enhancing biodiversity on working agricultural lands ...2015] biodiversity on working agricultural...

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Enhancing biodiversity on working agricultural lands through

environmental mitigation and offsets: Opportunities in Australia and the

United States

Matthew Roach

Australian agencies have extensive experience managing working agricultural lands to enhance biodiversity. State and Commonwealth agencies are increasingly using environmental offsets as a tool to manage the impacts of development. However, working agricultural lands are generally not considered a source of potential environmental offsets, as agencies prefer that land used for offsets be wholly set aside for environmental management purposes with limited or no agricultural activities. This contrasts with the United States, where efforts are underway to use working agricultural lands for mitigation purposes.

This paper proposes that working agricultural lands can be used for environmental offsets under Australia’s Environment Protection and Biodiversity Conservation Act of 1999 (EPBC Act). There are no significant legal barriers to this occurring, and the increased use of working agricultural land for offsets could generate four positive results, by: (1) achieving long-term environmental gains; (2) addressing the shortage of land available for environmental offsets in Australia; (3) providing land owners with additional income; and (4) improving collective expertise in sustainable agriculture.

INTRODUCTION

Australia’s degraded agricultural landscapes

Australia is one of twelve biologically mega-diverse nations, but has relatively high rates of extinction and a poor record of conserving biological diversity overall.1 Over half of Australia’s land area is used for agricultural

Copyright © 2015 by Matthew Roach * The author thanks Vanessa Casado-Perez (Teaching Fellow in Environmental Law and Policy and Lecturer in Law, Stanford Law School), and Professor Leon Szeptycki (Professor of the Practice,

2 ECOLOGY LAW CURRENTS [Vol. 42:3

purposes,2 and agriculture is commonly associated with increased mortality and loss of habitat for native species, as well as overall biodiversity decline.3 Agriculture has led—through impacts like salinization and exotic plant invasion—to habitat fragmentation, reduced landscape heterogeneity, and in some cases, complete collapse of ecological processes.4

In addition, some ecological consequences of past land use and changes to agricultural processes have not yet fully played out. For example, populations of long-lived trees persist in agricultural areas, giving the impression of reasonable population sizes. However, tree populations are actually declining over time because agricultural practices prevent recruitment of new trees.5 This affects not only tree species but understory and animals dependent on tree vegetation. Under a business-as-usual scenario, species already in decline are likely to be lost.6

Figures 1 and 2 show land use in Australia and illustrate that a significant extent of Australia’s overall land mass is used for agriculture.

Stanford Woods Institute for the Environment, and Executive Director, Water in the West) for their assistance in the preparation of this paper. 1. Tony Norton, Sustaining Natural Resources and Biological Diversity in Terrestrial Ecosystems of Rural Australia, in PRESERVING RURAL AUSTRALIA: ISSUES AND SOLUTIONS 51 (Alistair Robertson & Robyn Watts eds., 1999). 2. 4627.0 - Land Management and Farming in Australia, 2013-14, AUSTRALIAN BUREAU OF

STATISTICS, http://www.abs.gov.au/ausstats/[email protected]/mf/4627.0 (last visited May 8, 2015). 3. See Suzanne M. Prober & F. Patrick Smith, Enhancing Biodiversity Persistence in Intensively Used Agricultural Landscapes: A Synthesis of 30 Years of Research in the Western Australian Wheatbelt, 132 AGRIC., ECOSYSTEMS & ENV’T 173 (2009). 4. See id. 5. For example, activities such as grazing limit both seedling germination and survival, while land management practices may actively discourage the establishment of new trees. Josh Dorrough & Claire Moxham, Eucalypt Establishment in Agricultural Landscapes and Implications for Landscape-scale Restoration, 123 BIOLOGICAL CONSERVATION 55, 56 (2004). 6. Peter A. Vesk & Ralph Mac Nally, The Clock is Ticking - Revegetation and Habitat for Birds and Arboreal Mammals in Rural Landscapes of Southern Australia, 112 AGRIC., ECOSYSTEMS & ENV’T 356, 359 (2005).

2015] BIODIVERSITY ON WORKING AGRICULTURAL LANDS 3

Environmental offsets under the EPBC Act

Environmental offsets involve compensating for impacts on the environment or biodiversity at one location through conservation activities at a


different site.7 In some jurisdictions, including in the United States, environmental offsets are more commonly referred to as compensatory mitigation.8

Under the EPBC Act, offsets are used to generate benefits through compensatory activities that “offset” the residual impacts of development after all reasonable efforts have been made to reduce, avoid, and mitigate environmental impacts. Offsets are intended to achieve “no-net-loss” to the environment. Currently, the Commonwealth Department of Environment regularly imposes offset conditions on approvals under the EPBC Act and its offsets policy.9

Demand for offsets, and the potential for working agricultural lands

There is enormous demand for offsets but a limited supply of suitable land. In 2010, it was estimated that the global demand for offset lands was at least 86,000 hectares per year.10 EPBC Act offset conditions generally require that land be permanently reserved for conservation purposes and not be used for agriculture on an economic scale. This has been described as a “conservation estate” approach to offsets. Typically, approvals will permit agricultural uses of land only for fire, weed, or pest management purposes.11 The exclusion of such a large proportion of Australia’s land area as a potential source of offsets has contributed to a shortage of land available to satisfy EPBC Act offset conditions.12

The use of private land and the participation of landowners are critical parts of any effort to reduce biodiversity decline. Privately managed land is an

7. Martine Maron, et al. Faustian Bargains? Restoration Realities in the Context of Biodiversity Offset Policies, 155 BIOLOGICAL CONSERVATION 141, 142 (2012). This paper will not critique the underlying rationale for offsets or evaluate whether they are good for the environment, although that matter is often contested. See, e.g., ENV’T DEFS. OFFICE, REFORMING NATIVE VEGETATION OFFSET

RULES IN VICTORIA, 11 (2013). https://envirojustice.org.au/downloads/files/law_reform/edo_vic_native_vegetation_offsets_report.pdf. 8. See, e.g., Compensatory Mitigation, U.S. ENVTL. PROT. AGENCY, www.epa.gov/wetlandsmitigation (last visited Sept. 16, 2015) (describing section 404(b)(1) guidelines made under the Clean Water Act). 9. Departmental practice in imposing offset conditions is described in DEPT. OF

SUSTAINABILITY, ENV’T, WATER, POPULATION, & COMMUNITIES, Environmental Protection and Biodiversity Conservation Act 1999 Environmental Offsets Policy, 12 (2012), http://www.environment.gov.au/system/files/resources/12630bb4-2c10-4c8e-815f-2d7862bf87e7/files/offsets-policy_2.pdf. 10. Becca Madsen, et al., STATE OF BIODIVERSITY MARKETS REPORT: OFFSET AND

COMPENSATION PROGRAMS WORLDWIDE, 59 (2010), http://www.ecosystemmarketplace.com/documents/acrobat/sbdmr.pdf. 11. See, e.g., Biodiversity Offset Management plan submitted by Investa for EPBC Act approval number 2013/7074, available at http://tinyurl.com/investaoffsetsplan. 12. Terry Bailey, CEO of the Office of Environment and Heritage NSW, recently commented that reserved areas such as national parks are not enough to address biodiversity declines, and promoted efforts by the NSW government to encourage private landowners to undertake conservation actions on their own lands. Terry Bailey, Emerging Approaches to Improving Biodiversity in NSW, 1 (2014), http://www.nela.org.au/NELA/Documents/ Terry-Bailey.pdf. Others argue that reserve lands cannot solve agriculture’s impacts on biodiversity. See Vesk & Mac Nally, supra note 6.


important source of biological diversity.13 Across Australia, approximately 60 percent of land is managed by farmers or graziers.14 Moreover, 29 percent of native vegetation and 30 percent of Victoria’s threatened species populations rely on private land.15

Not using working agricultural lands for offsets also increases pressure to convert agricultural land to the conservation estate, reducing the viability of Australian agriculture.16 Numerous studies have shown that working agricultural lands can be managed for environmental purposes in a way that improves ecosystem services and prevents biodiversity decline.17 The biodiversity value of agricultural land is particularly notable when compared to land uses that typically generate requirements for offsets, such as urban development or mining.18

Agricultural producers often have choices available between practices that have lesser or greater environmental impacts. One example of this is the environmental impacts of different pasture grasses. About 46 percent, or 355 million hectares of Australia, are used mainly for grazing.19 Pasture grasses can

13. John Fenton, a farmer, describes his experience restoring environmental balance on his sheep property: “In my view, there is only one option: if Australians want to see their unique and fragile environment cared for and protected, as I am sure most of them do, then the Australian Government has to pay farmers to do it. There is simply no alternative. Farmers are the only people capable of doing the job, and as things stand now most farmers cannot possibly afford to do what needs to be done.” JOHN

FENTON, THE UNTRAINED ENVIRONMENTALIST: HOW AND AUSTRALIAN GRAZIER BROUGHT HIS

BARREN PROPERTY BACK TO LIFE 22 (2010). 14. NAT. RES. MGMT. MINISTERIAL COUNCIL, AUSTRALIA’S BIODIVERSITY CONSERVATION

STRATEGY 2010-2030, 68 (2010), https://www.environment.gov.au/system/files/resources/58321950-f8b6-4ef3-bb68-6f892420d601/files/biodiversity-strategy-2010.pdf. 15. DEPT. SUSTAINABILITY & ENV’T. VICTORIA, Future Directions for Native Vegetation in Victoria: Review of Victoria’s Native Vegetation Permitted Clearing Regulations: Consultation Paper, September 2012, http://tinyurl.com/deptsus-env (last visited on Sept. 23, 2015); DEPT. ENV’T &

PRIMARY INDUS. VICTORIA, BushTender, http://tinyurl.com/bushtender (last visited on Sept. 16, 2015). 16. NATIONAL FARMERS’ FEDERATION, National Farmers Federation Submission to EPBC Act Offsets and Cost Recovery, 5-7 (2011), http://www.environment.gov.au/system/files/pages/99f3973a-0506-4cd5-b3ec-1d0394d289cd/files/49-national-farmers-federation.pdf (noting the loss of agricultural land to conservation estate and asking that “multiple uses of the one piece of land must be acknowledged and supported” in the development of the EPBC Act offsets policy). 17. Sara J. Scherr & Jeffrey A. McNeely, Biodiversity Conservation and Agricultural Sustainability: Toward a New Paradigm of ‘Ecoagriculture’ Landscapes, 363 PHIL. TRANSACTIONS OF

THE ROYAL SOC’Y 477, 481 (2008) (noting that “many ecosystem services can also be provided by non-native species, or by combinations of native and non-native species in heavily managed settings such as permanent farms.”); Simon J. Attwood, et al., Declining Birds in Australian Agricultural Landscapes May Benefit from Aspects of the European Agri-environment Model, 142 BIOLOGICAL CONSERVATION 1981 (2009) (discussing how agri-environment models can benefit Australian birds in agricultural landscapes); Prober & Smith, supra note 3, at 179 (analyzing the biodiversity value of semi-natural grasslands used for grazing); Fenton, supra note 13 at 22 (narrating how one landowner has progressively restored environmental values of their farm over several decades). 18. Malika Virah-Sawmy et al., Mining and Biodviersity Offsets: A Transparent and Science-Based Approach to Measure “No-Net-Loss,” 143 J. ENVTL. MGMT. 61, 64 (2014). 19. AUSTRALIAN BUREAU OF STATISTICS 4630.0 Agricultural Resource Management Practices, Australia 2011-2012, http://www.abs.gov.au/ausstats/[email protected]/Lookup/4630.0main+features32011-12 (last visited Sept. 30, 2015).


be native, exotic, support significant biodiversity values, or be noxious and damaging weeds.20 Choosing and managing pasture grasses according to their capacity to enhance biodiversity is an opportunity to enhance the biodiversity values of working agricultural lands.

In order to enhance biodiversity on agricultural land, land managers should undertake activities that promote beneficial environmental services such as pollination, pest control, soil fertility, and water quality.21 Land managers should also learn how to protect and expand patches of high-quality natural habitat and retain paddock trees.22 Moreover, land managers can enhance biodiversity through whole farm planning, changes to tree planting plans, fencing and altering tillage regimes.23 Environmental offsets incentivize and fund such activities, ensuring that they may occur more frequently.

Should we be promoting an “inferior” alternative to traditional offsets?

Critics may have a number of reactions to using working agricultural lands for offsets. For example, offsets are arguably an inferior alternative to using land set aside entirely for conservation purposes. Additionally, it is possible that agricultural offsets will encourage the more frequent use of offsets, which were theoretically intended to be an option of last resort. Finally, critics could argue that proponents of offsets will use the program to “get away” with damaging Australia’s unique natural environment.

But offsets are already a ubiquitous part of development approvals in Commonwealth, state, and territory jurisdictions. Moreover, the alternative approach—creating a conservation estate as an offset—is itself highly problematic. Many areas set aside for conservation and restoration purposes fail to achieve intended environmental goals.24

Australian governments of all types will continue to approve land development. The status quo offset regime is deficient for reasons that include a lack of available offset lands, and questionable effectiveness of a conservation estate approach. As a result, Australia should consider using working agricultural lands as offsets.

20. Consider for example the research undertaken by the Commonwealth Department of Sustainability into the management of exotic pasture grasses in Northern Australia. See DEPT. OF

SUSTAINABILITY, ENV’T, WATER, POPULATION, & COMMUNITIES, Threat Abatement Plan to Reduce the Impacts on Northern Australia’s Biodiversity by the Five Listed Grasses (2012), http://www.environment.gov.au/system/files/resources/ff24e078-fbb9-4ebd-855d-db09cb4db1f8/files/five-listed-grasses-tap.pdf. 21. See Scherr & McNeely, supra note 17 at 481. 22. Martine Maron et al. Can Offsets Really Compensate for Habitat Removal? The Case of the Endangered Red-Tailed Black-Cockatoo, 47 J. APPLIED ECOLOGY 348 (2010). 23. Alistar Robertson & David Roshier, Scientific and Social Impediments to Restoration Ecology as Applied to Rural Landscapes, in PRESERVING RURAL AUSTRALIA: ISSUES AND SOLUTIONS 51, 1 (Alistair Robertson & Robyn Watts eds., 1999). 24. Maron et al., supra note 7, at 142.


Australia’s experience in enhancing biodiversity values on working agricultural lands

The potential to achieve significant environmental gains through changing how Australia manages agricultural lands is high, given Australia’s already significant success in developing and funding programs to restore and manage biodiversity values on working agricultural lands. Examples of such programs include Landcare, Greening Australia, BioBanking New South Wales, ecoMarkets Victoria, and conservation agreements under the EPBC Act. Table 1 and Figure 3 summarize these programs.

Program Description Landcare Community based program focused on engaging private

landowners in environmental education and local environment improvement programs.

Greening Australia Not-for-profit organisation funding conservation efforts on private land.

BioBanking NSW Banking and offset scheme that enables landowners to generate tradeable biodiversity credits from enhancing biodiversity values on their land. Competitive tendering by private landowners for funds for environmental improvement actions.

ecoMarkets Voluntary but legally binding agreements between landowners and the Commonwealth providing for actions benefiting biodiversity.

EPBC Act Conservation Agreements

Community based program focused on engaging private landowners in environmental education and local environment improvement programs.

Table 1: Examples of Australian programs promoting the management of land for environmental gain.


Landcare

Landcare is a community-based program focusing on farming improvement and biodiversity protection.25 It started in the mid-1980s as a joint initiative between the Victorian government and the Victorian Farmers Federation.26 There are now over 6000 Landcare groups operating in Australia, and the model has been applied in over twenty countries around the world.27

Farmers may participate in Landcare on a formal or informal basis. 28 Landcare groups typically consist of thirty to fifty farmer volunteers who are led by a locally elected leader. Landcare activities include planting native plants and soil conservation, mitigating salinization and forest destruction, and addressing biodiversity reduction and pest issues. Groups also meet to discuss and learn best practice agricultural techniques.29 This education program grew out of awareness that many environmental impacts on agricultural land are caused by lack of knowledge or understanding, limited finances, attitude towards risk, or skills deficiencies.30

The Australian Bureau of Agricultural and Resource Economics (ABARE) conducts surveys to test the effectiveness of Landcare in changing farmer behaviour. These surveys indicate that 40 percent of farms in the pastoral zone preserve or enhance areas of conservation value on their properties. Additionally Landcare members practice formal monitoring of pasture and vegetation conditions almost three times more frequently than non-members.31

Landcare has conducted a number of case studies of its initiatives.32 One such study analysed a program in the Dumaresq Valley, in Queensland. The outcomes of the local program included environmental gains, such as

25. LANDCARE AUSTRALIA, AUSTRALIAN FRAMEWORK FOR LANDCARE, 1 (2010), http://www.agriculture.gov.au/SiteCollectionDocuments/natural-resources/land-salinity/framework/framework-for-landcare.pdf. 26. Rob Youl et al., Landcare in Australia: Founded on Local Action, 5 (2006), http://www.agriculture.gov.au/SiteCollectionDocuments/natural-resources/landcare/communiques/landcare_in_australiaJune08.pdf. 27. LANDCARE AUSTRALIA, What is Landcare?, http://www.landcareonline.com.au/?page_id=26 (last visited Apr. 11, 2015). 28. Youl et al, supra note 26, at 13. 29. Geoff Wilson, The Australian Landcare Movement: Towards ‘Post-productivist’ Rural Governance? 20 J. RURAL STUD. 461, 464 (2004). 30. ORG. FOR ECON. COOPERATION & DEV., PROVIDING AGRI-ENVIRONMENTAL PUBLIC GOODS

THROUGH COLLECTIVE ACTION (2013), available at http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=COM/TAD/CA/ENV/EPOC(2012)11/FINAL&docLanguage=En. 31. Fiona Alexander et al., LANDCARE AND FARM FORESTRY: PROVIDING A BASIS FOR BETTER

RESOURCE MANAGEMENT ON AUSTRALIAN FARMS, 3, 20 (2000), http://apps.daff.gov.au/lrm/landcare.pdf. 32. See Case Studies, LANDCARE AUSTRALIA http://www.landcareonline.com.au/case-studies/ (last visited Oct. 1, 2015).


protecting remnant vegetation and wildlife, as well as productivity gains—for instance, better equipping farmers to manage drought conditions.33

While the Landcare movement has been characterized as mostly community and volunteer driven,34 it actually relies heavily on government funding. The current National Landcare Program will receive approximately USD $800 million delivered over the next four years through fifty-six natural resource management organizations, and from the Australian government.35 Landcare also receives funding from other sources, including not-for-profit organizations and companies. Companies involved in Landcare projects cite motivating reasons like corporate social responsibility, an ability to connect with Landcare groups and landowners relevant to their businesses, as well as the desire to enable employees to participate in Landcare group projects.36

Critics have questioned the effectiveness of programs such as Landcare. They argue that while those programs increase community awareness of land management and environmental issues, they are not cost-effective. In addition, those programs may not “lead to broad scale long term landscape outcomes.”37

Greening Australia

The not-for-profit organization Greening Australia has developed a number of programs seeking innovative solutions to conserve agricultural lands. One such project is the “Whole of Paddock Rehabilitation Scheme,” which rests paddocks from grazing while they are regenerated. Once trees have matured, stock can then be introduced. The organization makes stewardship payments to farmers to compensate for some loss of production during the regeneration period. In some cases, the regeneration period has resulted in significant agricultural productivity gains.38

BioBanking New South Wales

BioBanking is a government-led scheme that allows private landowners to gain income from biodiversity enhancement by generating tradeable, biodiversity credits on land secured for conservation purposes in perpetuity. As

33. Inglewood and Texas Landcare Association Dumaresq Valley Sub-Catchment Plan, LANDCARE AUSTRALIA, http://inglewoodtexaslandcare.webs.com/casestudies.htm (last visited Sept. 23, 2015). 34. Youl et al., supra note 26, at 4-5. 35. National Landcare Programme, AUSTRALIAN GOV’T, http://www.nrm.gov.au/national-landcare-programme (last visited Sept. 5, 2015). 36. Wilson, supra note 29; Corporate Partners, LANDCARE AUSTRALIA, http://www.landcareonline.com.au/corporate-partners (last visited May 7, 2015); The Benefits of a Partnership with Landcare Australia Limited, LANDCARE AUSTRALIA, http://www.landcareonline.com.au/?page_id=30 (last visited May 7, 2015). 37. Gary Stoneham et al., Auctions for Conservation Contracts: An Empirical Examination of Victoria’s BushTender Trial, 47 AUSTRALIAN J. AGRIC. & RESOURCE ECON. 477, 480 (2003). 38. Whole of Paddock Rehabilitation, GREENING AUSTRALIA, http://www.greeningaustralia.org.au/project/whole-of-paddock-rehabilitation (last visited Apr. 30, 2015).


of 2012, almost 5000 hectares of native vegetation had been protected under the BioBanking Program. A 2014 statutory review of the program found that its strengths included “a standardised [sic], consistent, scientific approach to measuring biodiversity impacts at development sites and biodiversity gains at offset sites”.39

ecoMarkets Victoria

The ecoMarkets program, in Victoria, is another government-led approach to enhancing biodiversity values on private land.40 One program within ecoMarkets—ecoTender—allows competitive bidding by landholders for agreements with the Victorian government. Landowners must then agree to undertake specified conservation actions.41

Behind ecoMarkets is software called Environmental Systems Modeling Framework (“EnSym”), which estimates the impact of actions in the landscape to a dollar value.42 EnSym provides a means for quantifying the environmental benefits delivered through on-ground conservation and re-vegetation efforts. A key part of this is the Site Assessment Tool, which is “designed to ensure the consistent and objective calculation of the change in environmental service expected as a result of management actions (like weeding and re-vegetation) across a landscape.”43 Users employ hand-held field computers to undertake field assessments at a given site. Those computers then model the change in environmental service as a result of management actions, and score the overall change in an “Environmental Benefits Index.”44

The Victorian Department of Sustainability and Environment has conducted a number of case studies of the operation of ecoMarkets.45 One farmer participating in ecoMarkets reported that the funding he received to enhance environmental values on his property also improved his agricultural

39. BioBanking, NSW OFFICE ENV’T & HERITAGE, http://www.environment.nsw.gov.au/biobanking/ (last visited May 7, 2015); NSW OFFICE ENV’T &

HERITAGE, BIOBANKING SCHEME: STATUTORY REVIEW REPORT, 5 (2014), http://www.environment.nsw.gov.au/resources/biobanking/140695BBRev.pdf. 40. Previously called BushBroker and BushTender. See BushTender, ST. GOV’T VICTORIA, http://www.depi.vic.gov.au/environment-and-wildlife/environmental-action/innovative-market-approaches/bushtender (last visited Sept 30, 2015); Bushbroker, ST. GOV’T VICTORIA, http://www.depi.vic.gov.au/environment-and-wildlife/biodiversity/native-vegetation/native-vegetation-permitted-clearing-regulations/native-vegetation-offsets/bushbroker (last visited Sept. 30, 2015). 41. How ecoMarkets work, ST. GOV’T VICTORIA, http://www.depi.vic.gov.au/environment-and-wildlife/environmental-action/innovative-market-approaches/ecomarkets/how-ecomarkets-work (last visited Sept. 30, 2015). 42. The Science Behind ecoMarkets, ST. GOV’T VICTORIA, http://www.depi.vic.gov.au/environment-and-wildlife/environmental-action/innovative-market-approaches/ecomarkets/the-science-behind-ecomarkets (last visited Sept. 5, 2015). 43. Id. 44. Id. 45. See How ecoMarkets work, supra note 41.


productivity. He noted that—as a result of the program—the processes he put into place will, “help us to advance the whole cell grazing system.”46

EPBC Act conservation agreements

EPBC Act conservation agreements are voluntary, legally binding agreements between landowners and the Commonwealth Minister for the Environment. They aim to encourage actions that deliver a net benefit to biodiversity, sometimes in return for financial and technical assistance.47 Conservation agreements are a flexible tool and demonstrate the Commonwealth’s experience in engaging directly with landholders to obtain a conservation gain for EPBC Act—protected matters on private land.

Using working agricultural lands as offsets: An example from the United States

While the Australian programs discussed in Part II involve the management of private land for environmental gain, they do not address the concept of using working agricultural lands as environmental offsets. The Central Valley Habitat Exchange (CVHE), in California’s Central Valley, provides an example of that concept.48

The Central Valley significantly contributes to California’s status as the United States’ most productive agricultural state—the state’s agricultural industry is worth approximately USD $35 billion.49 Figure 4 shows the area covered by CVHE.

46. VICTORIA DEP’T OF SUSTAINABILITY AND ENV’T, ECOMARKETS CASE STUDY: WEST

GIPPSLAND ECOTENDER (2011), http://tinyurl.com/westgippslandcasestudy. 47. Environmental Protection and Biodiversity Conservation Act 1999 (Cth) ch 5 pt 14 (Austl.). 48. See Central Valley Habitat Exchange, https://www.enviroaccounting.com/cvhe/Program/Home (last visited May 7, 2015) (providing an overview of the program). 49. U.S. ENVTL. PROTECTION AGENCY, State Agricultural Profiles, http://www.epa.gov/region9/ag/ag-state.html (last visited May 7, 2015).


CVHE is a working group that comprises a number of government and

non-governmental entities.50 The objective of CVHE is to enable farmers to generate income from improving the habitat value of their land. The program was triggered by stakeholders’ observations that mitigation requirements in the

50. Overview Slides , CENTRAL VALLEY HABITAT EXCHANGE, https://www.enviroaccounting.com/cvhe/FileResource/GetFileResourceForProgram/039900c5-f935-4a4b-bd44-9cdcd70f0ce9, Slide 3 (last visited Oct. 8, 2015).


state vastly exceed the amount of available land. CVHE has estimated that more than 1.4 million acres (approximately 566,000 hectares) are required under law to be protected or restored under current or proposed plans. A key issue identified in satisfying these mitigation obligations is the lack of involvement by private landowners in mitigation efforts.51

CVHE aims to empower private landowners through quantifying management actions taken with respect to their land and then allowing these gains to be traded as credits, with developers seeking offsets. Essential elements of CVHE include a habitat quantification tool that enables habitat quality measurement and is scored across “impact” and “offset” sites. The measure used is a “functional acre” of habitat, meaning that it treats one acre of very good habitat as a “functional acre,” and lower quality habitat as proportionately less. For example, one acre of low quality habitat may only equal 0.2 of a functional acre.52 CVHE also includes a credit exchange that enables farmers to generate credits through improving the habitat score of their land. Developers causing a proportional impact to the habitat value of other land may purchase credits from farmers.53

CVHE is currently developing these tools and programs for several vulnerable species, including the Chinook salmon, Swainson’s hawk, and the Riparian songbird.54 Figure 5 shows that CVHE has developed initial habitat suitability ratings for the Swainson’s hawk based on different agricultural land cover types.

51. Id. 52. Factsheet, CENTRAL VALLEY HABITAT EXCHANGE, https://www.enviroaccounting.com/cvhe/FileResource/GetFileResourceForProgram/2e420eb9-3d30-40c0-9ab0-f597471969b0 (last visited Oct. 8, 2015). 53. About, CENTRAL VALLEY HABITAT EXCHANGE, https://www.enviroaccounting.com/cvhe/Program/Display/About (last visited May 7, 2015). The author obtained further information about CVHE from personal discussions with Nat Seavy, Research Director at Point Blue and member of the CVHE Technical Advisory Committee. 54. Central Valley Habitat Exchange, ENVIRONMENTAL DEFENSE FUND, https://www.edf.org/ecosystems/central-valley-habitat-exchange (last visited Oct. 9, 2015).


With respect to preserving habitat for the Swainson hawk, Farmers can

increase their habitat score by undertaking management actions that are known to enhance prey accessibility and prey availability for the hawk.55 That includes managing agricultural practices such as flood irrigation, grazing, mowing, harvesting, and rodenticide application in order to maximize habitat value. The management actions prescribed by CVHE is a result of research suggesting that farming management actions can substantially increase habitat suitability for Swainson’s hawk. Figure 6 shows the extent to which management practices increase habitat scores, and therefore the value of tradeable credits, under CVHE.

55. Brian Woodbridge, Swainson’s Hawk (Buteo swainsoni), in THE RIPARIAN BIRD

CONSERVATION PLAN: A STRATEGY FOR REVERSING THE DECLINE OF RIPARIAN-ASSOCIATED BIRDS IN

CALIFORNIA. California Partners in Flight (1998), available at http://www.prbo.org/calpif/htmldocs/riparian_v-2.html (last visited Oct. 9 2015).


An example of the type of joint production envisaged by the Central Valley Habitat exchange is a project being implemented at a rice farm owned by Knaggs Ranch LLC in the Yolo Bypass—near Sacramento, California. This pilot project is designed to determine which agricultural practices maximize benefits to salmon.56 The project involves intentionally flooding participating rice farms, sometimes during winter and outside the normal flooding seasons for rice, in order to intentionally cater to the habitat requirements of Delta salmon. The Knaggs Ranch project has reported dramatic increases in the size and viability of juvenile salmon without a reduction in agricultural productivity. Figure 7 illustrates the unprecedented growth rates of these salmon.57

56. The Nigiri Concept: Salmon Habitat on Rice Fields, CALIFORNIA TROUT, http://tinyurl.com/caltroutnigiri (last visited May 29, 2015). The author also obtained further information about the project from a tour of the farm on March 6, 2015. 57. Id.


CVHE is using projects such as Knaggs Ranch to help develop its habitat quantification tool.58 It is also currently meeting with landowners, cities, and agencies to see how its program will fit in with land use management regulations throughout the Central Valley, and to determine the requirements under various land use planning documents and environmental statues.

Although CVHE has not yet commenced its credit exchange, CVHE provides an example of government and non-governmental agencies recognizing the potential value of working agricultural lands for offsets. It also shows the types of tools that are necessary to implement such a scheme.

Bridging the gap: Linking experience in managing working agricultural lands to the offsets regime under the EPBC Act

To date, Australian initiatives to improve the environmental value of working agricultural lands have not significantly extended into the field of environmental offsets.59

58. Ann Hayden, How a California rice farmer uses the market to protect wildlife - and boost profits, ENVIRONMENTAL DEFENSE FUND (2015), available at https://www.edf.org/blog/2015/03/10/how-california-rice-farmer-uses-market-protect-wildlife-and-boost-profits (last visited Oct. 9 2015). 59. ABARE has suggested the possibility of achieving net environmental gain in a single farm setting, through clearing areas of land for intensive crop cultivation while offsetting other areas of the farm. See Thilak Mallawaarachchi & Stephanie Szakiel, ECONOMIC ISSUES IN MANAGING NATIVE

VEGETATION ON FARM LAND 25, 41(2007), http://www.sustainablespace.info/resources/landclearing.pdf. Other have proposed the use of agricultural landscape as offset areas. See David Goldney, Environmental Offsets, in REDUCING THE

IMPACTS OF DEVELOPMENT ON WILDLIFE 191, 193-94 ((James Gleeson & Deborah Gleeson eds., 2012).


The following Parts discuss three issues: (1) the legislative and policy framework governing offsets under the EPBC Act; (2) the potential benefits to offsets; and (3) the potential legal and practical barriers to implementing offsets on working agricultural land. Table 2 summarizes the benefits of and barriers to offsets.

Using Working Agricultural Lands for Offsets

Benefits • Enhance the biodiversity values of working agricultural lands. • Achieve long-term environmental gains. • Give farmers financial incentives to manage their land better. • Improve knowledge about sustainable land management. • Increase the amount of land available for environmental offsets.

Barriers

• Not directly supported by the EPBC Act offsets policy. • Would require changes to some underlying assumptions about what

offsets should look like (eg. introduction of dynamic permanent offsets).

• May be resisted by those who view conservation estate as better. • Incomplete scientific knowledge about how to manage working

agricultural lands for specific protected matters. Table 2: Benefits and barriers to using working agricultural lands for offsets under the EPBC Act.

The legislative and policy framework under the EPBC Act

The EPBC Act does not specifically address offsets, but it does give the Minister for the Environment the power to impose conditions on approvals.60 This conditioning power has often been used by the Minister to impose offsets.61 There is nothing in the EPBC Act that prevents the Minister from imposing offset conditions that allow offsets to be delivered on working agricultural lands.

In practice, the Department of Environment determines the content of offset conditions under the EPBC Act offsets policy.62 Methods used to determine suitable offsets are outlined in the offsets policy, shown in Figure 8.

60. Environmental Protection and Biodiversity Conservation Act 1999 (Cth) s 134 (Austl.). 61. See, e.g., the numerous approvals containing offset conditions issued by the Minister for Environment which may be viewed at http://www.environment.gov.au/node/18569 and searching EPBC Act approvals for “offset conditions,” DEPT. OF SUSTAINABILITY, ENV’T, WATER, POPULATION, &

COMMUNITIES, supra note 9. 62. DEPT. OF SUSTAINABILITY, ENV’T, WATER, POPULATION, & COMMUNITIES, supra note 9.


The EPBC Act offsets policy does not directly contemplate providing

offsets on working agricultural lands. Even still, it general supports that concept. The offsets policy is flexible in how a proponent can deliver an offset, as long as the proponent satisfies the Minister that the offset adequately and effectively compensates for the impacts of the proposed development on a protected matter. The offsets policy also encourages offsets that deliver social and economic benefits.63 These include offsets that enable rural landowners to diversify their income for the management of biodiversity. The offsets policy permits proponents to give funding directly to farmers for conservation activities.64

Benefits of using working agricultural lands

Using working agricultural lands for offsets should increase the supply of land available that satisfies offset obligations under the EPBC Act. It should also increase financial incentives for better land management. The lack of financial incentive is a key issue currently preventing further investment in biodiversity actions on agricultural lands.65 In fact, surveys indicate that most

63. Id. at 8. 64. Id. at 9. 65. Attwood et al., supra note 17, at 1985.


farmers have a strong environmental stewardship ethic. Those surveys also suggest that barriers to the adoption of better agricultural practices—like Landcare—are caused by concerns about resource availability and economic risk, rather than farmers’ lack of desire to address environmental issues.66

Australian environmental programs discussed in earlier Parts have all relied on external funding, whether from government, not-for-profits, or corporations. ABARE has noted that, “unlike farm products . . . sold in the marketplace, most environmental goods arising from farm land do not have a market price and land owners are not able to recover payment for their efforts that result in public good environmental benefits.”67 As a consequence, “farmers will generally conserve native vegetation on their property to the extent that it delivers private benefits . . . but have little incentive to conserve vegetation beyond that level.”68 Moreover, ABARE summarized the economic issue of “joint production” between agriculture and ecosystem services in the following terms:

[W]hile agricultural goods and environmental outcomes may be jointly produced, in some situations certain environmental outcomes are complementary while in others they are competitive. In the absence of incentives encouraging environmental protection, however, the level of agricultural production is the main determinant of the level of environmental outcomes that is achieved, whether these environmental outcomes enhance (complementary in production) or reduce (competitive in production) agricultural production.69

The offsets policy notes the potential for rural landholders to gain income from offsets: “rural landholders may wish to diversify their income streams by investing in conservation activities that benefit specific threatened species with a view to providing these as offsets.”70 The offsets policy also encourages the use of market-based mechanisms to deliver offsets, indicating support for flexible ways of financially incentivizing offsets: “use of market-based mechanisms for delivering offsets is supported as a means of determining the conservation value of both the proposed action site and the proposed offset, where such mechanisms are based on reproducible and scientifically robust information.”71

Further, some studies have indicated that managing land for biodiversity can also increase agricultural productivity. So, in some cases, farmers may receive a double economic benefit. ABARE prepared a report on vegetation management in South Australian agricultural lands, concluding that “non-broad

66. Allan Curtis & Terry De Lacy, Landcare in Australia: Does it make a difference?, 46 J. OF

ENVTL. MGMT. 119, 135-6 (1996). 67. Mallawaarachchi, supra note 59, at 5. 68. Id. 69. Id. at 36. 70. DEPT. OF SUSTAINABILITY, ENV’T, WATER, POPULATION, & COMMUNITIES, supra note 9, at 26. 71. Id.


scale native vegetation management offers net benefits to landholders, with operational costs being offset by increased productivity, increased asset value and improved aesthetics . . . some of these benefits also accrue to the wider community as complementary benefits of sustainable farm production.”72

Another benefit of using working agricultural lands for offsets is the long-term nature of the environmental gains. Unlike other environmental programs reliant on government funding which may be exhausted, or subject to changing priorities, land management is required to be long-term if it is tied to an offset condition in an EPBC Act approval.73

Use of working agricultural land for offsets may have other indirect benefits. Offset agreements between farmers and proponents allow an opportunity for groups whose interests are often in conflict to work together. Presently, when proponents require offsets, they must generally acquire land either through purchase or some other long-term tenure arrangement, and take it out of agricultural production.

This approach of “locking land away” offers little opportunity for a proponent to increase their community involvement, as the land is taken out of active management by the original landowner. Instead, using working agricultural land for offsets offers the potential for offset-users to interact with a given community and to build relationships, as they will need to have ongoing relationships with the landowners who are providing their offsets contemporaneously with using the land for agricultural purposes. This mutual and ongoing dependence may improve relationships between community groups and industry sectors.

Additionally, using working agricultural lands as offsets may also be a tool for education. Researchers have observed that there are major gaps between the understanding of ecological processes of Australian landscapes held by land and water managers, and that land managers are much more likely than scientists familiar with biodiversity issues to believe that current land management practices are sustainable.74 Participation in an offset regime might serve to better educate land managers on the current science of land management.

It follows also that land management techniques will improve as more land managers expand their experience with environmental protection efforts. Lessons learned in implementing offsets on working agricultural lands could be applied to the management of agricultural land more generally.

Barriers to using working agricultural lands

This section discusses legal and practical barriers to using working agricultural lands for offsets.

72. Mallawaarachchi, supra note 59, at 43. 73. DEPT. OF SUSTAINABILITY, ENV’T, WATER, POPULATION, & COMMUNITIES, supra note 9, at 7, 18. 74. Robertson & Roshier, supra note 23, at 4-6.


Legal barriers to implementation

The EPBC Act offsets policy does not prohibit offsets from being provided on working agricultural lands. However, it contains a number of provisions that could act as barriers to using working agricultural lands for this purpose.

For instance, the offsets policy requires “like for like” habitat replacement: any direct offset must meet, as a minimum, the quality of the habitat at the impact site for impacts on habitat for threatened species, migratory species and threatened ecological communities.75 Where a proposed offset site has a lower habitat quality than that of the impact site, the offset must be managed and resourced over a defined period of time so that its habitat quality is improved to meet the quality of habitat originally impacted.76

This provision requires the offset area to have the same habitat quality as the area impacted. That condition limits the use of working agricultural lands for offsets. For example, it prevents the use of working agricultural lands to offset impacts occurring on land that has higher biodiversity values than the working agricultural land, even where actions to enhance biodiversity on that land have already been implemented. Policy makers should be tasked with deciding whether a greater area of lower quality habitat is an adequate substitute for “like for like” habitat. This is possible under CVHE’s concept of “functional acre.”77

The offsets policy requires offsets to have the same duration as the impact, and to provide a result that would not otherwise be expected to occur if the status quo continued. Specifically the securing of unprotected habitat is only recognised as a valid offset if that habitat was under some level of threat of being destroyed or degraded, and as a result of offsetting, will instead be protected in an enduring way that is actively managed to maintain or improve the viability of the protected matter.78 In these cases, the tenure of the offset should be secured for at least the same duration as the impact on the protected matter arising from the action.79

Moreover, “offsets on private lands should be legally secured . . . for at least the duration of the impact [and] the securing scheme should actively monitor for compliance, with covenant requirements enforced.”80 Historically, this has required that the offset be provided continuously on the same land for the life of the offset. However, the dynamic nature of agricultural land use means that greater flexibility would be needed if offsets were to be provided on

75. DEPT. OF SUSTAINABILITY, ENV’T, WATER, POPULATION, & COMMUNITIES, supra note 9, at 16. 76. DEPT. OF SUSTAINABILITY, ENV’T, WATER, POPULATION, & COMMUNITIES, supra note 9, at 17. 77. CENTRAL VALLEY HABITAT EXCHANGE, supra note 52. 78. DEPT. OF SUSTAINABILITY, ENV’T, WATER, POPULATION, & COMMUNITIES, supra note 9, at 18. 79. Id. at 19. 80. Id.


working agricultural lands. For example, offset conditions could require the conservation gain of the offset to be equal to the term of the impact while also permitting the conservation gain to be delivered over different properties using different management actions over time. Therefore, in a manner consistent with species requirements, areas of high habitat may be relocated to a property over time in a way that is complementary to changing agricultural land uses.

Although this paper does not consider state government offset requirements, Australia’s federalism also presents a potential barrier to using agricultural lands for offsets. Many, if not most, projects that trigger an offset requirement under the EPBC Act will also trigger offset requirements under state legislation or policies. In some cases, the resulting state and Commonwealth approvals for offsets in both jurisdictions may be provided through a single offsets package. But if the state laws do not allow offsets on working agricultural lands, then they too may act as a barrier to the EPBC Act offset.

Practical barriers to implementation

There are three practical issues that must be resolved before working agricultural lands can be used as offsets.

First, while economic agricultural land uses can be maintained while managing land for environmental gain, the relationship between land management actions and specific protected matters under the EPBC Act requires further study.81 For example, it is unclear which threatened fauna species have habitat requirements that are consistent with agricultural uses. Additionally, researchers should try to discern the extent to which specific management actions can improve habitat quality.82

Australia should model its research on that done by CVHE in California. More specifically, Australian officials should try to quantify the extent to which management actions can improve habitat quality on working agricultural lands, as shown in Figure 6. This is a challenging task, because each management action needs to be related to the requirements of individual protected matters under the EPBC Act, not just some general indicia of biodiversity.83

81. Prober & Smith, supra note 3, at 182; See Virah-Sawmy et al., supra note 18 (noting the complexity of environmental offsets and the difficulties of obtaining scientific certainty that any offsets will address risk, effectiveness and permanence of biodiversity gains). 82. See, e.g., Attwood et al., supra note 17 (providing a number of examples of how management actions on agricultural lands could support Australian bird species); Prober & Smith, supra note 3, at 178 (noting that the effects of management actions such as habitat corridors are highly species-specific); Virah-Sawmy et al., supra note 18 (discussing mechanisms such as “habitat hectares” and “biodiversity conversion factors” as means of quantifying the precise extent of biodiversity losses and gains); Maron et al., supra note 22, at 145-46 (discussing the need for species-specific work into establishing equivalence between habitat quality and quantity at impact and offset sites). 83. Refer to the level of improvement or level of averted loss delivered by the offset for the attribute being impacted, as shown under the label “Offset Package” in Figure 8; DEPT. OF

SUSTAINABILITY, ENV’T, WATER, POPULATION, & COMMUNITIES, supra note 9, at 8, (“Offsets should


Programs such as BioBanking in New South Wales, Victoria’s ecoMarkets, and CVHE’s Habitat Quantification Tool show that it is possible to develop processes that quantify environmental benefits delivered through specific management actions, and to provide a standardized and comparable score of biodiversity enhancement.

Second, using working agricultural lands for offsets is likely to require a creative approach to packaging various offset attributes into an overall offset package. Many offsets may consist of packaging management actions and biodiversity outcomes across multiple properties into a single offset.84 This is not explicitly contemplated by the current offsets policy and would require flexibility from the Department. For example, attributes like the period during which loss is averted, the time between impact and when a conservation gain is delivered, the risk of loss might need to be averaged or otherwise moderated across multiple “mini” offsets in order to achieve the desired outcome for the overall offset.85 There are numerous strategies that have been developed in the offsets field to facilitate offset transactions, including using brokers, offset aggregators, and banks, and many of these tools may also be helpful to packaging offsets on working agricultural lands.86 Packaging offsets can also spread the risk of offsets failing, and therefore satisfy relevant Offset Policy requirements for confidence in the ultimate positive net result of the offset (see Figure 8 under heading “Offset Package”).

Third, a persistent issue with environmental offsets has been the high transaction costs associated with their delivery—for instance, the need to pay ecologists, estate agents, and lawyers to implement a project.87 Programs such as NSW Biobanking and Victoria’s ecoMarkets have developed various strategies to reduce transaction costs. However, this is a critical part of the design of any program aimed at working agricultural lands, and it must be the subject of further study.

align with conservation priorities for the impacted protected matter and be tailored specifically to the attribute of the protected matter that is impacted. . .”). 84. See, e.g., the offsets package proposed for the New Hope Acland Coal Mine Stage 3 Project, involving offsets for multiple protected matters proposed to be delivered as part of a package over several properties. NEW HOPE GROUP, BIODIVERSITY OFFSET STRATEGY: NEW ACLAND COAL MINE

STAGE 3 PROJECT (2014), http://www.aclandproject.com.au/files/files/stage-3-eis-2014/Appendix%20I%20Offset%20Strategy%20-%20State%20and%20Federal.pdf. 85. These all being examples of relevant factors in determining an offset. DEPT. OF ENV’T, HOW

TO USE THE OFFSETS ASSESSMENT GUIDE, http://www.environment.gov.au/system/files/resources/12630bb4-2c10-4c8e-815f-2d7862bf87e7/files/offsets-how-use.pdf (last visited Sept. 16, 2015). 86. See Anthea Coggan et al., Intermediaries in Environmental Offset Markets: Actions and Incentives, 32 LAND USE POL’Y 145, 147 (2013) (reviewing possible tools available). 87. See Anthea Coggan et al., Factors that Influence Transaction Costs in Development Offsets: Who Bears What and Why? 88 ECOLOGICAL ECON. 222 (2013).


CONCLUSION

Environmental offsets that allow actions on private land should be part of the solution for enhancing biodiversity in Australia. The legislative and policy framework under the EPBC Act is sufficiently flexible for this to occur. The primary barriers to implementing offsets on working agricultural lands are non-legal. In particular, there is a need for targeted research into the relationship between management actions on agricultural land and benefits to specific protected matters under the EPBC Act. This research could be done either by the Commonwealth, to help give proponents additional options in preparing offset proposals, or by project proponents themselves. This research will greatly benefit from the work already done on quantifying the environmental benefits of management actions undertaken by programs such as ecoMarkets and CVHE.