In November last year, the NSW Government released the Spot Price Index1 for biodiversity credits created using the BioBanking Assessment Methodology under the Threatened Species Conservation Act 1995 (TSC Act). Whilst this act has now been replaced by the NSW Biodiversity Conservation Act 2016 (BC Act) and the assessment of biodiversity offsets is now determined by the Biodiversity Assessment Methodology (BAM), the vast majority of biodiversity offset credits generated and traded to date have been BioBanking credits.
The Spot Price Index (SPI) is a web-based tool (see link in the footnote) that aims to give access to BioBanking credit market data otherwise recorded in the Biobanking Public Register.
Further, the SPI distills all of the credit trade data for BioBanking credits in NSW since the inception of the BioBanking scheme. It is intended that as Biodiversity Stewardship Sites are established and biodiversity credits are traded in NSW under the BC Act, they will be added to the SPI or equivalent.
What does the SPI tell us?
If you’re a graph nerd like us, the SPI is a powerful database of information that can assist both credit purchasers and credit owners to understand the history of credit sales and, to some extent, the value of the credits required or available for sale.
The outputs in the SPI can be interrogated to show the price of credits over a period of time and in different regions.
Although this information is useful in determining a fair credit price, the final credit price in any transaction will always be determined by normal market forces in a willing buyer – willing purchaser arrangement.
In summary, the SPI provides:
- a history of the price at which ecosystem credits were bought or sold
- a history of the price at which species credits were bought or sold
- the number and status of Stewardship Site Agreements (also known as BioBanking Agreements) operating or terminated in NSW which can be interrogated by region or Local Government Area.
Prior to the commencement of the BioBanking scheme a good number of commentators predicted that the whole program would fail in a very short time. The SPI would suggest otherwise. To give you an idea of what we mean here are some highlights.
Since the inception of the BioBanking Scheme:
- $404 million worth of credit transactions have occurred:
– Just under 2% of this value is related to species credits. All other sales have been for ecosystem (vegetation) credits.
– This does not account for the true market value of transactions that have occurred between related parties at below market value.
- More than half of the total value and volume of credits sold has occurred in the last two years. An offsets scheme (BioBanking and current) has been in operation for well over 10 years now in NSW.
- A total of 704 market transactions have taken place.
- Almost 110,000 individual credits have been transferred.
- The vast majority of credits sold and the highest credit prices have been achieved in greater Sydney, which is reflective of development pressure in the region.
- Most of the offset sites occur in the greater Sydney region as a result of this and, unsurprisingly, these sites tend to be amongst the smallest offset sites in the state.
- In the last two years, an increasing number of offset sites, many of which are larger in size, have been established in regional areas.
Biodiversity Offsetting: What does it all mean?
The Biodiversity Offsetting Scheme (BOS) in NSW is complex and expensive but it is also fascinating. Half an hour in the SPI will demonstrate that.
Having all of this data in one location though, once it is well understood, provides proponents and suppliers of biodiversity credits some certainty around offset costs or potential returns on biodiversity credit sales.
In our consultation with the NSW Government relating to the BOS, our position has always been that proponents of projects in NSW will make good investment decisions based on the certainty of project costs and the consistency of planning decisions. Whilst the SPI does not speak to the consistency of planning decisions, it does provide data for informed investment decisions.
The high cost of biodiversity offsetting has seen some projects altered to avoid biodiversity impacts, which is precisely the intention of the scheme. It has also provided offset credit suppliers with an opportunity to invest in biodiversity conservation. Both of these outcomes have created the market that is reflected in the SPI.
Niche’s place in the market as offsetting experts and credit brokers
When biodiversity offsets for major projects have the potential to add tens, if not hundreds, of millions of dollars to a project’s costs it is absolutely critical that proponents ensure project planning considers biodiversity impacts and biodiversity offset obligations.
At Niche, we have a team of eleven BAM accredited assessors who work daily with proponents of major projects across the state to reduce their offset liability through good project planning.
Our team has also supported dozens of landowners and project proponents in NSW to develop biodiversity offset sites since 2009.
Niche is proud of the fact that we developed the first approved Biodiversity Stewardship Site under the BC Act.
To date, Niche has developed the largest BioBank site in NSW and we are currently delivering what will be the largest Biodiversity Stewardship Site in NSW.
Our biodiversity offsetting leadership team consists of leading people in the field of biodiversity offsets and offset brokerage.
Developers seek our services because we can act for them in the process of securing biodiversity offsets.
Offset site owners seek our services because we have the industry and government agency links to bring their offsets, successfully, to market.
Our accredited biodiversity offsetting assessors have advised clients on the retirement of more than $50 million dollars in biodiversity offsets and we are currently supporting clients to secure biodiversity offsets for projects that will exceed several hundred million dollars in offset credit acquisition.
These numbers are significant and Niche is a market leader in the field of biodiversity offsetting in New South Wales.
We are here to help!
Biodiversity offsetting in NSW is expensive and complex. Understanding how to navigate this complexity is our core business. We know what we are doing and we have the runs on the board to prove it.
If you would like to discuss how we can assist you with your project, or to investigate the potential for your property to deliver biodiversity offsets to the NSW biodiversity offset market, our offsetting leadership team would welcome the opportunity to speak with you.
Biodiverstiy Offsetting Leadership Team – NSW
Read more about our Biodiversity Offsetting services.
Project case study: Biodiversity Offsetting for Liverpool Range Wind Farm
Project case study: Appin West BioBank Site Establishment
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