Nature Repair Market bill may repair the environment, but is it the Budget that will need repair?

By Peter Burnett

Environment minister Tanya Plibersek’s draft Nature Repair Market bill, currently out for public comment, appears to form part of a ‘build it and they will come’ strategy on nature repair.

Right from her first domestic speech as Minister last July, Plibersek has said consistently that the environment is in a bad way and getting worse. And — citing an estimate of more than $1 billion a year to restore landscapes and prevent further degradation— that the cost of repair is beyond the capacity of governments alone.

Plibersek believes the answer lies in finding industry and philanthropic partners. She says that markets can put a value on improvements in biodiversity, enabling landholders to be paid for their services to nature and allowing businesses, among others, to invest in the biodiversity credits that landholders would produce.

The Nature Repair Market bill certainly aligns with this framing, but I don’t think the investors will come, at least not without inducements.

Let me explain.

Nature Repair Market Bill

The bill itself is very similar to the Agricultural Biodiversity Stewardship Bill introduced by then-Agriculture minister David Littleproud before last year’s election. It addresses what can be regarded as the five foundations of efficient and effective markets in nature:

• standards, to guarantee that any credit given for repairing nature delivers genuine ‘additionality’ — ie, that nature really is enhanced by the action concerned and that the ‘benefit’ produced wouldn’t have happened without the action
• methodologies, to allow experts on a Nature Repair Market Committee, including conservation biologists and ecologists, to spell out exactly what must be done to enhance nature in particular cases, whether by preparing the soil in a certain way, planting native species in a particular mix, or controlling for particular pests
• certification by a Regulator, to ensure that repair projects are following the methodologies
• implementation and compliance, to ensure the repair projects deliver the intended additionality in a measurable way
• good governance, to ensure that all aspects of the scheme comply with the standards and are seen to be doing so; this requires strict role separation between minister the methodology experts and the regulator, as well as full transparency, so that market participants can see that the elements that give the credits their value are present at all times.

But the bill needs strengthening if it is to lay these five foundations in full. In particular, it comes with some ‘mutant DNA’ inherited from one of its forbears, the Carbon Credits (Carbon Farming Initiative) Act 2011. This DNA was injected by the Abbott government in 2014 and blurs some of the boundaries between the policy role of the minister and the independent expert role of the Nature Repair Market Committee.

The bill also needs more transparency. The underlying principle should be that everything the Committee does should be publicly available, with a few narrow exceptions such as confidentiality while methods are under deliberation.

No doubt the government will make some changes itself to reflect its recent in-principle acceptance of the recommendations of the recent Chubb Review into the integrity of carbon credits, but the underlying principle is that integrity must not only be achieved but seen to be achieved. Anything less rests on a slippery slope towards greenwashing and impaired value.

Then there is the task, once the bill becomes law, of getting a swag of methods approved. This will be much harder for biodiversity than for carbon: a tonne of carbon is a tonne of carbon, but a unit of biodiversity has dimensions in structure, composition, geography and even history, and so may need to be defined in ways specific to a bioregion, ecosystem or area.

Take for example a site that has undergone pasture improvement with the application of fertiliser over time. This site will be more difficult to restore to its original condition than a similar unfertilised site, and sowing seeds and planting native trees on both sites will lead to different biodiversity outcomes.

Come hither, philanthropists, investors, one and all …

At the end of the day though, the biggest challenge is not building the scheme, but getting investors to come.

Philanthropy in Australia is limited, while the business case for companies to invest in biodiversity to build social licence is also very limited. And companies that invest in biodiversity certificates to deliver offsets are compensating for losses they are causing elsewhere — so overall, they deliver no additionality.

I think the government is wedged. If the investors do not come, it could look at some form of compulsion, such as a development levy with an exemption for companies that purchase biodiversity certificates. Any measure of this sort would be political poison without an election mandate.

Alternatively, the government could do what other governments have done over the years — fudge their way through by failing to collect comprehensive data and funding small tree planting programs to apply a veneer of greenwash. Apart from the policy failure this represents, I think Plibersek has already nailed her ‘no fudging’ colours to the mast.

The final option is for the government to stump up a billion or so each year to buy certificates itself. A billion against the Budget as a whole is not much, but a billion from the much smaller pile of ‘new money’ that the government puts on the table each year is a big slice.

Any large biodiversity certificate purchasing program the government did consider would likely come at the expense of either another portfolio or the Budget bottom line, because the environment portfolio was so run down by successive Coalition governments. It would represent an embarrassing, though survivable, retreat from ‘build it and they will come’.

Keep an eye on the coming May Budget for a response to the wedge. Or a cupped hand to the ear for the sound of raised voices emanating from a certain room deep in a well- known Hill in Canberra.

Banner image: Tree plantings and shelterbelts on agricultural land near Canberra. Defining what a biodiversity unit consists of is only part of the challenge in establishing a market for nature repair. (Image by David Salt)