‘Biodiversity Credit’ the new currency saving the environment

The Savills Blog

‘Biodiversity Credit’ the new currency saving the environment

The expansion of the Sydney footprint particularly through the last boom cycle has started to threaten some flora and fauna species across the growth regions of New South Wales, in particular the Western Sydney, Illawarra, Southern Highlands, Central Coast and Hunter Regions.

In November 2016, The NSW Government passed new biodiversity legislation known as the ‘Biodiversity Conservation Act 2016’ which repealed the old Threatened Species Conservation Act of 1995. 

Under the former Threatened Species Conservation Act 1995, developers had the choice to opt-in to the former biodiversity credit trading scheme known as ‘BioBanking’. This scheme still applies to the local government areas of Camden, Campbelltown, Fairfield, Hawkesbury, Liverpool, Penrith and Wollondilly. All development applications involving clearing of native vegetation in these council areas have until 24th November 2019 to lodge their applications or they will be forced to reassess their developments under the new Biodiversity Conservation Act 2016. 

All the other council areas across Sydney and the remainder of NSW are subject to the provisions of the new legislation.

Under this new biodiversity legislation, has come a new scheme known as the ‘Biodiversity Offset Scheme’ whereby property developers are required to obtain and retire ‘Biodiversity Offset Credits’ if their development involves clearing of native vegetation in one of the following circumstances:

  1. In certain mapped areas known as the ‘Biodiversity Values Map’ or
  2. If the clearing exceeds certain area thresholds that vary depending on the minimum lot size of the block. 

These developers are then held accountable for the degradation and loss of specific native flora and fauna habitats and species via redevelopment of their sites.

With the increasing clearing of native vegetation for urban development, innovative approaches are needed to tackle the momentous task of balancing development needs whilst also conserving biodiversity for the future.

New scheme provides new opportunities

The introduction of this new biodiversity offset credits trading scheme provides a great opportunity to effectively secure large areas of previously low value land so that they can be protected and rehabilitated into flourishing ecosystems with well-considered ongoing environmental management plans. 

The Government and the public sector are among the largest purchasers of Biodiversity Offset Credits along with mining, renewables, agribusiness companies and large community based and industrial developers such as Stocklands, Frasers, Mirvac, Goodman, Walkers Villaworld, and other large private developers.

Biodiversity Offset Credits have experienced significant increases in value over the last three to four years with the Sydney housing boom and government infrastructure spend as the catalyst for demand.

Future infrastructure such as Sydney’s second airport at Badgery’s Creek and motorway and freeway extensions will see the continued demand for both biodiversity credits, including ecosystem (vegetation) and species credits (credits to offset rare species of fauna or flora).

Developers are embracing the offsets as it enables land earmarked for development to be unlocked whilst at the same time quarantines, protects and rehabilitates historically unusable land in perpetuity.

Since 1 January 2015, $266 million worth of Biodiversity credits have been transferred in NSW. Ecological communities typically found in Greater Western Sydney have always held the highest value from a biodiversity credit perspective, with two broad vegetation communities in particular fetching between $15,000 and $30,000 per Biodiversity Offset Credit. These being Grey Box Woodlands and Forest Red Gum Woodland variants of the shales and riparian landscapes of the Cumberland Plain. With up to 10 credits generated per hectare of bushland, the financial return can be quite significant.

Biodiversity offsets have commonly been used to counterbalance the impact of development on biodiversity, which was originally organised on a case by case basis until now. 

Under the new Biodiversity Conservation Act 2016 offsets will be measurable, consistent, secure, transparent and strategic with a public government register of all Biodiversity Offset Credits available for trade, another public register that identifies current market demand for particular types and volumes of Biodiversity Offset Credits and another register of all established BioBanking and Biodiversity Stewardship Sites.

The majority of offset credit transfers have been concentrated around the Greater Sydney Area, however, with the new legislation there is now significant demand coming from regional locations that are experiencing large infrastructure spends or housing growth. This is because the new legislation forces developers to offset vegetation clearing anywhere it occurs for development. In other words, developers can no longer just ‘opt-in’ to the offset scheme like you could under the old legislation.

The NSW Government has earmarked $87.2 billion dollars for infrastructure projects over the next four years alone.

One of the largest and last remaining NSW BioBanking sites

The Savills Australia Residential Site Sales team is currently marketing one of the largest and last remaining NSW BioBanking sites approved under the old Threatened Species Conservation Act 1995 providing in excess of $27.195 million in Biodiversity Credits, currently registered under two BioBanking Agreements. 

This property is of extreme value, as it contains a very large volume of sought-after Biodiversity Offset credits that can effectively be used to offset developments under both the old and the new Acts.

There are few properties like this one, properties that have proven resources of ‘in-demand’ biodiversity offset credits that can be used to offset developments under both the Threatened Species Conservation Act 1995, and the Biodiversity Conservation Act 2016.

For sale through Stuart Cox, Neil Cooke and Johnathon Broome of Savills Australia, the approximate 207 hectare property at 159 – 283 & 300 Irwins Road, Blaxlands Ridge and 132 Irwins Road, East Kurrajong NSW comprises six individual lots situated within the Kurrajong and Blaxlands Ridge area at the foothills of the Blue Mountains and is for sale with a guide price of $27.195 million.

Located just over an hour from the Sydney CBD, subdivision of the site allows for four separate 8.1 hectare lots, as per the concept schemes and the biodiversity offset credits generated from the BioBank site that spans the remainder of the property can be used within the heavily developed greater Western Sydney region. The site has potential for residential subdivision (Subject to Council Approval) and has accessibility to large employment catchments including North West Priority Growth Area, Parramatta, Penrith and Badgerys Creek.

There is additional value uplift via significant species credit species already identified on the site. This includes sought after offset credits species including the threatened Dural Woodland Snail and Glossy Black Cockatoo. 

The site is currently zoned RU4 – Primary Production Small Lots.

This is a rare and very unique opportunity to secure one of the last remaining BioBanking sites that comprises significant medium to high demand credits and additional species credits listed on the endangered species register. 

Under the new legislation, property owners who have large areas of native bushland greater than one hectare can register a Biodiversity Stewardship Site in order to generate their own Biodiversity Offset Credits. Biodiversity Stewardship Sites are the new version of a BioBank Site. The larger and more sought-after the vegetation patch, the more valuable the Biodiversity Offset Credits can be.

There has been an increase in the number of Biodiversity Stewardship Sites as homeowners and farmers realise the potential of the unused, vegetated portions of their land. Owners are now being proactive in gaining the appropriate steps to forming a Biodiversity Stewardship Site as the potential value increase in their once unusable land is realised, whilst earning real money and conserving the native flora and fauna for future generations.

The Biodiversity Offset Credits values of a given site are identified by Accredited Biodiversity Assessors (specialist Ecologist Consultants) through rigorous, targeted onsite survey of vegetation, flora and fauna followed by complex, standardized calculations in accordance with the NSW Biodiversity Assessment Method. Ecologist assessments are followed by detailed reporting processes as well as vetting and auditing by the NSW Government before a Biodiversity Stewardship Site can be established. The establishment of a Biodiversity Stewardship Site on your property will be subject to intensive selection and auditing, but the process can be very enriching to the value of your property and your life, from an environmental, health, and financial perspective.

159 – 283 & 300 Irwins Road, Blaxlands Ridge and 132 Irwins Road, East Kurrajong NSW is for sale through Savills Australia via Expressions of interest closing 4pm, Thursday, 18 July 2019.

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