Improvements to the Biodiversity Offsets Scheme

The NSW Biodiversity Offsets Scheme is a world-leading scheme that aims to ensure no net loss of biodiversity from development.

The Biodiversity Offsets Scheme does so by requiring that any residual impact on biodiversity from a development must be replaced by a gain in biodiversity elsewhere.

This is achieved by developers purchasing credits offered by landholders on the credit market. Landholders generate these credits by agreeing to secure and manage an area of their land to improve biodiversity under an in-perpetuity Biodiversity Stewardship Agreement. Credit sales provide funding for ongoing management activities on the land, such as weed and pest management, fire management, and restoration works.

The biodiversity impact and gain are calculated in a transparent and scientifically robust way.

The NSW Government is committed to the continual improvement of the Biodiversity Offsets Scheme to help ensure it delivers effective and lasting environmental and economic outcomes for the communities of New South Wales.

Key to this commitment is the NSW Government's existing Integrated Improvement and Assurance Program for the Scheme and the appointment of the former Secretary of the Commonwealth Infrastructure and Transport Department, Mr Mike Mrdak AO, as the independent Scheme monitor.

This snapshot outlines improvements to date, made by the department through the Integrated Improvement and Assurance Program and based on 4 strategic priorities:

  • a functioning biodiversity credits market
  • making it easy to participate
  • ensuring confidence in the Scheme
  • maintaining scientific rigour

The Integrated Improvement and Assurance Program is an evolving work program that will respond proactively to incorporate new recommendations from reviews or stakeholder feedback.

The statutory 5-year review of the Biodiversity Conservation Act 20l6, which establishes the Biodiversity Offsets Scheme, has commenced.

Statutory Review of the Biodiversity Conservation Act 2016

Biodiversity, country landscape between Dubbo and Newcastle 

Delivering biodiversity offsets

  • 43,783 hectares protected in perpetuity under Biodiversity Stewardship Agreements (as of 31 October 2022).
  • $199.9 million invested in the Biodiversity Stewardship Payment Fund (as of 30 September 2022) – this fund provides annual payments to landholders for the ongoing management of Biodiversity Stewardship Agreement sites.
  • In 2021–22, nearly $10 million in annual management payments from the Biodiversity Stewardship Payment Fund were made to landholders to generate biodiversity gains through weed and pest management, fire management, and restoration works. Approximately 70% of this went to regional communities, diversifying incomes and providing environmental services.

A functioning biodiversity credits market

We are providing more certainty for proponents and landholders with ready visibility of credit demand and a better match in the timing of supply and demand.

  • Established a $106 million Biodiversity Credits Supply Fund to invest in the supply of biodiversity credits.
  • A dedicated Taskforce established to manage the Credits Supply Fund and to fast-track supply of in-demand biodiversity credits, working proactively with landholders and providing biodiversity assessments by accredited assessors at no up-front cost to landholders.
  • Released new tools, including a market sales dashboard and a credit pricing guide, to help landholders and proponents estimate the fair value of biodiversity credits.
  • Implemented a new Biodiversity Conservation Fund Charge System that supports cost recovery for the Biodiversity Conservation Trust while providing more stable pricing for transferring obligations.

Making it easy to participate

Giving stakeholders the right tools, information and support to take part.

  • Established a dedicated help desk for customer queries about the Scheme.
  • Rolling out a local government support program to build capacity in local councils in their role as consent authority. The department has published a Biodiversity Offset Scheme resources manual for local government and is continuing to sponsor local government staff participation in Biodiversity Assessment Method (BAM) training.
  • Providing ongoing support to regional councils and proponents to navigate and apply the existing flexibility of the Scheme.
  • Completed a customer journey mapping project to better understand and improve the experience of landholders and developers participating in the Scheme. Recommendations from this work are now being built into the Scheme's improvement program.
  • Established the Taskforce to proactively support landholders to enter into Biodiversity Stewardship Agreements.
  • Removed the $2,600 application fee for Biodiversity Stewardship Agreements until 30 June 2023.
  • Offering biodiversity assessments at no up-front costs for landholders with potential to generate in-demand credits, with costs recouped on the sale of credits.
  • Expanding the number of staff processing Biodiversity Stewardship Agreements through the Taskforce to reduced approval timeframes to less than 6 months.
  • Published an Aligning Biodiversity Assessments factsheet that outlines the implications for biodiversity assessments following the Australian Government endorsement of the Scheme.
  • Enhancing the Scheme's digital systems to simplify processes and improve access to information about biodiversity credits.

Ensuring confidence in the Scheme

Building a robust regulatory and governance framework.

  • Appointed Mr Mike Mrdak AO, former Secretary of the Commonwealth Infrastructure and Transport Department, to oversee the delivery of the Integrated Improvement and Assurance Program.
  • Establishing a new compliance and assurance plan that will include an audit program, de-accreditation process and conflict of interest protocol to ensure greater accountability of Accredited Assessors.
  • Established an external stakeholder reference group, independently chaired by the Scheme monitor, with industry, environment groups and local government representatives.
  • Reviewing the risk settings and resetting the discount rate for calculating Total Fund Deposits. The discount rate was increased from 2.6 to 3.2 to reflect long-term return forecasts for the Biodiversity Stewardship Payments Fund (BSPF), management costs and risk tolerance. The new discount rate lowers the amount landholders need to pay into the Biodiversity Stewardship Payments Fund when they sell credits to fund the ongoing management of their stewardship sites.
  • Commissioned the Independent Pricing and Regulatory Tribunal (IPART) to monitor and report on the operation of the biodiversity credits market. Independent monitoring of the biodiversity credits market will support transparency and public confidence in the Scheme and help improve its operation. For more information, visit the IPART website.
  • IPART website

Maintaining scientific rigour

Ensuring the Scheme is guided and informed by the best available science and data.

  • Published new guidance for surveying reptiles under the Biodiversity Assessment Method (BAM).
  • Preparing for the 5 year review of the BAM in accordance with Biodiversity Conservation Act.
  • Developing guides for undertaking planted native vegetation streamlined assessments and categorising Category 1 exempt land.
  • Continuing transition to the revised classification of Plant Community Types in eastern NSW into the Biodiversity Offset Scheme and Biodiversity Assessment Method. The Plant Community Types will be easier to use in land use decisions and biodiversity assessments and provide greater confidence, certainty and transparency.
  • Updating BAM Calculator data and releasing system enhancements.
  • Ecological monitoring requirements are now included in Biodiversity Stewardship Agreements.
  • Establishment of a dedicated Biodiversity Conservation Trust compliance team to support Biodiversity Stewardship Agreements where biodiversity outcomes are not on track.

Changes made to improve the integrity of Scheme, include:

  • ensuring the ecological integrity of the Scheme by promoting avoidance and minimisation of impacts and better capturing data on the no net loss of biodiversity
  • revising conflict of interest protocols for staff and accredited assessors
  • ramping up the requirements for, and auditing of, accredited assessors, including new mandatory training now required for accreditation (as of March 2021) which includes comprehensive online eLearning modules and a four-day intensive training course, including a field day
  • introducing continuing professional development from June 2021 for accreditation renewals, which includes requirements for professional development activities including field work, credit analysis, assessment and reporting
  • providing a complaints policy and process for accredited assessors.

Improving Scheme operations

Day-to-day operation of the Scheme is also being improved. This includes:

  • training and guidelines for accredited assessors and improving the functionality and user-experience of information systems
  • improving support for local government including tailored online training modules and an induction manual for staff
  • specific guidance will support specific development types, including the renewable energy sector
  • maintaining and improving key data sets and mapping (including important habitat maps)
  • a concierge function for major projects, helping proponents navigate the offsets system
  • an enhanced helpdesk for the Scheme to support local government, accredited assessors and Scheme participants, and faster processing of transactions will be made possible through increased resourcing
  • improvements to support Serious and Irreversible Impacts assessment, nominations and decision-making
  • the proposed replacement of the current Biodiversity Offset Payment Calculator with new charge framework being developed by the BCT, including transparency and assurance mechanisms – this will provide greater certainty for developers who want to use payment into the Biodiversity Conservation Fund as a way of meeting offset obligations. Offset obligations can also be met by purchasing existing credits on the market or establishing new stewardship agreements.

Addressing key issues: pricing and supply

Significant new work is underway to bring forward the supply of biodiversity credits to avoid project delays and provide economic opportunities for landholders. This work includes:

  • demand identification: analysis of the development pipeline to identify future demand for offset credits to signal the need for future supply
  • work with major projects: to support the development of supply, improving access to information about current supply of credits and market pricing, and investigating and supporting the identification of private and public land available as part of the supply mix
  • communicating opportunities for landholders: highlighting opportunities for landholders to generate or diversify income through the establishment of stewardship agreements to create biodiversity credits on their properties, focussed on areas where supply is most needed
  • improved and streamlined landholder experience: working with the Biodiversity Conservation Trust (BCT) and Accredited Assessors to improve and streamline landholder experience of the Scheme, including the barriers to participation
  • iinvestigating supply options on public land: researching and supporting the identification of public land available as part of the supply mix
  • Improved access to information: providing regular market and trend information and other tools and support to build market confidence

Monitoring, evaluating and reporting is being refreshed

A monitoring, evaluation and reporting framework for the Scheme is being developed to improve transparent and consistent reporting on the Scheme including conservation and economic outcomes. This will include reporting on outcomes for biodiversity and using social and economic indicators to track progress of the Scheme against objectives.