26 September 2023

Audit finds biodiversity scheme too diverse

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A performance audit into whether the Department of Planning and Environment (DPE) and the Biodiversity Conservation Trust (BCT) effectively designed and implemented a scheme to offset the loss of biodiversity due to development has found they did not.

In his report Effectiveness of the Biodiversity Offsets Scheme, Deputy Auditor-General Ian Goodwin said DPE had not effectively designed core elements of the NSW Biodiversity Offsets Scheme.

“DPE did not establish a clear strategy to develop the biodiversity credit market or determine whether the Scheme’s operation and outcomes are consistent with the purposes of the Biodiversity Conservation Act 2016,” Mr Goodwin said.

“The effectiveness of the Scheme’s implementation by DPE and the Biodiversity Conservation Trust (BCT) has been limited,” he said.

“A market-based approach to biodiversity offsetting is central to the Scheme’s operation but credit supply is lacking and poorly matched to growing demand: this includes a potential undersupply of in-demand credits for numerous endangered species.”

Mr Goodwin said key concerns around the Scheme’s integrity, transparency, and sustainability were also yet to be fully resolved.

As such, he said, there was a risk that biodiversity gains made through the Scheme would not be sufficient to offset losses resulting from development, and DPE would not be able to assess the Scheme’s overall effectiveness.

“At the time the Scheme commenced in 2017, DPE lacked a strategic plan to guide its implementation, set clear outcomes and performance measures, and respond effectively to risks,” the Deputy Auditor-General said.

“DPE did establish a detailed scientific method for assessing biodiversity impacts under the Scheme and a system for accrediting assessors to undertake this technical work.”

He said these were important foundations for the robustness of the Scheme.

Mr Goodwin said the Scheme has been in place for five years, but the biodiversity credit market was not well developed and most credit types had never been traded.

“Also, according to DPE data, around 90 per cent of demand cannot be matched to credit supply – and there is likely to be a substantial credit undersupply for at least seven endangered flora species, three endangered fauna species, and eight threatened ecological communities,” he said.

Mr Goodwin made 11 recommendations to DPE, including the establishment of governance arrangements to better oversee and manage risks related to the BCT and/or other Agencies with multiple roles in the Scheme, evaluate the overall quality of biodiversity assessment reports, and implement a long-term strategic plan for the Scheme that defined biodiversity goals with respect to the Act.

The Deputy Auditor-General’s 69-page Report can be accessed at this PS News link.

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