Australia’s government wants to create a market to preserve the habitats of koalas, emus and other native fauna — an effort that could be worth A$137 billion ($91.4 billion) annually.
(Bloomberg) — Australia’s government wants to create a market to preserve the habitats of koalas, emus and other native fauna — an effort that could be worth A$137 billion ($91.4 billion) annually.
Under the nature repair market bill introduced into parliament this week, companies that destroy wildlife habitat will potentially be able to offset their environmental impact by buying a credit to conserve land elsewhere.
These kinds of “biodiversity” credits would be awarded to conservation projects that can prove measurable improvements to the environment, with land managers from farmers to Indigenous communities then able to sell those credits.
“The concept of nature repair, and rewarding people, is a very good one,” said Martijn Wilder, CEO of Pollination Group, an Australia-based climate finance advisory firm, but “there are many uncertainties that still need to be resolved, including the way in which you create credits, and who will actually be buying the credits.”
A similar but smaller-scale effort in New South Wales state was largely ineffective in meeting its environmental aims, the state’s auditor general reported last year, citing additional problems with integrity and transparency. In that market, a credit for koala habitat costs A$399, and an emu credit goes for A$4,000.
A national biodiversity market could grow to A$137 billion annually by 2050, in the form of loans, bonds and other nature-themed instruments, according to a 2022 PwC report. Biodiversity offsets could grow to a A$9 billion a year market, though the Albanese government said it will only allow their use as a “last resort.”
The left-wing Greens Party, who hold the deciding votes in the Australian Senate, have already signaled they will block the national scheme unless major changes are made. “Nothing in this bill will save Australia’s koalas from extinction,” Greens environmental spokeswoman Senator Sarah Hanson-Young said in a statement.
Carbon project developer South Pole said, during public consultation, it’s “unlikely” the bill will lead to increased private sector investment, while Nuveen Natural Capital, a $10 billion asset manager, suggested the government invest to “incentivize early demand.” The Australian Banking Association, warned that the market could face liquidity issues and that a nature repair project in one area cannot be readily equated to a nature impact in another area.
Australia’s wildlife populations are declining due to climate change and habitat destruction. The PwC report estimated that Australia needed to spend A$2 billion annually for 30 years to restore degraded ecosystems. Prime Minister Anthony Albanese, who announced the program last year, said the government cannot “foot the bill alone” for conservation efforts.
“Australia is one of the first countries to try to put in place such legislation, and the government’s efforts should be recognized,” said Pollination’s Wilder. “But it’s also very important that we get it right.”
–With assistance from Sybilla Gross.
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