IPART has completed its three-year annual monitoring review of the NSW Biodiversity Credit Market
Healthy biodiversity is important for the quality of life of current and future generations. The biodiversity credits market plays a key role within the NSW Biodiversity Offsets Scheme to ensure biodiversity losses due to development or land clearing are offset by equivalent biodiversity gains at a price that reflects the efficient cost of conserving biodiversity.
We were asked to monitor the biodiversity credits market for 3 years from 2022-23 and make findings and recommendations with the aim of:
- maintaining and promoting competition
- addressing the interests of existing and potential biodiversity market participants, and supporting fair trading
- identifying opportunities to improve market efficiency and address market failure.
We have released the final findings and recommendations as part of its third and final annual review into the NSW biodiversity credits market. Our 2024-25 Final Annual Report has found that key challenges with the market remain, including:
- The Biodiversity Conservation Fund continues to hold a significant number of obligations, and a growing proportion of these have not been met on a like-for-like basis.
- The risk that the Fund will not be able to source like-for-like credits to meet its obligations is not adequately considered in Fund charges or in current planning processes.
- Trading in the market continues to be administratively complex, and improvements to the quality and reliability of market data are needed.
- There is limited reporting on the environmental outcomes of the Scheme, including which offsets have been delivered and using what pathways.
- Key government entities continue to have multiple, overlapping roles and objectives, which risk creating conflicts of interest and impacts participants’ confidence to participate in the market.
We thank all stakeholders who engaged with us throughout our annual reviews and shares their perspectives and experiences in the credits market. We have listened to all stakeholders’ views and considered all feedback in making our final findings and recommendations to the NSW Government.