Koala Offsets

What’s a koala worth? Just suppose you were responsible for looking after koala habitat, but you decided to gather royalties from the land by leasing it out to mine coal, koalas would be moved on. Is there a price you could charge the mine operator to compensate for the death of the dispossessed koalas? As it so happens there is such a scheme in New South Wales and prices start as low as $345. Bargain! This is the ‘spot price’ of a single ‘species credit’, an IOU for a dead koala, or part there-of. It’s a win-win, the miner makes money from coal and the government picks up a little extra cash for dead koalas. And where do you go to get your dead koala dispensation? The DPIE – Department of Planning, Industry and Environment. Note that ‘Environment’ is subordinate to Planning and Industry. There is a senior planning minister and there is a junior environment minister but only the senior minister has control of a department. (EDIT: DPIE was changed to DPE under Matt Kean and then DCCEEW under Penny Sharpe)

The history is dry but it is important; through the evolution of management structures patterns emerge; intractable environmental problems are smoothed over while the need for planning consent is promoted. One constant is the word ‘biodiversity’, it encompasses the idea of ‘nature’ – and all the drawers full of stuff in the natural history museum, the mineral specimens, the bugs and bird pelts, and all that footage in David Attenborough’s back room. There is the stuff we admire and there is the stuff we use to get rich by turning into other stuff; koalas into coats, logs into timber, coal into steam, ore into metal. The trick is to protect the diversity of the natural world and simultaneously extract value from it. The problem is that all this stuff is tangled together; the birds need the bugs, and the koalas need the trees, and the trees need the rocks, and so on. Managing biodiversity might be seen as a project of ‘sustainability’, keeping things as they are, or it might be an exercise in accountancy, moving assets around to maximum advantage, like opening an offset savings account.

There develops a list of negatives that attach to offset methodology, ways in which offsets are inadequate and ways in which the offset process can be corrupted. These weaknesses could be addressed over time or they could develop further, in NSW the weaknesses have proliferated. The Nature Conservation Council released a report in 2016,

Paradise Lost, the weakening and widening of NSW biodiversity offsetting schemes, 2005 – 2016.

1. Switching New for Old

The idea of the biodiversity offset was developed in the USA in the 1970s as a way to recreate natural settings. One section of river could be dammed and developed for urban expansion after the river was diverted into nearby farmland. If the newly established river banks were properly replanted it would be an adequate offset for the missing original section of river. To the casual observer this is a marvellous trick, a sleight of hand where a coin can disappear from the hand to reappear behind your ear. With skill it seems possible to produce something new that is just as good as that which has disappeared. The reality is that the new river is an artifice, it is redirection, like the magic trick it relies on a lapse in attention, you may not notice that which has gone missing. Once large trees have been removed it may seem that the young saplings are a reasonable replacement. The assumption is that everqything important will be transported along with the conceptual urge to recreate. In NSW the recent decision to clear koala habitat to allow for an expanding quarry site is justified by providing nearby offset land, yet to be planted with koala feed trees.

2. The Unseen Losses

The example of redirecting a river is one type of active intervention where the water might heal the landscape. Aquatic plants and animals can move with the water to inhabit the new offset site. The water itself  will draw life to relocate. Some features will be left behind, the stream bed, the roots of ancient trees, the animals that burrow in these roots perhaps an ideal habitat for particular rare species like a platypus. Other environmental factors might flow from diverting water, the turbidity and salinity might increase. It would take a particularly dedicated level of scrutiny to assess these possibilities and to monitor the changes over time. Perhaps the expense of close scrutiny is not the first priority of those seeking development consent. Mining destroys ancient underground rivers that are home to fragile undiscovered subterranean animals known as the  stygofauna and troglofauna, it might be convenient to destroy these unseen life forms without first looking for them. 

3. Switching Near and Far

Another scenario, besides the moveable river, common in NSW is the clearing of land for housing development. Here an offset site may be another block of land that is not adjacent to the development site. Koalas are victim to this type of offset planning, trees that are felled in an area with enough forest to support a viable koala colony cannot be offset by other trees that are not connected to that area. The ‘connectivity’ value of a particular site can’t be offset by a similar disconnected site. Fragmented landscapes occur over large scales and they die a death of a thousand cuts. Smaller blocks have greater edge effects . Koalas are nomadic and capable of crossing open ground to find fresh trees, but they are also extremely vulnerable to dog attack and car strike. Fragmented landscapes are criss-crossed with roads and fences, urbanisation brings disruption and danger.

4. The Liability of Responsibility

Offsetting is best defended where it is used to protect and remediate sites that have unrecognised biodiversity values that are very similar to the development site. This is the ‘like-for-like’ exchange. Taking the example of woodland forest, it’s possible for farmland to revert to woodland over time. Even though it had been cleared for grazing there exists a seed bank within the soil, rare and endangered plants may resume their place in the understory. Given the passage of decades large trees may grow, and the cleared farmland earmarked for housing may now have high biodiversity value. Clearing that land for a second time might be in breach of conservation laws, and the property speculator may feel aggrieved that a real estate investment had been thwarted by the unwanted regrowth. One solution for the wary landholder is to continually keep the land cleared so that it never attracts unwanted attention, another solution is to make revegetated land available as an offset to another development. This is the crux of recent squabbling within the NSW government, land gaining value for housing development is also land supporting koala populations.

5. Halving of Assets

Take a moment to recognise the planning paradox of awarding offset credits to landholders with valuable biodiversity assets; that value is only realised if there is a market demand for the credits, meaning a similar area of land with similar assets will be cleared. This is the mathematics of decline, one block is saved when another is cleared. In accounting terms this is known as a net loss. Notice how easily the economic parlance of assets and values becomes attached to environmental attributes, and appreciate how the apprehension of damage can drive those values; increasing scarcity creates value. The concept of biobanking incentivises scarcity. When koalas are relatively common there is no incentive to protect them, by the time they are endangered their value as a tradable commodity will not protect them.

6. Temporary Perpetual Stewardship

Stepping back again, let’s also recognise the inevitable question, what happens when the offset block is required for another housing estate? In theory the ‘stewardship’ of offset land is a responsibility carried ‘in perpetuity’, – for ever and ever. In practice the offset steward is given a modest upfront payment that shortly dwindles to a pittance. Perhaps there is money to build a fence to protect a koala colony, but that fence will not be maintained. Small stewardship fees will disappear while the profits offered by development will remain a continual lure to alter the stewardship agreement. We can guess that ‘perpetual’ stewardship is highly unlikely and is more accurately described as ‘temporary’. The use and abuse of language to support the illusory benefits of offset methodology is revealing; positive outcomes are assumed to flow from positive language.

7. Avoidance of Avoidance

Offsetting is presented as a measure of last resort. The planning mantra is that offsetting should only be used as the last resort after reasonable attempts have been made to avoid doing damage, or repairing any damage done. Avoid, Mitigate, Offset. In reality the temptation to slip through to the offset mechanism is irresistible. If avoiding an adverse impact is seen to affect the profitability of a project that alone is reason to skip the avoidance requirement. Mitigation of damage is only considered necessary where it can be demonstrated to be cost effective, and making good irreparable damage is a fruitless promise best put to one side. Some effort will be made towards cosmetic remediation – a strip of trees along a roadside or ridge line to create the appearance of forest, or cracks filled in a stream bed to give the impression of an intact watercourse. These measures are designed for the corporate prestige rather than environmental benefit. By far the cheapest approach to gaining consent is to promise offsets. Offsets are preferred because they deliver the highest profits, the only reason to abandon offsets is again where the cost becomes prohibitive, but where the proponent controls the assessment process the costs are also managed.

8. The Cost of Consulting

 The BAM – Biodiversity Assessment Methodology is entirely transparent, all the information is online. It has been designed so that any landholder can engage. Like a tax return the integrity of homework may be subject to audit, or not. For those developers  seeking a smooth path to development  consent there are offset consultants who will work to drive down your biodiversity assessment costs. Like any accountant there are fees to be paid for handling the paperwork and delivering the lowest return. Like taxation law, the BOP – Biodiversity Offset Policy is full of detail that can be used to the advantage of the developer and against the environment.  These consultancies employ ecologists, people who may have hoped to protect biodiversity are now paid by clients to reduce that responsibility.

9. Compliance and Corporate Culture 

Offset planning provides a theoretical pathway for responsible development, but it can be instructive to see how the planning process plays out in reality. Large corporations have the political and financial resources to extract maximum advantage by ‘gaming the system”. With a coal mining project the timeline begins with establishing a mining lease., either on crown land or private property. This initial step carries the potential for corruption with the windfall profits to be made from assigning mining rights. With exploration begins the flow of revenue to the government and also begins the environmental destruction; roads are built, holes are drilled, explosions set off underground. The commercial arrangement develops where the mining company pays the DPIE to accept its own assessment of the damage to be done. The unseemly haggling to minimise the declared damage and drive down the cost of offsets will carry on for years up until such time as the mine is no longer profitable. When the flow of money dries up the cost of the damage becomes an unfunded problem for the future.

10. Adaptive Management

Planning approval to proceed with a mining project is subject to conditions of consent including a negotiated offset package. Each threatened species and threatened community will have an individual tally of required species credits based on formulas that have been assessed and calculated by offset consultants working for the proponent. The ‘retirement’ of those offsets may be decided in time on review of ‘performance criteria’ subject to ongoing monitoring and ‘adaptive management’. For instance, a drained upland swamp may be deemed to retain some biodiversity value and only subject to partial offsets. A Koala may be found wandering the carpark looking for missing trees and taken as proof that impacts are not so bad after all.

11. Capture of Conservationists

When site-based offsets are recognised as an impossible task in a finite world of dwindling biodiversity assetts the time comes to offer up cash to the Biodiversity Consevation Fund. The species credits have a dollar value for this precise purpose; to provide developers  an escape from the real world of conservation. Those conservation biologists not working in the offset consultancy industry are now caught in the net  of seeking funding that derives from development. Naturally the discretion of funding approval may be linked to the interests of the source of that funding.

12. Buying Bureaucrats  

The arcane intricacies of Biodiversity Offset Policy BOP gives power to a small number of closely involved players with sufficient knowledge to navigate the system. The career path of those involved may begin within government and proceed to contracts outside government in consultancy work or other business positions in land development. In truth it is never clear on whose behalf the public servant is working while seeking to smooth the planning process. Legislative obstacles that are impediments to cash flow affect the motivation of government employees and enterprise, the issue of conflict of interest becomes very murky as consultants re-enter the employ of government while also working in the private sector. The distinction between service in the public and private sectors is lost.

13. Limitless Power

 By exerting control and capture of all parts of the planning process; removing antithetical government agencies, replacing legislation, defunding political opposition  – the planning minister has control of a monolithic structure that yields only to political instruction. The entire organisation is entirely transparent, except when it isn’t. The appointment of experts onto panels of Enquiry, the appointment of Commissioners onto public panels, the appointment of judges into the Land and Environment Court – all these political decisions direct the process and the outcome. 

Conclusion

Some of the preceding guff may help explain the decision by the DPIE to sanction mining in the Sydney water catchment, while justifying the destruction as a net benefit to both water and biodiversity resources. The 39 species credits that attach specifically to koalas – from the clearing of 28 hectares and the de-watering of 940 hectares of koala habitat – will bring in the princely sum of $29,055, payable after further challenge by the proponent South 32. None of this reflects on the good standing of BHP, the Big Australian who acquired the mining lease, secured planning permission and then divested the assert to offset damage to their corporate reputation. Green washing and aspirational offsetting allow the semblance of conservation, while the reality is that the destruction continues unabated. Time to call a spade a spade and offload an offset methodology built and maintained by developers. Offsetting does contain the germ of a good idea, to make the best of a bad situation, but it is now no more than having your cake and eating it too.

Afterword

The IPC, Independent Planning Commission, were required to review the DPIE sponsored plan by South32 to expand the Dendrobium coal mine, and they rejected the proposal. The use of offsets had finally exceeded the capacity of forgiveness for bullshit. Until… Mark Latham conspired with Labor to wedge the planning minister, but that’s another story.