DIVERSITY OF ENVIRONMENTAL PAYMENTS ON OFFER FOR FARMERS.

Sustainability & Environment

MICK QUIRK

The federal government has introduced legislation to establish a biodiversity trading scheme. This means farmers and other land managers could earn credits for activities that have a high likelihood of improving the conservation of native plants and animals. This scheme is most relevant to the more extensive land uses, such as grazing, where significant areas of native vegetation have been retained. However, even intensive farming systems like sugarcane may have opportunities through feral pest control, constructing or restoring lagoons or wetlands, or managing riparian areas. Scaling up these activities so that there are real benefits will be the challenge. For example, feral pig control requires concerted efforts by many landholders in an area to have any lasting benefit for both farms and the local environment.

The idea of farmers receiving payments for actions that improve biodiversity is not new and there is experience with many types of incentive and grants programs. The Coalition government initiated work on a national biodiversity ‘market’ and the current government is taking this work forward.

Biodiversity markets are not favoured by some scientists and conservation groups, as the funds tend to get sprayed across many areas and issues rather than being focussed on the areas and issues that will give most environmental benefit per dollar spent.

The proposed scheme is an example of a market-based instrument (MBI), the design and use of which we have covered in earlier policy updates. Compared to grant programs, MBIs are designed to use market principles to get the biggest environmental benefit for the least cost. For example, the reverse auction tenders used by the Reef Trust 'bought' reduced N inputs to sugarcane crops by selecting offers from growers that were the most cost-effective.

The proposed biodiversity scheme has a lot in common with the Australian Carbon Credit scheme and the Reef Credits scheme. These all seek to establish a self-sustaining market that buys and sells ‘certificates’ that, respectively, represent credited units of improved biodiversity, reduced greenhouse emissions, or improved water quality. Such contrived markets may only survive where they remain bank rolled by the government or where non-government demand for certificates is driven by related government policies. For example, demand for Australian Carbon Credit Units is sustained by the Safeguard Mechanism that requires our largest emitters to reduce their emissions. The recent reform of this mechanism will further boost demand.

The hope for an ongoing biodiversity market is based on predictions of more than $100 billion of public and private investment into biodiversity improvement in Australia over the next few decades. It is worth noting that such schemes always seem to start with unbridled optimism and little tolerance for reality checking.

CANEGROWERS will continue to work with the NFF to seek a biodiversity scheme that is as efficient and effective as possible.

ARE MARKET-BASED SCHEMES GOOD FOR THE SUGARCANE INDUSTRY?

CANEGROWERS believes participation in MBI projects or schemes is an individual grower’s choice. But to assist growers in their understanding and assessment of any scheme, the Policy Council recently endorsed a formal position. This position includes the attributes that any market-based environmental scheme needs to meet if it is to be taken seriously. These include:

1. The scheme will not lead to significant reductions in cane supply.

2. There has been strong involvement of industry in its development.

3. Robust science underpins the scheme, and this informs estimates of costs and benefits.

4. Administration costs for participating growers are minimised.

5. Full transparency in protocols, calculations, verification, registers, and prices.

Reef Credits is currently the scheme of greatest relevance for growers but we remain concerned about its impacts, reliability and credibility in relation to points 1, 3 and 5. On many occasions, we have offered to work with the proponents of Reef Credits to address our concerns. But with little result. 