How effective is biodiversity offsetting policy settings in WA for proposal subject to EPA assessment?
Introduction
2024 could be considered the year of Nature Positive, with at least three national events held focusing on Nature Positive[I1]?: including the Global Nature Positive Summit held in Sydney in October, organised by the Department of Climate Change, Energy, the Environment and Water. This year will see the Commonwealth Government’s Nature Repair Market come into operation.
In summary, Nature Positive is about stopping the decline in the extent and condition of native vegetation, increasing its extent and condition, and with business playing an important role using market mechanisms.
With these endeavours in mind, it is timely to take a closer look at the policy settings for biodiversity offsetting in WA, especially in the light of the opt-in EPA policy released in 2024 [I2]?(EPA 2024).
This post is an assessment of the effectiveness of the existing biodiversity offsets policy and the new EPA opt-in policy. To do this, I will review the literature – academic and grey – and propose a set of evaluation criteria based on the key criticisms of offsets.
There is an important caveat to this discussion, which is that these criteria will not include whether the policies deliver a net gain in vegetation cover – i.e. both policies are not based on the principle of no net loss. This is a serious flaw in the WA policy framework. In my last post I asked the question: “Has the practice of offsetting in WA contributed to Nature Positive outcomes?”. I concluded – well, not so much; offsetting in WA is delivering a net negative outcome for Nature. In arriving at this conclusion, I examined all the offsets listed in the WA offsets register: 201 from Environmental Protection Act 1986 (EP Act) Part V clearing permit approvals, and 65 from EPA assessments under Part IV of the EP Act.
Assuming all the vegetation approved for clearing occurs, this means that 154,097.2 ha would be cleared from Part IV approvals and 3,222.4ha from Part V approvals, with a total clearing of 157,319.6ha. Most offsets that did not involve contributions to an offsets fund were for acquisition (i.e. acquiring and protecting existing native vegetation in another location), which in total would be in 5,746.5ha for Part IV approvals, 8,989.8hn for Part V approvals for a total of 14,736.3ha.
Some offsets involved restoration of degraded land, which would be 2,331.8ha for Part IV approvals, 992.3ha for Part V approvals for a total of 3,324.1ha.
If only restoration is counted as ‘gain’, then the net loss of native vegetation is 151,765.5ha for Part IV approvals, 2,230ha for Part V approvals for a total loss of 153,995.5ha. If acquisition is also included (contentious – see below), the respective figures are 146,019.0ha loss for Part IV approvals, a gain of 6,759.8ha for Part V approvals for a net loss of 139,259.2ha.
I also undertook an exercise where all of the money in the various offsets’ funds ($129,278,702 for Part IV approvals, $4,858,200.00 for Part V approvals for a total of $134,136,902.00) is used to restore degraded land. I found that these funds would restore 2,585.6ha for the Part IV funds, 97.2ha for the Part V funds, for a total of 2,682.7ha.
The net loss would still be significant – net loss of 153,995.5ha if acquisition was not included, and 151,312.8ha if acquisition included. This shortcoming is not just confined to the WA policy framework: as Tran and Maron(2024)note:
… effectiveness of biodiversity offsets is rarely evaluated, though recent reviews suggest generally poor outcomes and failure to achieve their main aim of at least no net loss for the target biota. (p2)
So, the criteria developed here are based on critiques of the operation, implementation and other environmental outcomes of various offsetting regimes around the world.
Broad concerns about the use of biodiversity offsets
The use of biodiversity offsets is particularly controversial within the broader environmental movement. In early 2014, the Australian Senate referred the use of offsets in assessments under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) to its Environment and Communications References Committee, which reported in June that year (Senate Environment and Communications References Committee 2014). The following quotes from the submissions made to the committee reflect these concerns, especially from Green and community groups:
The current practice of biodiversity offsets, while well intentioned, is poorly designed and implemented resulting in a ‘green-wash’ for the approval of highly destructive projects. The BOP does not prevent the ongoing loss of our unique Australian biodiversity (Greenpeace).
Let me be clear from the outset; the AKF is totally opposed to the concept of environmental offsets. They sanitise the destruction of our natural capital. Given the current state of Koala populations throughout Australia, there can be no role for offsets in Koala protection (Australian Koala Foundation).
… the increasing use of offsets as a way of replacing efforts to ‘avoid’ or ‘mitigate’ in the application/approval process, means greater loss of biodiversity at a time when Australia’s abysmal record in biodiversity loss is set to increase with the inevitable impacts of government-assisted climate change (North Queensland Conservation Council).
Criteria to assess effectiveness of biodiversity offsets policies and regimes
Summary – if you don’t want to read the analysis
In summary, the ten (10) criteria I will use to assess the effectiveness of biodiversity offsets polices and regimes are:
Mitigation hierarchy – does the policy specifically require that offsets should only be considered once the avoid and reduce steps have been exhausted?
Government resources – does the policy framework require additional resources to assess, implement and monitor offsets?
Negative incentive – does the policy framework work against and/or replace other conservation initiatives or programs?
Compensation ratios – does the policy framework have a robust methodology for assessing compensation ratios that considers all relevant factors?
Narrow focus – does the policy framework only consider the direct loss of or impact on a species or ecology community in calculating the nature and size of the offset, or are other related matters considered?
Acquisition vs restoration – In the context of national and state policies on biodiversity, does the policy framework favour restoration over acquisition?
Compliance – does the policy framework set out a robust and transparent compliance process?
Transparency – does the policy framework ensure transparency in methodology, assessment, implementation and monitoring?
Local vs strategic – does the policy framework support and encourage regional and strategic offsetting where these will deliver a better environmental outcome compared to case-by-case local offsetting?
Other benefits – does the policy framework support consideration of the provision of socio-economic benefits??
Literature review and analysis
In summary, there are nine key concerns about offsets raised in the literature.
Concern 1 – mitigation hierarchy
A key concern is that proponents propose offsets before working all the way through the mitigation hierarchy, and do not fully consider the Avoid and Reduce steps (Guillet and Semal 2018).
Concern 2 – government resources
The overuse of offsets has led to what Guillet and Semal (2018) called “saturation of the organizations responsible for biodiversity policies” (p89). This is where government resources are shifted from core conservation activities and instead used to deal with the assessment and management of offsets, as they are agreed to as part of EIAs.
Concern 3 – negative incentive
Gordon et al (2015) argued that an offset can be an incentive to wind back other conservation actions, where land identified for another conservation initiative – for example, protection through a conservation covenant – gets protected as an offset instead, while the conservation covenant process is not used. If this did not happen then another site would have to be found as an offset, and the outcome would be that two sites are protected not one.
Concern 4 – compensation ratios
Souza et al (2021) noted there were a lack of robust methodologies to determine compensation ratios, and the decisions are often ad hoc and may not properly compensate for the losses. A study into offsets for loss of Koala habitat (Tran and Maron 2024) found that:
… biodiversity offsets for impacts on koala habitat since 2012 are unlikely to adequately compensate for associated impacts. On average, offsets would have needed to be approximately twice as large as those proposed—on average, approximately five times the size of areas cleared. (p9)
Concern 5 – narrow focus
Burgin (2008) argued that assessments of the suitability of offsets is often too narrowly focused on a single species or a single ecological community, and doesn’t consider the need for broader environmental impacts and requirements: for example, effects of fragmentation and population/ecosystem viability and genetic diversity.
Concern 6 – acquisition vs restoration
Burgin (2008) also argued that the offset process can be based on flawed logic: for example, like-for-like acquisition offsets used to replace threatened ecological communities are a net loss and not a gain and are, therefore, not offsets at all. Further, the site subject to the like-for-like offset may already have implied protection as the remaining extent of ecological community is now further reduce because of the initial loss and further clearing is likely to be unacceptable.
The argument that acquisition offsets (also known as averted loss) are not really offsets is the most common criticism of offsets in the literature (O'Brien and Ascelin 2024, Tran and Maron 2024). The 2019 review of the WA offsets regime (Department of Water and Environment Regulation 2019) noted that the main reason acquisition offsets are favoured is because they:
… have been found to most reliably deliver offset outcomes, and are easier to demonstrate compliance. (p3)
The 2014 Senate report on biodiversity offsets (Senate Environment and Communications References Committee 2014) made a specific recommendation in this regard:
Recommendation 3
6.13 The committee recommends that the Department of the Environment ensure that all offsets adequately reflect the principles of additionality, and are not granted in relation to areas that are already protected under existing Commonwealth, state or territory legislation or policy. (pvii)
‘Additionality’ refers to there being a net gain in the area protected, which would rule out acquisition of pristine like-for like offsets. Acquisition of degraded land which is then restored and be considered additionality depending on the compensation ratios used.
Concern 7 – compliance
Burgin (2008) was concerned about the lack of compliance in the governance of offsets by referring to two studies: one in Canada, where less than 15% of 124 developments associated with fish habitat were compliant with offsets conditions, and a second in Massachusetts where 54% of proposals were found to be non-compliant.
Concern 8 – transparency
Moilanen et al (2024) also noted the lack of regulatory oversight, enforcement, and accounting. They further argued that the success of many offsets is difficult to determine due in part to a lack of transparency of most offset registers, as well as poor monitoring and reporting programs. Similarly, a study of 108 offset regimes from around the world found that only 14 had publicly available documents explaining how offset metrics (multipliers) are arrived at (Marshall, Southwell et al. 2024). They concluded that:
This illustrates a gap in the transparency of offset policies around the world, specifically that these policies are not often accompanied by explicit guidelines describing the biodiversity metrics require. (p7)
Concern 9 – local vs strategic?
Another criticism is that case-by-case offsetting at the local level may not always deliver the best environmental outcome. The argument that offsets should be found locally and close to the development site is based on the policy preference for like-for-like, where, it is argued, the further from the development site the offset is, the less likely that it will be exactly like-for-like to the development site. As McKenney and Kiesecker(2010) argue:
Do offset benefits need to accrue to the local geographic area affected by project impacts? What if a proposed ‘‘local’’ offset provides considerably less environmental benefit than other more distant proposed alternatives? (p170)
A strategic and regional approach to offsetting rather than case-by-case can, in many cases, deliver a better environmental outcome. For example, in a hypothetical case where three developments require offsets, a single large offset for all three developments would be environmentally preferred to three separate smaller offsets. Edge effects will be less for the larger site, and it will be a more viable in the long term as a fauna habitat.
2019 Review of WA offsets
In 2019, the WA Department of Water and Environmental Regulation carried out a review of the biodiversity offsets regime (Department of Water and Environment Regulation 2019). The purpose of the review was:
… to assess the effectiveness of the framework and its implementation in delivering its environmental objectives, and to make recommendations for improvement. (p28)
The overall conclusion of the review was that:
… ?implementation of the framework has not fully counterbalanced the significant residual impacts of approvals. (p8)
While the review carried out a literature review that raised many of the concerns discussed here, its assessment of the WA offsets regime was against the policy elements rather than an assessment on the broader issues: that is, it was a review of whether offsets were being delivered and implemented consistent with the policy rather than a broader assessment of the policy framework itself.
Biodiversity offsets policy assessment criteria
Taking into account the 9 concerns discussed above, the following criteria are proposed to assess the effectiveness of biodiversity offsets policy.
Mitigation hierarchy – does the policy specifically require that offsets should only be considered once the avoid and reduce steps have been exhausted?
Government resources – does the policy framework provide additional resources to assess, implement and monitor offsets?
Negative incentive – does the policy framework work against and/or replace other conservation initiatives or programs?
Compensation ratios – does the policy framework have a robust methodology for assessing compensation ratios that considers all relevant factors?
Narrow focus – does the policy framework only consider the direct loss of or impact on a species or ecology community in calculating the nature and size of the offset, or are other related matters considered?
Acquisition vs restoration – in the context of national and state policies on biodiversity, does the policy framework favour restoration over acquisition?
Compliance – does the policy framework include a robust and transparent compliance process?
Transparency – does the policy framework ensure transparent and easily publicly available information and data on methodology, assessment, implementation and monitoring?
Local vs strategic - does the policy framework support and encourage regional and strategic offsetting where these will deliver better environmental outcomes compared to case-by-case local offsetting?
These criteria cover the 9 concerns raised above, but there is an argument for an additional criterion based on potential benefits of offsetting – that it, an offset can deliver socio-economic benefits. For example, employment for local people in managing an offset site, and protecting or enhancing cultural values of the site the subject of the offset. Therefore, a tenth criterion is proposed:
Other benefits – does the policy framework support consideration of the provision of socio-economic benefits?
Assessment of the existing WA Offsets policy framework and the EPA opt-in policy
This section assesses the existing biodiversity offsets policy framework and the EPA new opt-in policy against these 10 criteria.
The existing policy framework is:
As well, the 2021 EIA Procedures Manual (EPA 2021) requires that the proponent’s environmental review document includes a section that discusses proposed offset where a significant residual environmental impact remains after the avoid and reduce mitigation hierarchy steps have been exhausted.
The EPA advised that the opt-in policy does not replace the existing policy framework, but is part of policy evolution and builds on the existing framework.
The assessments below give a score of 0-3 on each criterion, as follows:
Table 1 is the assessment of this policy framework.
Table 1: Assessment of existing policy framework
Table 2 gives the assessment of the EPA opt-in policy.
Table 2: Assessment of EPA opt-in policy
Clearly, the EPA opt-in policy addresses some of the shortfalls of the existing framework, and if applied on a case-by-case basis should deliver improved environmental outcomes. However, it should be noted that some of the improvements still need to be adopted by Government (for example, improved transparency). The policy makes several recommendations for the greater resources from Government, who have yet to respond.
This does point out a significant flaw in the WA biodiversity offsets policy framework, which is governance: there is no single agency who is responsible for administering biodiversity offsetting, including compliance, and no supporting legislative framework within which this can occur.
A concern not addressed by either the biodiversity offsets policy framework or the EPA opt-in policy is that the calculation of the size of the offsets, especially how compensation ratios are arrived at, lacks both transparency and, in part because of this, rigour.
There is still work to be done, including in the implementation of the improve EPA opt-in policy.
Final word – the 2019 review of the WA biodiversity offsets policy framework
While this review was primarily about the effectiveness of offsetting and its consistency with the existing policy framework, it is worth noting that some of the recommendations did address some of the broader concerns raised here. These are:
Implementation of these recommendations would ensure the WA biodiversity offsets policy framework is improved and delivers improved environmental outcomes.
?Finally - happy to receive any feedback on this article
Garry Middle, March 2025.
References
Burgin, S. (2008). "BioBanking: an environmental scientist’s view of the role of biodiversity banking offsets in conservation." Biodiversity and Conservation 17: 807-816.
Department of Water and Environment Regulation (2019). Review of the Western Australian environmental offsets framework: Final report. Perth, Western Australia, Government of Western Australia.
Department of Water and Environment Regulation (2021). Environmental offsets metric: Quantifying environmental offsets in Western Australia. Joondalup, Western Australia, Government of Western Australia.
?EPA (2021). Environmental Impact Assessment (Part IV Divisions 1 and 2) Procedures Manual: Requirement under the Environmental Protection Act 1986, Environmental Protection Authority.
EPA (2024). Public Advice: Considering environmental offsets at a regional scale. Perth, Western Australia, Environmental Protection Authority.
Gordon, A., et al. (2015). "Perverse incentives risk undermining biodiversity offset policies." Journal of Applied Ecology52(2): 532-537.
Government of Western Australia (2011). WA Environmental Offsets Policy. Perth, Western Australia, Environmental Protection Authority.
Government of Western Australia (2014). WA Environmental Offsets Guidelines. Perth, Western Australia.
Guillet, F. and L. Semal (2018). "Policy aws of biodiversity o setting as a conservation strategy." Biodiversity and Conservation 221: 86-90.
Marshall, E., et al. (2024). "A global analysis reveals a collective gap in the transparency of offset policies and how biodiversity is measured." Conservation Letters 17(1).
McKenney, B. A. and J. M. Kiesecker (2010). "Policy Development for Biodiversity Offsets: A Review of offset frameworks." Environmental Management 45(1): 165-176.
Moilanen, A., et al. (2024). "Monitoring in biodiversity offsetting." Global Ecology and Conservation 54: 1-11.
O'Brien, A. and G. Ascelin (2024). "Evaluation of averted loss gains under Victorian biodiversity offset policy." Conservation Science and Practice 6(2).
Senate Environment and Communications References Committee (2014). Environmental Offsets. Canberra, Senate.??????
Souza, B. A., et al. (2021). "Mitigating impacts on ecosystem services requires more than biodiversity offsets." Land Use Policy 105.
Tran, H. N. and M. Maron (2024). "Biodiversity offset conditions contributing to net loss of koala Phascolarctos cinereus habitat." Conservation Science and Practice 6(12).
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