Markets and investment

Market-based solutions are being established to create a commercial value for land and water management practices that help control salinity.

Environmental Services Scheme (ESS)

The Environmental Services Scheme is a pilot program to investigate how natural resources can be managed sustainably, while ensuring that primary production remains profitable.

Under the scheme, twenty-four landholders signed agreements to conduct remedial work on approximately 13,000 hectares of land in various locations throughout NSW. The work includes salinity control, carbon sequestration, biodiversity enhancement and water quality improvement. These case studies will increase our understanding of:

  • the types of environmental services that can be incorporated into farm management practices
  • the best ways to measure and value a range of environmental services
  • the systems needed to allocate property rights to those services
  • the costs associated with including environmental services with rural production, and
  • the type of financial and contractual arrangements needed if this type of approach is to be more widely adopted.

Hunter Salinity Trading Scheme

The Hunter River Salinity Trading Scheme manages the discharge of saline water from twenty mines and two electricity generators into the Hunter River to ensure water quality objectives are met. These 22 individual operations are licensed to trade their salinity discharge credits, but only to environment protection licence holders in the Hunter catchment. For more information go to Your environment/market based solutions/Hunter salinity trading scheme.

Market-Based Instruments (MBIs)

Market-Based Instruments (MBIs) are a promising new addition to the existing suite of natural resource management tools. They use trading mechanisms, auctions and price signals to change behaviour.

MBIs give more flexibility in the sustainable use and management of natural resources. However, like other countries, Australia is still in the early stages of using MBIs and there are many questions about how they can work.

The National MBI Pilots Program seeks to increase Australia's capacity to use MBIs in managing natural resource issues, in particular to address the problems of salinity and water quality. For more information visit the website

Experts Group on Salinity

The New South Wales Government established an Experts Group of leading financiers and economists to advise on market-based solutions to salinity problems. The Experts Group was given the task of developing basic structure and operational rules to enable pilot schemes for market-based solutions to salinity. Working papers of the Experts Group on Salinity can be accessed on-line.

Strategic investment

Strategic investment is ensuring the resources needed to control salinity are invested in a manner that provides the greatest social, environmental and economic benefits.

Liverpool Plains Pilot Project

The Liverpool Plains Pilot Project trialed three types of incentive mechanisms to encourage land mangers to adopt better land management practices. They include:

  • Small grants of less than $5,000, funded with a 1:1 cost-sharing arrangement to undertake works.
  • Natural resource 'auctions' that are based on the idea that a funding body pays for certain environmental services provided by the landholder. The funding body advertises the services they want to purchase and landholders tender for the project. A system for ranking the tenders was developed to ensure the projects delivered cost effective environmental outcomes.
  • Environmental Management Systems (EMS) ISO14001 is an internationally accredited land management system where producers are externally audited to ensure maintenance of the standard. Potentially, if enough landholders take up EMS accreditation, land management practices would move to a sustainable footing sooner.

Of the three levels of investment, the natural resource 'auctions' were the most successful. Farmers generally recognised and accepted the need for more strategic investment of funds, which was possible with this approach.

TARGET Pilot Project

The Tools to Achieve Landscape Redesign Giving Environmental / Economic Targets (TARGET) Pilot Project investigated funding mechanisms to help land mangers achieve land use change to address salinity and other natural resource issues, and, identified the barriers and incentives to implementing change.

Funding for on-ground works was provided to landholders through various cost sharing arrangements and formal landholder agreements. The type of works funded included perennial and native pastures, conservation farming, intercropping, farm forestry and vegetation conservation.

Heartlands project

The Heartlands initiative is a collaborative research project between the CSIRO, the NSW , Victorian and Australian government , Catchment Management Authorities and local landholders in NSW and Victoria. The project aimed to improve land use in the Murray-Darling Basin by combining a research program directly with the implementation of on-ground works such as tree planting, establishment of perennial pastures and erosion protection measures. The research guides the on-ground works to ensure maximum environmental benefit from the works expenditure. The close linkage with on-ground implementation ensures that the research remains relevant and well focused.

Page last updated: 26 February 2011