Biodiversity offsets in WA

Below is a discussion of the biodiversity offsets policy and its application in WA through the EPA’s assessment of development proposals through Part IV of the Environmental Protection Act 1986 (EP Act). The first part is a history of how we arrived at where we are today with the WA offsetting. The second section is an assessment of that current framework.

You can download a pdf version by clicking on this link.

1. History

1.1 Position Statement on Clearing of Native Vegetation (EPA 2000)

The EPA released this policy in response to concerns about the extent of clearing of native vegetation, especially in the agricultural area, and this is likely to be the first direct reference to offsetting. Whilst the policy established a presumption against clearing in the agricultural area, it would consider approving clearing in special circumstances (notably, small areas) and where the

… proposed land use addresses alternative mechanisms for protecting biodiversity. Opportunities for addressing biodiversity could include rehabilitation of disturbed areas and/or acquisition of areas containing remnant native vegetation. The EPA would like to see an overall environmental benefit as a result of the proposal, such as ensuring protection and management of higher quality remnant native vegetation in the general area (not necessarily on the same property). (p 8,9)

The reference to rehabilitation of disturbed areas and acquisition and protection of land containing remnant native vegetation is, in effect, what we call today a direct offset. The reference to overall environmental benefit could also be seen as requiring either a multiplier in determining the size of the offset or adding indirect offsets.

This idea of “overall environmental benefit” is developed further in subsequent policies.

The policy goes on to make reference to using alternative mechanisms in other areas where the clearing would result in the vegetation ‘type’ (complex) being reduced to below the 30% threshold level.

1.2 Policy Framework for the Establishment of Wetland Banking (EPA 2001)

The EPA released this draft policy in response to the loss of wetland area and values approved through EIA. It noted that wetland banking is

… is a system through which credits are generated for restoration, creation and/or enhancement of wetlands, and in exceptional circumstances, conservation of wetlands and their buffers in advance of authorized wetland impacts. These credits may then be later withdrawn from the bank to compensate for an actual authorized wetland impact.

It supported wetland banking as a way to ensure a successful offset for a wetland loss is achieved. This is, in effect, an advanced offset scheme.

1.3 EPA Bulletin 1101 (EPA 2003)

EPA Bulletin 1101 was EPA’s strategic advice on the then proposed Gorgon LNG project, where the processing facility was proposed to be located on Barrow Island, and A Class Nature Reserve. In section 7 of Part B of the report the EPA advised that the proposal should deliver net conservation benefits (NCBs), which are additional measures beyond what would be expected as part of and EIA to mitigate project impacts. This is a short section, and the notion of what is a NCB was not well developed, but can be seen as the first mention of offsetting and its role in EIA.

NCBs are to be

… in addition to the management, protection, insurance and offset actions that directly relate to the impacts or potential impacts of a proposed development. NCBs are net of the actions needed to deal with impacts and potential impacts, and are actions outside of what is required for good operational practice. (p38)

Interestingly, this report mentions offsets as part of measures that are good operational practice.

In supporting NCB, the EPA noted that Gorgon would lead to environmental losses – “(f)or example, the determination of appropriate NCBs would have to include an evaluation of adequate compensation for the loss of a species.” (p38)

Therefore,

… (b)enefits may be seen as reasonable to the community if they meet all of their costs (including environmental and conservation costs) and then provide an appropriate return to the State. To be seen as reasonable, the benefit must be substantial and readily visible. NCBs need not be simply a dollar amount, but, to be realised, demonstrable, substantial and enduring conservation outcomes may require the input of resources. (p38).

This introduced the idea of indirect offsetting involving providing money and resources as an NCB.

If we take these NCB as offsets, it is not clear when these are to apply. Are they to apply in a general sense where the total environmental effect (sum of impacts) is determined and offsets are to compensate for the total loss and then provide a net environmental benefit? Is it only to apply to significant residual impacts? It seems to suggest the former.

1.4 Benthic Primary Producer Habitat EIA Guidance (EPA 2004)

This policy provided guidance to proponents of proposed developments that could result in the removal or destruction of, or damage to, marine benthic primary producer communities or the habitats which support them. The policy has 6 principles , the 5th one is advised that where

Where substantial cumulative losses of BPPH have already occurred, proponents should consider some form of environmental offset (e.g. artificial reefs, seagrass transplants) for the additional damage/loss of BPPH and/or their associated BPP communities within the management unit. (p 12).

The last principle is

Proposals which, in the judgement of the EPA, pose a substantial risk to ecosystem integrity within a management unit will be presumed to be unacceptable.

The Guidance refers to “cumulative loss threshold”, which is the unacceptable loss criterion – i.e. where there is a “substantial risk to ecosystem integrity.” The Guidance established six categories of marine ecosystem protection and sets cumulative loss thresholds – as shown below (copied form the Guidance).

Category F areas are generally highly degraded and the guidance gives the following advice for the offset where further loss of BPPH is proposed:

The EPA will expect the proponent, who wishes to remove BPPH, to have applied the principles of this Guidance Statement and to have developed an adequate environmental offset package to counterbalance the further damage/loss of BPPH#. Environmental offsets aim to ensure that environmental impacts are counterbalanced by an improvement in environmental condition in another location, with a goal of meeting ‘no net loss’ and preferably achieving a ‘net environmental benefit’. Primary offsets that aim to counterbalance the loss of BPPH may include replacement, using proven mitigation techniques, of habitat and/or the associated communities that would be lost as a result of the development (e.g. the creation of artificial reefs in cases where a natural reef would be lost). In addition, these primary offsets should be located within the management unit and be acceptable to the relevant management body and the EPA. After the proponent has addressed the practicality of primary offsets, the EPA may also consider secondary offsets, such as contribution by the proponent to enhance the management of a degraded area that would preferably result in a net improvement of environmental quality within the management unit. In addition, the proponent would be expected to monitor the effectiveness of any environmental offsets. (p16)

The footnote referred to was:

At the time this Guidance Statement was released, the EPA was preparing a Position Statement on environmental offsets to articulate its position on this matter. In the interim, the EPA will consider environmental offsets on a case-by-case basis.

This is the first mention of ‘no net loss’ which is alongside ‘net environmental benefit’. Noting this is in the marine context where an acquisition offsets is not usually available, the offsets referred to is restoration.

1.5 Draft Environmental Offset Position Statement (EPA 2004)

The policy established two types of offsets:

· Primary – direct counterbalance offset which are restoration related with at least no net loss, but preferably net environmental benefit (NEB). They should also be like for like or better; and

· Secondary – activity that complements primary offset by adding to knowledge, research, management and protection. It also includes purchasing land and providing protection for its environmental values.

The policy required that offsetting be considered at the end of the mitigation hierarchy –

Environmental offsets should only be considered where on-site impact mitigation has been reasonably considered or demonstrated, and where residual adverse impacts are considered significant - but not significant enough to make the project unacceptable.

The notion of positive offset ratios is introduced where the size of the offset is greater than the asset being lost (ratios greater than 1:1). These are to be applied where critical asset are impacted or where there is a risk the offset may not succeed.

The policy introduced a hierarchy of environmental assets. The highest assets are ‘critical assets’, which are the most important environmental assets and are defined in the policy. The EPA advised that “… it is unlikely to approve project proposals that have significant adverse impacts to ‘critical assets’ “ (p10).

Other than so-called ‘special circumstances’, offsetting shouldn’t be used to mitigate the loss of critical assets to attain approval for a project – i.e. impacts on critical assets should be avoided. The policy noted that it is up to the Government to make the decision to approve the loss of critical assets and the use of offsetting to mitigate these losses. Whilst this is not stated in the policy, the reference to ‘government‘ here is because the EPA cannot take into account socio-economic considerations.

The next level are high value assets, which are generally in good to excellent condition and are considered valuable by the community and/or government. The EPA would consider the need for offsets on a case by case basis, although other decision making authorities could also apply offsets.

The final level is low to medium assets, and the EPA would not require offsets for the loss of these assets.

These special circumstances related to the significance of the project to provide a significant or strategic social and/or economic benefits. In these cases, the proponent needs to demonstrate maximum on-site mitigation measures and provide an acceptable offsets package.

The following key principles were to apply:

· Environmental offsets should only be considered after all other attempts to mitigate adverse impacts have been exhausted;

· An environmental offset package should address both primary offsets and secondary offsets;

· Environmental offset and impacts should ideally be ‘like for like or better’;

· Positive environmental offset ratios should apply where risk of failure is apparent;

· Environmental offsets must entail a robust and consistent assessment process;

· Environmental offsets must meet all statutory requirements;

· Environmental offsets must be clearly defined, transparent and enforceable; and

· Environmental offset must ensure a long lasting benefit.

1.6 The Mt Gibson project – case study of the application of the draft policy (EPA 2006).

The Mt Gibson project is an example of a proposal that was assessed under this 2004 draft offsets policy Mount Gibson Mining Limited proposed to mine and process iron ore from Extension Hill and Extension Hill North, which are part of a ridge of Banded Ironstone Formations (BIFs) within in the Mid West region of Western Australia. Two key factors were the presence of a species of declared rare flora, Darwinia masonii, and the recently discovered Lepidosperma sp. Mt Gibson, and the restricted vegetation communities on Extension Hill and Extension Hill North. Both plant species and the vegetation are unique to the Mt Gibson ranges. The proposal could have led to the loss of 14% impact on the known population of D. masonii and 55% of Lepidosperma sp. Mt Gibson. Based on the knowledge at the time, these species were only known to exist on this BIF.

The EPA recommended that the proposal could proceed, subject to, among other things, that the proponent prepare and implement Lepidosperma sp. Mt Gibson Research and Recovery Plans.

The EPA concluded that, based on the knowledge at the time, the loss of 55% of Lepidosperma sp. Mt Gibson was acceptable, but that was the limit of acceptable loss. Consequently, it recommended the remaining area of the BIF should be included in a conservation reserve, otherwise the proposal would be unacceptable. As part of its assessment, it recommended that Research and Recovery Plans be prepared for both D. masonii and 55% of Lepidosperma sp. Mt Gibson.

The EPA did not refer to this an offset, but did note that the proponent did prepare an offsets strategy, which the EPA referred to in “Other Advice”, which was after its assessment section of the report. That other advice simply noted the offsets strategy without assessing it, although also noted that the then Department of Environment and Conservation (DEC) wanted changes to the strategy. The EPA concluded that:

The EPA notes these recommendations from DEC and their value as offsets in contributing to regional conservation. The EPA is of the opinion that environmental offsets should be used for this proposal with an aspirational goal of achieving a ‘net environmental benefit’. (P26)

Interpreting this is tricky. The EPA assessed the proposal on its merits and found it could proceed subject to conditions. The adequacy of the proposed offsets was not part of its assessment. However, it recommended that an offset was required, but there was not a condition set in the Ministerial Statement. Based on the policy settings at the time, it can be assumed that a high value asset was significantly impacted.

The absence of a formal environmental conditions requiring an offset is likely explained as follows.

I am aware that the EPA at the time had legal advice that it can only assess the proposal as referred and can only apply conditions that can be implemented on the site of the project. The implementation of Lepidosperma sp. Mt GibsonResearch and Recovery Plans was to be on-site, but the offset would be offsite, including

… provision of funds to each of the surrounding landowners, Australian Bush Heritage Fund, Australian Wildlife Conservancy and Pindiddy Aboriginal Corporation for the protection and conservation of biodiversity and regional sustainability values; and the establishment of, and funding for, a Regional Conservation Association, to enhance regional sustainability, biodiversity, visitor and cultural values around the Mt Gibson mine. (p26)

In summary, the proposal, subject to conditions, did not impact significantly on a critical asset, but did impact on a high value offset. The EPA recommended that an offset was required but there were legal constraints on making the offset legally binding through Part IV of the EP Act.

1.7 Final Environmental Offset Position Statement (EPA 2006)

The policy is largely the same as the draft, including the above principles, with the following key changes:

· Offset to deliver NEB – i.e. beyond no net loss;

· Secondary offsets re-named to Contributing offsets; and

· Purchase and protection of land with native vegetation outside the conservation estate can be consider a direct offset - acqusition.

NEB achieved through a package of primary and contributing offsets. The following figure was included to explain NEB.

A critical part of this policy is when the EPA would consider offsets as part of any EIA. The EPA defined three types of assets:

· Critical;

· High value; and

· Low to medium.

The EPA advised that “the EPA in providing its advice will adopt a presumption against approval of project proposals where significant adverse impacts affect ‘critical assets’.” (p19). I other words, where a critical asset is significantly impacted, the EPA will recommend that the proposal not proceed and no offset can mitigate the residual impact.

This Position Statement address this and notes the Government could approve such a proposal where it provides an essential community service, public benefit, or to allow strategic social or economic development to occur. In this case, the government would require an offsets strategy to address the residual impacts. The reference here is to the Government approving an offset not the EPA.

For high value assets, the EPA advised that “Project proposals and offset activities for these assets may be referred to and assessed by the EPA on a case-by-case basis, but are otherwise considered by relevant environmental government agencies.” (p19). In practice, the EPA assessed the proposal on its merits without considering the offsets package, and the proposal by itself had to have acceptable impacts.

The preference for primary offsets is restoration (not rehabilitation), but acquisition offsets are also mention, which is the first time in a policy document

The policy introduces the notion of ‘like for like or better’. Like of like applies to

… environmental values, vegetation, habitat, species, ecosystem, landscape, hydrology, and physical area. (p10)

The use of the word ‘or’ rather and ‘and’ is interesting. The idea of ‘or better’ in the policy refers to the condition of the offset – i.e. the acquisition offset is in better a better condition. Arguably, ‘or better’ could refer to a ‘like for similar’ which delivers a better environmental outcome – unfortunately no!

The offset should ‘ideally’ be located in the same local area.

Offset ratios of greater than one are referred to but only where “there is a reasonable risk that the offset will not fully succeed over the long term” (p11)

In short:

· Significant impacts on critical asserts cannot be offset – i.e. impacts unacceptable;

· Government may decide to proceed in these circumstances and require an offset;

· EPA may recommend an offset for significant impacts on high value assets;

· Offsets seen primarily as restoration but acquisition introduced in this policy;

· Like of like or better is introduced;

· Outcome should be net environmental benefit including primary and contributing.

1.8 Draft Offset Guidance (EPA 2007)

This policy complemented the 2006 Final Offset Position Statement, and was specifically aimed at providing advice to proponents on how to address and present environmental offsets as part of the EIA process for development projects, in those situations when offsets were appropriate.

The Guidance set four ‘tests’ for when offsets should be applied:

· Implementation of the proposal could result in a significant adverse environmental impact either direct, indirect or cumulative impacts;

· Before offsetting is consider the proponent has to demonstrate how the mitigation hierarchy has been applied and addressed;

· Residual impacts are expected to have an adverse effect on critical or high value assets; and

· These residual impacts need to be not so significant that the EPA would find the proposal environmentally unacceptable.

The Guidance set six ‘tests’ for the key characteristics of an offsets package:

· Direct offsets are preferred and ‘like for like or better’;

· If residual impacts cannot be fully offset using direct offsets, contributing offsets will be applied;

· The offset package should achieve a net environmental benefit, and include positive offsets ratios where appropriate;

· The offset package should be secure, robust, and likely to produce a long-lasting benefit in reasonable time;

· The offsets package should include the enduring costs of management and maintenance; and

· All elements of the offsets package are clearly defined, readily implementable, measurable, enforceable and meet all statutory requirements

The Guidance went into significant detail about how to prepare an offsets package to achieve the principles set out in the Position Statement, examples of offsets, and what information is necessary to assist the EPA in assessing the adequacy of the offsets package.

The Guidance advised that proponents should identify very early on if an offsets package would be required and the details of that package be contained in the referral. If EIA is required than the environmental review document should provide more details of the offset package.

1.9 EPA advice on areas of the highest conservation value in the proposed extensions to Mount Manning Nature Reserve (EPA 2007).

As a follow-up to the 2002 Koolyanobbing and expansions into Windarling Range and Mt Jackson Range assessment, and the concerns raised by the EPA about the significance of BIFs in the region, the Minister, in 2004, asked the EPA to provide advice (under Section 16(e) of the EP Act) on the following:

· The location of the highest conservation values in the proposed extensions to the Mt Manning Nature Reserve;

· Surrounding areas which require protection from extractive industries as well as those areas in the proposed extensions to the Mt Manning Nature Reserve for which there is a potential for environmental offsets; and

· This advice should also give consideration to details of Ministerial Statement 627 with respect to Portman Iron Ore Ltd Koolyanobbing Expansion.

This advice was contained in Bulletin 1256. The EPA recommendations made a specific mention of offsets:

Proposals to offset losses of highly habitat specific BIF endemic species through translocation to other sites should be viewed with caution, as each BIF range generally has its own endemic species occupying equivalent habitats;

The EPA made three specific references to the use of offsets. The first was about the problematic use of offsetting a loss of populations of species or communities endemic to a single BIF range that would be cleared because of a proposal by committing to protect the remaining populations on the rest of the range when the proponent doesn’t control the mining lease on that offsetting land.

The second was advice that the areas recommended for conservation in the table above should not be used as environmental offsets.

The third related to the concerns raised by the EPA in its 2002 assessment – i.e. there is significant uncertainty that the translocation of populations of species to new areas will be effective and that caution should be applied in using translocation as an offset to the losses to populations of highly habitat specific BIF endemics. The advice in Bulletin 1256 was strategic in nature and was not a formal assessment of a specific proposal.

1.10 Koolanooka/Blue Hills Direct Shipping Iron Ore Mining Project (EPA 2009)

This was a proposal to mine hematite ore at Koolanooka Hills and at two locations at Mungada (part of the Blue Hills Range). The key impacts was loss of approximately 6 ha of the Koolanooka Hills Threatened Ecological Community (TEC). The EPA found that

However, as the area to be impacted is small and represents only approximately 0.11% of the total TEC area and a very small percentage of the remnant vegetation of the region, the EPA recommends that this component of the proposal could be approved. However, as the proposal impacts a critical asset, it would only be acceptable with an appropriate offset consistent with the requirements of EPA Position Statement 9 (pii)

Similar to the Mt Gibson proposal, a critical asset was impacted, but not deemed to be unacceptable. Consequently, as offset was requited,. As well, there was not an environmental condition that required the offset.

The offset involves a five year cooperation agreement with the holder of the grazing lease adjacent to Koolanooka and Dingle Dell that forms part of the proposed Koolanooka Hills Conservation Reserve to destock, eliminate goats and to fence the property. As well the proponent proposed that additional land, classified as a TEC and owned by the proponent, would be fenced where practicable and de-stocked. The EPA advised that:

However, it is not clear what protection and management will be available for the area after the five year agreement and whether this proposed offset would deliver a long lasting benefit to the environment. The benefits must continue after the development project has been completed (EPA, 2008). A net environmental benefit from the Koolanooka Hills component of the proposal is considered essential for the approval of this component. (p21)

The EPA does not go on to say what process is required to ensure the offset is acceptable and consistent with the existing policy framework.

1.11 WA Environmental Offsets Policy (Government of Western Australia 2011)

This is a whole of government policy, not an EPA policy.

The policy recognises two types of offsets:

· Direct – “are actions designed to provide for on-ground improvement, rehabilitation and conservation of habitat. Direct offsets vary, depending on the specific circumstances of environmental impacts, and include acquisition, restoration, revegetation and rehabilitation of natural areas outside the project area.” (p2); and

· Indirect – “are actions aimed at improving scientific or community understanding and awareness of environmental values that are affected by a development or activity. These actions are designed to result in positive conservation outcomes and may include research to improve the management and protection of existing conservation estate or contributions to State Government initiatives, policies or strategic funds.” (p2)

The policy sets six principles for “… assessment and decision making processes in relation to the use of environmental offsets” (p2):

· Environmental offsets will only be considered after avoidance and mitigation options have been pursued. The Principle notes that offset will not be considered where the proponent hasn’t worked through the mitigation hierarchy, offsets should be proposed early on in the assessment process to ensure better transparency and certainty, and the Minister for the Environment is responsible for imposing offsets through the EPA assessment process;

· Environmental offsets are not appropriate for all projects. Case by case assessment of the need for offsets is required, in particular, offsets will not be applied for minor impacts;

· Environmental offsets will be cost-effective, as well as relevant and proportionate to the significance of the environmental value being impacted. The policy notes that offset should relate to the environmental value, but also notes that an offset may, in some circumstances, be of similar value to that which is lost, but not identical – i.e. not like for like;

· Environmental offsets will be based on sound information and knowledge. The information and knowledge used to support an offset proposal needs to be credible to ensure transparent and accountable decision making;

· Environmental offsets will be applied within a framework of adaptive management. There are risks associated with offsetting – for example, predicting the biodiversity outcome, the time-lag in achieving the predicted outcome, and unintended consequences. Adaptive management is needed to respond to any risks that eventuate; and

· Environmental offsets will be focused on longer term strategic outcomes. The policy notes that offsets need to be enduring, enforceable and deliver long term strategic outcomes. Flexibility is needed for offsets’ security, management, monitoring and auditing for effectiveness. Where an offset is required as part of an approval, the agency responsible for the monitoring, ongoing auditing and the legislative basis will need to be specified in that approval.

The policy flagged the need for more detailed guidelines.

1.12 WA Environmental Offsets Guidelines (Government of Western Australia 2014)

These Guidelines are also whole of government and apply to approves under both Part IV and V of the EP Act.

The Guidelines refer to a ‘significant residual impacts’ model:

· Unacceptable impacts – where a proposal has been found to be environmentally unacceptable, the use of offsets cannot reduce the impacts – i.e. offsets cannot be used to make proposal has been found to be environmentally unacceptable acceptable. It leaves the ‘door open’ that offsets could be used in these circumstances;

· Significant impacts requiring an offset – in general, these are anticipated impacts (loss) of species declare rare or threatened, areas within a conservation reserve, species and ecosystems covered under international agreements, and areas already identified as being critically impacted because of cumulative loss;

· Potentially significant impact which may require an offset – this relate to impact (losses) caused by a proposal that are result in a species of ecosystem (complexes and communities) requiring protection because of the predicted loss (i.e. threat level increased) or where the cumulative level of loss reaches a critical level;

· Impacts which are not significant – impacts not covered by the above.

The Guidelines emphasise the need to look at impacts within regional and cumulative contexts.

The Guidelines also note that there will be occasions where proposals are being assessed by the EPA where there is a high level of uncertainty in predicting impacts – i.e. there is a real risk, although not actually anticipated, residual impacts (i.e. losses) could be significant. Offsets would be applied in cases where there is a high risk of significant impacts taking into account the ‘likelihood’ of the impact and the ‘consequences’ of the impact. As well, assessments by the EPA need to consider the significance of indirect impacts as well as direct impacts.

The Guidelines recognise three types of offsets:

· Land acquisition – securing other land with important environmental values. These offset need to include the upfront costs of and the on-going management costs of maintaining the offset for the long term. Ceding the land to the government isn’t the only option, for example the proponent could commit to the on-going management of the land;

· On-ground management (i.e. restoration) – this includes re-vegetation of largely degraded areas and rehabilitation of partially degraded native vegetation areas (e.g. weed and feral animal removal); and

· Research projects – these research project must be related to impact (i.e. environmental value impacted/lost), and can include areas related to improved management and gaps in knowledge. Also included are projects that support existing State Government initiatives, policies or strategies. In general, research is only applicable where “… there is a high degree of uncertainty regarding impacts of a project and new science is required to develop better mitigation measures or predictive tools to avoid and minimise the particular type of impact” (p13).

The order in which these are listed are significant. EPA policies list restoration offsets first and acquisition second. This is a significant change in policy.

The Guidelines note that planning for any offset should occur very early in the assessment process, and where the proponent believes that an offset is required, this should be described in the environmental review document. As well, the proponent needs to show how it has addressed the mitigation hierarchy and arrived at the need for an offset.

Section 4 of the Guidelines sets out how offsets are to be determined, including how to quantify significant residual impact, but does not set out to who’s satisfaction, although the 2011 Policy makes it clear that the Minister for the Environment is responsible for imposing offsets through the EPA assessment process. The Guidelines make no mention of any requirement for the EPA to assess, and provide advice on, the adequacy of the offset.

This section is about multipliers but without saying so. It notes there are the following four elements in quantifying the environmental benefit of the proposed offset:

· Type of offset;

· Security of offset;

· Likely success of achieving the offset; and

· Time lag in achieving the offset.

Section 5 refers to implementing offset and notes this may be achieved through:

· direct action by the proponent/applicant;

· funding by the proponent/applicant directly to a third party to undertake agreed offset actions; or

· contributions by the proponent/applicant to a fund for the purpose of undertaking agreed offset actions.

This is the first mention in policy of establishing offset funds.

Section 7 relates to governance auditing, enforcement and review and states:

Offsets are imposed as conditions of the ministerial statement or clearing permit. Conditions are legally enforceable. Conditions apply only to the holder of the ministerial statement or clearing permit. While third party delivery arrangements may occur, the legal obligation remains with the proponent or permit holder.

A number of conditions for Part IV projects involve the contribution of funding over time. To ensure that the value of this funding remains relative, the value of offset contributions may be maintained through indexation to the Perth Consumer Price Index.

The Guidelines require that if the EPA is of the view an offset is required as part of an assessment it needs to provide the rationale for this as part of its recommendations to the Minister.

This is an attempt to use Government policy to overcome the previously mentioned legal problem of setting an offset as an environmental condition. Whilst, the practice did change after the release of these Guidelines (see below), the legal question remained unaddressed

It is worth noting that these Guidelines (and the WA Offsets Policy) do not address the process that follows where the EPA finds a proposal to be unacceptable because of impacts on critical assets. The EPA’s Offsets Position Statement address this and notes the Government could approve such a proposal where it provides an essential community service, public benefit, or to allow strategic social or economic development to occur. In this case, the government would require an offsets strategy to address the residual impacts. However, it did allow the EPA to change how it dealt with offsets.

1.13 Offsets as an “Integrating Factor”

Around this time, the EPA introduced a new environmental factor - Offsets (Integrating Factor). It was used in the EPA’s assessment of the Swan Valley Section of the Perth – Darwin National Highway (EPA 2014). The objective for this factor was “to counterbalance any significant residual environmental impacts or uncertainty through the application of offsets.” (P63).

A key concern of the EPA was the loss of 5.5 ha of Yanga Complex, noting there is approximately 16.5 per cent remaining on the Swan Coastal Plain, and this proposal would result in a further loss of 5.5 ha. This equates to a 0.4 per cent reduction in the remaining extent of the Yanga Complex, leaving 16.1% left uncleared, still above the 10% unacceptable threshold.

The EPA assessed this impact as follows:

However, the EPA notes the vegetation proposed to be cleared is in a degraded condition, it covers a small geographic area and constitutes a small incremental loss. In this case, the EPA is satisfied that this small incremental loss is an acceptable impact.

However, taking into consideration the cumulative loss of the Yanga Complex on the Swan Coastal Plain, the EPA considers that the further loss of Yanga Complex outside the Bush Forever Study Area constitutes a significant residual impact. The EPA therefore considers that an offset is required to counterbalance the loss of 5.5 ha Yanga Complex outside the Swan Coastal Plain portion of the Perth Metropolitan Area. This position is in accordance with its current policies and with the WA Environmental Offsets Guideline (Government of WA 2014) (p15)

The Offsets (Integrating Factor) section is a significant review and assessment of the proposed offset noting there are environmental conditions set relating to the offset and concluded that subject to those conditions, the offset would counterbalance the residual environmental impacts and, therefore, the proposal could proceed.

The EPA noted two types of significant impacts with respect to offsetting - residual impacts that are unacceptable, and significant residual impacts. Where the latter types occur, offsetting is appropriate. As this example shows, the EPA after the release of the 2014 Guidelines began assessing the adequacy of proposed offsets strategies against the residual impacts of proposals, and began including reference to offsets in recommended conditions. The concerns the EPA previously had about including consideration of offsets as part its assessments of proposals have been somewhat allayed.

Any lingering concerns have now been completely addressed in the changes to the EP Act assented to in November 2020. Section 45A(1) sets out the matters that an environmental condition of an approval can include, which included offsets. (see below).

1.14 Offset register

An Offset register was established as flagged in the 2014 Guidelines, – this is primarily just a data base of offsets set to-date. It is called the “Government of Western Australia Environmental Offsets Register” - https://offsetsregister.wa.gov.au/public/home/ .

An assessment of the register is not carried out here.

1.15 Pilbara Environmental Offsets Fund

The Pilbara region is a largely remote semi-arid area of land covering nearly 180,000 square Kms, where all but a small portion near the coast is vested in the State Government (Crown land). Less than 7% of the land is within formal conservation reserves, and about 62% of the land used for broad scale cattle and sheep farming, relying on exiting native vegetation. The area has significant biodiversity value, which is under threat from overgrazing and more recently mining. Around 93% of the area is covered by mining tenements, and the region produces over 90% of Australia’s iron ore exports. The number of new mines established in the region has increased significantly since 2009. Since 1997 around 5,000 sq km of native vegetation has either been clear for mining and related infrastructure, or approval has been granted for clearing.

Many of these developments were subject to a requirement for biodiversity offsets but they case by case offsets. As well, the Pilbara region is largely uncleared and government owned land, and so the opportunity for direct like for like offsets very limited.

In 2014 the EPA released a report describing its concerns about the loss of, and threats to, biodiversity in the region, and setting out a strategy to address this loss.

The centre piece of the strategy was a proposal for a centralised offset fund that all proponents contribute money to rather than providing an offset. The size of the financial contribution to depend on the nature and extent of impacts. The money in the fund to be used to provide strategic offsets rather than case by case offsets.

So far, around $7 million is owed to the Fund and it is expected that over the next 40 years approximately $90 million will be received for the fund.

Funds will be used for strategic landscape scale projects including pest plant (weeds) and animal (ferals) control, fire management, erosion control, and on-ground works that improve native vegetation and or habitat for threatened species that would be impacted by each specific development. Projects could also build on existing local conservation programs undertaken by not-for-profit natural resource organisations. As well, projects involving Traditional Owner Ranger Groups could also be funded.

The Minister for the Environment is currently considering how best to structure and administer the fund.

The offset condition to apply to the Pilbara projects has a number of key elements, notably:

· A per hectare $ rate is to apply based on the significance if the vegetation to be cleared, as shown in the table below;

Subregion

Good to Excellent condition native vegetation

If other environmental values present as well

Fortescue

$1,596 per hectare impacted

$3,193 per hectare impacted

Hamersley

$798 per hectare impacted

$1,596 per hectare impacted

Chichester

$755 per hectare impacted

$1,509 per hectare impacted

· These rates are set on the 2016-2017 financial year;

· These rates are to be adjusted upwards based on the annual Perth CPI figure;

· Biennial reporting and payment periods are to be established where the amount of clearing that occurred in the reporting period is calculated and the payment due to Fund calculated; and

· In some cases, a discount can be given if the proponent also has to provide a separate offset because of an assessment under the EPBC Act.

1.16 The 2020 changes to the EP Act – securing the legality of offsets

Any question about the legality of setting Part IV offsets conditions have now been removed with changes made to the EP Act in 2020.

New S45A.(1) specifies that conditions can be set to cover the following:

• Carrying out environmental protection, abatement or restoration measures on land not part of the proposal as an offset;

• Contribute money to a third party to carry out environmental protection, abatement or restoration measures on land not part of the proposal; and

• Arrange for an environmental protection covenant or other environmental undertakings to be applied by a person who is not the proponent on land not part of the proposal.

New S45(9) is a catch-all in that notwithstanding the types of conditions listed in 45A.(1), the EPA can recommend any other type of condition.

This section also allows a condition to be set which requires the collection of fees (s.45A (4)).

1.17 Considering environmental offsets at a regional scale – EPA advice (EPA 2024)

In the forward to this advice, the EPA notes:

The EPA is, however, increasingly being asked to consider the application of environmental offsets at a local scale only, and for averted biodiversity loss only, without consideration of regional scale or broader environmental protection and enhancement needs. (p1)

This advice is, in effect, and opt in policy where proponents are encouraged to propose offsets that are or a regional not local scale. It is not meant to replace the existing policy framework.

The advice lists the following seven (7) values that underpin the development of regional offsets that “can make to holistic environmental protection and enhancement at a regional scale” (p2):

· Restoration of existing degraded areas;

· Regional scale management which are consistent with existing and new regional level planning, for example regional plans, reserve management plans, recovery plans, strategic programs;

· Building resilient systems that can adapt to key challenges, for example climate change and restoring inland water flows;

· Expanding scientific knowledge, for example knowledge gaps which could contribute to enhanced protection of key species of ecological communities, or restoration trials;

· Like for like or similar, in particular restoration which may not be able to be exactly like for like but a regional need is addressed;

· Connectedness, for example, providing a connection between existing conservation areas

· Co‑benefits for social surroundings, for example, the offset includes a cultural significant site allowing Traditional Owner access and to carry out cultural activities

Recommended priorities – for government

Land availability and security

Regional Plans, Recovery Plans

Monitoring and transparency

Holistic values mapping

Research programs

Advanced offsets

Roles in delivering outcomes

2. Assessment of the existing offsets policy framework and the EPA opt in policy.

This section is a broad assessment of the existing offsets policy framework and the EPA opt in policy. The first step was a review of the academic literature identifying key concerns about offsets to come up with some assessment criteria. These criteria were then used to carryout the assessment.

First, a quick overview of DWER’s 2019 revied of the offsets policy framework.

2.1 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.

2.2 Overview of the literature

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.

2.3 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?

2.4 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:

· The WA Environmental Offsets Policy 2011 (Government of Western Australia 2011);

· WA Environmental Offsets Guidelines 2014 (Government of Western Australia 2014);

· WA Environmental Offsets Register 2013; and

· Environmental offsets metric and supporting Guidelines (Department of Water and Environment Regulation 2021).

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:

· 0 – not consistent;

· 1 – partially consistent;

· 2 – mostly consistent; and

· 3 – consistent.

Table 1 is the assessment of this policy framework.

Table 1: Assessment of existing policy framework

Criterion

Assessment score

Explanation

Mitigation hierarchy

Policy explicitly requires “Environmental offsets will only be considered after avoidance and mitigation options have been pursued.” Worth noting DWER review found that “Analysis of Part IV and V approvals and examination of appeals found that avoidance and mitigation were consistently considered in assessment processes, and decisions were generally sound. Recording of avoidance and mitigation has improved over time (Appendix E, Table 7). Over the period 2017 to 2018, this information was included in approximately 80 per cent of approval documentation.” Given this is a requirement in 2021 2021 EIA Procedures Manual compliance should be high.

Government resources

Resources provided for Register, but likely assessment and implementation of offsets likely done in existing resources.

Negative incentive

Not considered.

Compensation ratios

Ratio determined by relevant agency and unclear how it would be arrived at.

Narrow focus

Guidelines refer to “repair of ecosystem processes and management of weeds, disease or feral animals” but is focused on the primary residual impact and not any interconnections.

Acquisition vs restoration

Policy does not preference either of these types of offsets.

Compliance

Compliance relies on the normal processes of auditing condition set under Part IV of the EP Act with no separate compliance process/agency looking at offsets.

Criterion

Assessment score

Explanation

Transparency

The register is publicly available but only provides limited data on progress and effectiveness of offset. This is OK for acquisition offsets but for restoration offsets the only check is the public reporting processes under Part IV of the EP Act with no separate offsets reporting mechanism.

Local vs strategic

1.5

Emphasis is like for like which favours local over strategic. Policy mentions offset should “deliver long term strategic outcomes”. Guidelines are more specific and refer to “In some cases, a better environmental outcome can be achieved by considering offsets at a landscape rather than at a local scale. Strategic approaches could be based on a regional need or be focused on addressing issues related to particular species.” And “In the extensive land use zone, strategic offsets may also include conservation and enhancement of existing ecological systems. The use of such strategic offsets should relate and be relevant to the impacted environmental values”. In practice, the focus is on like-for-like and has meant few strategic offsets delivered.

Other benefits

No mention of considering other socio-economic benefits.

Total of assessment

11.5/30

Table 2 gives the assessment of the EPA opt-in policy

Table 2: Assessment of EPA opt-in policy

Criterion

Assessment score

Explanation

Mitigation hierarchy

The opt-in policy is consistent with existing policy framework in this regard.

Government resources

The opt-in policy makes recommendations about the need for the Government to provide more resources and information.

Negative incentive

Not considered.

Compensation ratios

The opt-in policy is consistent with existing policy framework in this regard.

Narrow focus

Goes further than existing policy framework and refers to ‘resilient systems’ and “may include consideration of climate change modelling and/or projections, ensuring inland water quality and flow requirements to support biodiversity, as well as maintenance, buffering and improvement of significant ecological linkages, conservation areas and places of ecological significance.”

Acquisition vs restoration

Policy gives priority to restoration and regional scale management.

Compliance

Compliance relies on the normal processes of auditing condition set under Part IV of the EP Act with no separate compliance process/agency looking at offsets separately.

Criterion

Assessment score

Explanation

Transparency

Makes special mention of “Monitoring and transparency: Priority should be given to the requirement for collection and publication of regional data that is freely accessible to the public, industry and government. Promotion of its use should occur to ensure open accessibility of regional data for environmental impact assessment and environmental performance monitoring, including of offsets. An accurate public database of all environmental offsets which could contribute to regional environmental benefit should be developed support transparency and accountability.”

Local vs strategic

Policy favours regional approached over local offsetting.

Other benefits

Specifically mentions “Co‑benefits for social surroundings.”

Total of assessment

22/30

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.

2.5 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:

· “SR3 The design and content of the offsets register should be revised to ensure information on offset implementation is complete, up to date, collated and clearly presented.” – this will help with compliance and also addresses transparency concerns;

· “SR9 Offset conditions should be strengthened to improve enforceability, allow monitoring of implementation through the use of tools such as satellite imagery, and require approval holders to provide adequate information on progress of offset implementation” – this would address concerns over compliance;

· “SR10. DWER’s annual compliance program should include reporting of offset compliance” – this also address concerns over compliance; and

· “SR12. Bioregional plans should be developed to support development and implementation of offsets that align with regionally significant and/or landscape-scale environmental objectives – this is consistent with the EPA opt-in policy and addresses the local vs strategic concern.

Implementation of these recommendations would ensure the WA biodiversity offsets policy framework is improved and delivers improved environmental outcomes.

3. Data on offsets

3.1 Part V

201 Part V projects were included in this analysis.

Figure 1 shows the number of different types of offsets for those 201 projects, noting some had more than one offset type.

Figure 1: No of projects with type of offset (some had more than one)

The data on area is as follows:

· Area approved to be cleared – 3,222.4 ha

· Area of acquisition – 8,990.0 ha

· Area restored – 992.3 ha

· Total offset – 9,982.3

· Notional net gain – 6,760.0 ha

· Ratio – 2.1

· Discounting acquisition – net loss of – 2,230.1 ha

3.2 Part IV (excluding PEOF offsets)

14 Part V projects were included in this analysis.

Figure 2 shows the number of different types of offsets for those 14 projects, noting some had more than one offset type.

Figure 2: No of projects with type of offset (some had more than one)

The data on area is as follows:

· Area approved to be cleared – 5,418.7 ha

· Area of acquisition – 6,847.5 ha

· Area restored – 1,231 ha

· Total offset – 8,078.5 ha

· Notional net gain – 2,660.0 ha

· Ratio – 0.5

· Discounting acquisition – net loss of – 4,187.7 ha

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