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Should offsets fund the Coalition’s reef plan?

On Monday, the Coalition announced its plan for the Great Barrier Reef, including a A$40m trust-fund to target threats to the Reef such as Crown of Thorns starfish and runoff from agriculture. The promises…

Crown of Thorns is one threat on the reef, but it’s not the only threat. Flickr/Nemo's great uncle

On Monday, the Coalition announced its plan for the Great Barrier Reef, including a A$40m trust-fund to target threats to the Reef such as Crown of Thorns starfish and runoff from agriculture.

The promises will be funded partially from offset money, generated through the environmental approval process for projects that could adversely affect the reef in various ways. While we don’t know exactly how much offsets will contribute to the fund, current approval decisions by the Federal environment department already require A$185m in marine offsets from development projects. If the Coalition plan will rely on a fund of similar magnitude, they need to take offset design very seriously.

Offsets are a way to channel private funds into reef conservation. Shadow environment minister Greg Hunt is certainly right in saying that, to effectively manage the reef, we need a more strategic approach to investing private money. The reef might have world-leading zoning – demarcated areas, showing which activities can take place in each location – but current offset investment schemes are far behind world’s best practice.

So, let’s have a look at how offsets might work for the Great Barrier Reef, and how we can learn from mistakes elsewhere.

Offsets are activities that compensate for damage approved by the environmental assessment process, supposedly ensuring no net (environmental) loss. They are a promising mechanism for halting and reversing the downward trend in reef health. Offsets are required under the EPBC Act and associated Biodiversity Offsets Policy.

But there are many risks associated with offsets. They should carry the label: open with caution.

One risk is financial capture. Government agencies might allow developments that would otherwise be unacceptable because of the cash flow. Bimblebox Nature Refuge in Queensland is an example, where critics argue coal-mining has been allowed in exchange for A$3 billion from offsets.

The Coalition is proposing that the trust is managed by Queensland with consultation from the Great Barrier Reef Marine Park Authority. Queensland has a troubling track record for environmental management of nationally (and internationally) important matters.

Even if this record improves, the risk remains that government decisions to approve developments will be influenced by the cash flow. Most other countries use third parties, rather than government, to both avoid this risk and to tap into expert capacity. Third parties can be important even to avoid the perception of capture, and consequent undermining of credibility.

Australia should choose to learn from decades of hard-earned offset lessons overseas. At least 29 countries have offset policies and an international collaborative group called the Business and Biodiversity Offset Program has developed best-practice guidelines. In brief, the best approach to designing effective offsets is to pool the money, and invest it strategically through a third party (not the developer or the government).

Another risk related to offsets is that companies can be asked to pay arbitrary amounts of money, pooled into a trust, that is later invested into activities not connected to the damage caused by their development. This becomes a pay-to-damage scheme, where the impact is not mitigated by the investment.

Under the EPBC Act, offsets must compensate for specific damage. For example, offset funds from a port development that reduces turtles’ food sources (seagrass beds) must be used to improve the survival of turtles through promoting the growth of seagrasses. It cannot be used to eradicate Crown of Thorns Starfish, as proposed in the Coalition’s plan.

Importantly, we know that the threat to the reef from Crown of Thorns starfish is a symptom. The cause is declining water quality from catchment runoff. If a medical doctor treated only the symptoms of illness, not the cause, most patients would not heal. If we treat the symptoms of reef decline only superficially, the reef will certainly maintain its downward trajectory.

While the current A$185 million for marine offsets is a lot of money, this total could and arguably should be much more. This is not just because it costs money to offset damages properly, but because many of those negatively impacted by environmental damages may not benefit much from the development.

Currently, the Federal environment department does not use a consistent or transparent method to calculate how much money a proponent must pay for offsets. It appears that a loose precedent is used instead of a more explicit, defensible method.

The Australian Government expects that offsets will produce a net positive benefit to the environment; given the large damages allowed, this is costly to achieve. To give us a fighting chance at producing net positive outcomes for the reef, and to move away from the perception that offsets are just pay-to-pollute, the amount of money required from developers should be transparently calculated based on the actual costs to achieve offset benefits.

The Great Barrier Reef is at a critical juncture and the underfunding of management and protection could contribute to irreversible declines. Offsets cannot replace government investment, as is suggested by the Coalition plan.

Offsets are one mechanism for the development industry to contribute, but they must be used in combination with government investment, in the right places in the right ways, and with government restraint on developments that adversely affect the reef.

Join the conversation

12 Comments sorted by

  1. Michael Shand

    Software Tester

    I think you nailed it with the Treating symptoms line

    They want the development to go ahead and they would like to have an excuse when it all goes bad and the reef keeps dying.

    ie. we invested $X Million to save the reef, the single biggest investment from any government, this is our track record and we want to continue protecting the reef but it can't come at the cost of jobs which is why we are allowing new development....and the cycle continues

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  2. John Newlands

    tree changer

    There is a danger of perverse effects with offsets. The Clean Development Mechanism used to justify carbon credits in the EU requires the activity to be merely less-worse than some presumed entitlement. The idea is to 'help' a developing country. Example
    http://thinkprogress.org/climate/2012/09/19/865471/in-the-crazy-world-of-carbon-finance-coal-now-qualifies-for-emission-reduction-credits/
    A pre-existing stream of pollution in the EU is now exonerated while a new form of pollution begins in a…

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  3. David Arthur

    resistance gnome

    The cause of much avoidable damage - runoff water quality - has been well-known for some time, so why this continued focus on symptoms?

    Perhaps all this offset money should be put to restoration and revegetation of riparian zones.

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    1. Jon Brodie

      Research scientist

      In reply to David Arthur

      Unfortunately riparian areas in our catchments do not trap much in the way of pollutant runoff given short residence times of the water. The real mechanism to reduce pollutant runoff from farms and urban areas involves on-site controls e.g. strict fertiliser application calculations, erosion controls, spot spraying of pesticides not general spraying. All these cost money to implement and we don't have that much funding given the immense value of the Great Barrier reef. However we are making some progress under the Reef Plan process albeit slowly.

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    2. David Arthur

      resistance gnome

      In reply to Jon Brodie

      Thanks for that correction, Mr Brodie.

      I'd previously thought that well-developed riparian vegetation decreased both sediment and soluble chemical ingress to waterways - here, you point out that I was mistaken in respect of soluble chemicals.

      Would it be correct to state that well-developed riparian vegetation captures sediment in run-off water, thereby decreasing sediment loads into estuaries and thence the GBR lagoon?

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    3. Jon Brodie

      Research scientist

      In reply to David Arthur

      In north and central Queensland we have high peaky rainfall and big but relatively short floods. Under these circumstances small areas of riparian vegetation normally don't have the residence times to trap much of dissolved or particulate matter. However there are notable exceptions - in the Belyando River (a southern tributary of the Burdekin) which has a wide vegetated flood plain, the very large flood of 2009 spread widely across the flood plain such that the river was almost 50 km across and…

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  4. Lee Emmett

    Guest House Manager

    I can't see how Tony Abbott's 'cutting red and green tape' approach is ever going to achieve a net positive outcome for the Reef, national parks, or any other delicate environment affected by business development.

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  5. Alice Kelly
    Alice Kelly is a Friend of The Conversation.

    sole parent

    Please excuse my cynicism, every time an election comes around, "the reef" is offered a bandaid. Good as an election winning platform, for telly. Reality is, there's no point if we don't join with 200 other countries to cut carbon pollution in 2015, then cut hard, and urge others to do so too, the reef will dissolve. The issues in the article are important. But won't mean much in a couple of decades time.

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    1. Melissa Bos

      PhD Researcher, Marine Conservation Finance at James Cook University

      In reply to Alice Kelly

      Hi Alice,

      While I agree that climate change can undermine other efforts for reef management, we can't ignore the other threats to the reef and focus exclusively on carbon. There is a very real possibility that the reef could be damaged beyond repair before we get carbon right. To be effective, we have to simultaneously work on threats to the reef at multiple scales.

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  6. Nick Heath

    Great Barrier Reef Coordinator, WWF

    hi there

    Just a clarification - the title is a little misleading

    Not a single cent of the coalition's plan announced monday is yet funded by offsets, according to commitments given to WWF over the last 4 days

    What they have committed to is investing $200m of Commonwealth funds into the next 5 years of Reef rescue which will be rebranded Reef 2050. That will include a Commonwealth investment of $40m into developing and piloting a mechanism which if validated can help funding grow well beyond…

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    1. Melissa Bos

      PhD Researcher, Marine Conservation Finance at James Cook University

      In reply to Nick Heath

      Hi Nick,

      The Coalition has publicly announced "after an initial injection by the Commonwealth, funding will also be derived from pooling of offset funds for significant projects under Federal Law." The media release does not mention any other finance mechanisms, but it is very encouraging to hear that the Coalition is considering other options. Thank you for adding to our larger understanding of the plan.

      There are numerous untapped finance mechanisms that could generate significant funding for the Reef. I agree with you that the combination of the right finance mechanisms, a Trust with good governance, and a strategic investment plan (with community input) is essential for the future of the Reef.

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