economics which are held as highly important considerations by the stakeholders present, seemly irrespective of any industry or perspective they represented.
Economic concerns were raised again regarding offset supply, especially by rural landowners who are optimally positioned to conduct conservation and generate offsets and credits. Some suggested that government could have a central role here, supporting initiatives around ‘local champions’ and other bottom-up representatives that foster participation. Alternatively, it was suggested that positive examples by ‘big business’ would act as powerful incentives. Others however felt a business presence could be deterring. This debate over the role of business characterized the afternoon’s discussions.
The importance of incorporating biodiversity values into land prices was one point of concurrence, acknowledged as an important mechanism to generate supply by creating economic incentives, sending market signals to rural landowners, and providing tangible evidence of the benefits available from biodiversity conservation.
Michelle Gain of (Project Manager, Institute for Sustainable Resources, Queensland University of Technology, Brisbane, Australia) drew on experience in the United States to demonstrate the potential of the entrepreneurial sector. She argued the active fostering of entrepreneurship is the absent key to bolstering Australian markets and filling these gaps the Round Table had expressed. This is because entrepreneurship is able to generate considerable private investment to drive offsetting markets, as financial incentives are created and the government is able to take the role of regulator not controller.
Such regulatory (rather than directory) role for government was not universally supported by the Round Table, notably questioned by public conservation sectors. One concern was that private investment through entrepreneurship makes enforcement and monitoring more challenging. Secondly, the maintenance of rights and engagement with rural landowners and their communities could be jeopardized. Such an approach might not align easily with the types of social concerns within Australia that some participants represented. Debate continued with the concept of ‘critical mass’: if entrepreneurship could grow the market to a suitable size, enforcement and monitoring costs and logistics are expected to ease and negate such cost-related disadvantages. Some suggested this could even be turned to an advantage.
With the afternoon drawing to a close the role of entrepreneurship and government remained an exposed yet unresolved topic, highlighting the complexity of liquidity issues and divides that remain between stakeholders. Despite the drive and capacity to develop policies of national and international standards, remaining debates indicate that ‘one policy does not a system make’. Australia’s maturity and awareness at one level may be overshadowed by the complex and recurring business versus government debate. Stakeholder engagement can only offer many things that Australia is well positioned to take advantage of, but a silver bullet is not one of them. Without overshadowing continued momentum and optimism, this was the take home message that participants were only too willing to recognize.
Looking to the Future
The conference and the continued involvement of stakeholders gives NELA and ELRANZ valuable insight into the formation of the policy paper about offsets. This is the value that this type of organization can provide. Bringing together perspectives from multiple sectors, the organization can provide government representatives with a well-rounded policy recommendation, with the hope of improved, inclusive biodiversity and offsetting policy firmly in the sights.
The paper and the processes it has pioneered in Australia will also provide non-governmental stakeholders with invaluable information and experience to form on-the-ground projects and take environmental markets in Australia and New Zealand towards a positive, and hopefully progressive, future industry.