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IPART was appointed to monitor the credits market and make recommendations to improve its efficiency and effectiveness. We were asked to do this annually for 3 years, from 2022–23 to 2024–25.3 This draft report summarises our analysis and provides the findings from our third annual review. We will consider feedback from stakeholders before finalising our Annual Report in July.

The NSW biodiversity credits market has faced various challenges since its inception, particularly around high transaction and search costs, and ensuring adequate in-demand credit supply, market liquidity and stakeholder confidence. Our first two annual reports found that the market was not functioning as well as it could be.

There are signs of improvement in the market this year

The Government has made many changes to the market, and the Scheme more broadly, and still more are underway. These changes are taking time to work their way through, but the market is showing signs of improvement in some areas. We have observed the following developments over the three years we have been monitoring the credits market: 

  • Steady growth in the number and type of credits generated, and in the land area under conservation.
  • An increase in the use of the credits market, relative to the Biodiversity Conservation Fund option, and a rise in the rate of credit acquisition by the Biodiversity Conservation Fund to offset the obligations transferred to it by development proponents.
  • Several changes to promote the release of information to the market in a more timely and equitable way.
  • Changes to the Credits Supply Fund’s reverse auction process aimed at providing more certainty to landholders and increasing the supply of credits available in between auction cycles. 

Additional changes to the Scheme are currently proposed, which will have further implications for the functioning of the market in future years. 

Some issues of concern remain

Many of the issues we initially highlighted in the market remain, including:

  • The Biodiversity Conservation Fund (administered by the Biodiversity Conservation Trust) continues to hold a significant number of obligations for which development has occurred, but no credits have been purchased. Approximately 60% of all obligations transferred to the Fund since its commencement remain with the Fund.
  • Over a third of the Trust’s acquittals in 2024-25 were not on a like-for-like basis. To date, the Trust has used variation rules and conservation actions to secure obligations for around 40% of all biodiversity types for which developers paid into the Fund, including obligations for endangered and vulnerable species.
  • Changes to impose a time limit on how long the Fund can hold onto obligations should help reduce the number of obligations it holds. However, they are also likely to lead to a further increase in the number of obligations being secured that are not on a like-for-like basis. This is particularly likely for developments that have impacted vulnerable and endangered species, as sourcing like-for-like credits to offset these impacts is likely to be more difficult.
  • The risk that the Fund will not be able to source like-for-like credits to offset obligations is not adequately considered in current processes. Ultimately, it is the role of the consent authority to determine whether developments should proceed. However, in making that determination, it is important that consent authorities have access to accurate information about which biodiversity types are at high risk of not being able to be offset on a like-for-like basis. It is also important that the Fund is able to take that risk into account in its charges.
  • Trading in the market continues to be administratively complex and time consuming. Much of the process is manual, which increases the likelihood of errors and discourages market participation. Changes that have been announced to improve data accessibility and availability have not yet resolved important data issues experienced by prospective participants.
  • Overlapping functions of government entities and a lack of guidelines for private brokers risk creating opportunities for exploitation and corruption. New government interventions have also fragmented the available information and increased the level of complexity in the market.
  • There is limited reporting on the environmental outcomes of the Scheme, including which offsets have been delivered and using what conservation measures.

We are inviting all interested stakeholders to make a submission on the Draft Report by Friday 5 June 2026.

See more information about this review

Alongside this document, we also released a: 

For further information, please see Monitoring the NSW Biodiversity Credits Market