Draft NSW Biodiversity Offsets Policy for Major Projects

Agriculture Environment & Planning Government Infrastructure Resources

In brief

The NSW Government has released a draft Biodiversity Offsets Policy for Major Projects that will apply to the assessment of State Significant Development and State Significant Infrastructure. Partner Paul Lalich , Senior Associate Trent March and Lawyer Dennis Smith consider the implications of the draft policy in the context of the State Government's ongoing planning reforms.

How does it affect you?

  • Following adoption of the NSW Biodiversity Offsets Policy for Major Projects (the Offsets Policy), Director-General's Requirements issued for the assessment of State Significant Development and State Significant Infrastructure will include a requirement for assessment under a new Framework for Biodiversity Assessment (FBA).
  • Assessment under the FBA will involve consideration of the net impact of development on biodiversity and calculation of an appropriate offset. The requirement to provide an offset may be satisfied by payment of a monetary contribution to the Biodiversity Offsets Fund.

Background – the existing system

Currently, where development is likely to significantly affect threatened species, populations or ecological communities, or their habitats, proponents may either assess the likely impacts through the preparation of a Species Impact Statement (SIS), with offset arrangements negotiated on a case-by-case basis, or apply for a Biobanking Statement under the Biobanking Scheme, provided for by the Threatened Species Conservation Act 1995 (NSW).

Under the Biobanking Scheme:

  • The likely impact of the development on biodiversity must be assessed in accordance with the Biobanking Assessment Methodology.
  • Biodiversity impacts may be offset by retiring biodiversity credits, purchased from a landowner who has entered into a Biobanking Agreement.
  • Under a Biobanking Agreement, biodiversity credits are generated by undertaking management actions that increase the biodiversity value of the land the subject of the agreement.
  • Biodiversity credits that are purchased and retired must relate to the loss in biodiversity values sought to be offset (the 'like for like' principle).
  • A Biobanking Statement will only be issued if the development, including any offsets obtained through the purchase of biodiversity credits, results in a maintenance or improvement of biodiversity values.

Changes proposed in the 2013 Planning Bill

The Planning Bill 2013 proposed to amend the Biobanking Scheme, including by:

  • allowing proponents to make monetary contributions into a biodiversity offset fund, rather than having to locate relevant offsets; and
  • adopting a biodiversity assessment procedure that could be applied instead of preparing an SIS.

The draft Offsets Policy

The draft Offsets Policy implements aspects of these reforms in advance of the introduction of a revised Planning Bill into Parliament. Relevantly, the FBA, exhibited with the Offsets Policy, appears to be the biodiversity assessment procedure anticipated by the Planning Bill and a Biodiversity Offsets Fund (the Fund) is intended to be created.

More specifically:

  • The FBA will include a step-by-step process for assessing the net loss in biodiversity values caused by a development and determining the appropriate offset requirements. The FBA will be applied by accredited ecological consultants. Before considering offset requirements, proponents will first need to attempt to avoid or minimise the impact.
  • A proponent will still have the option to acquire the required biodiversity credits themselves.
  • There will be a relaxation of the 'like for like' principle.
  • Where applicable offsets are not available, a proponent may be able to provide funds for supplementary measures that protect biodiversity but do not specifically involve protecting and managing a site.
  • In certain circumstances, offset requirements will be reduced if the requirements would otherwise make the project unviable and the project can demonstrate significant overall social or economic benefits.
  • Mining proponents may also be able to offset biodiversity impacts by rehabilitating the mine site.
  • A proponent may discharge its obligations to obtain offsets by making a monetary contribution into the Fund. The manager of the Fund will then use the contribution to purchase the required offsets.
  • The Offsets Policy anticipates that a proponent making a monetary contribution will be required to pay a premium to reflect the risk that the Fund manager will not be able to purchase the necessary offsets with the contributions paid.

The mechanisms for entering into Biobanking Agreements and generating biodiversity credits under the Offsets Policy will otherwise not be materially different to those under the existing Biobanking Scheme.

What happens next?

Submissions on the draft Offsets Policy and draft FBA are open until 9 May 2014. Following a transitional period when the Offsets Policy will be implemented generally through Director-General's requirements, a fine-tuned version of the Offsets Policy will be implemented through legislation.

The existing Biobanking Scheme will continue to apply on an optional basis to all development that is not State Significant Development or State Significant Infrastructure.

It is anticipated that the biodiversity assessment and offset mechanisms for all development in NSW will eventually be harmonised.