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In a decision that will benefit the protected natural temperate grasslands of the Victorian Volcanic Plain, Pyrenees Shire Council in Victoria will pay $155,000 towards the future conservation of this ecological community.

This good outcome for the environment comes after the council and the federal environment department agreed on an enforceable undertaking for road works that destroyed some of the endangered ecological community.

Federal environment department spokeswoman, Rose Webb, said the outcome highlighted the need for federal government approval before the start of any activity that could have an impact on a nationally protected matter.

"Between June and December 2008, Pyrenees Shire Council damaged about half a hectare of the protected grassland while carrying out road works along the Eurambeen Streatham Road, between the Western Highway and the Glenelg Highway," Ms Webb said.

"The council did not have federal environmental approval for their activities at the time, despite their actions affecting grasslands protected under national environment law.

"As a result of the damage, the council will now pay $17,500 towards research and recovery of the affected species, and $19,500 towards rehabilitating the damaged area, and will protect one hectare of good quality grassland.

"The council will also spend $118,000 on improving their environmental planning processes, including the development of an environmental management strategy for the council area.

"While it is regrettable that this threatened grassland was damaged, it is good news that this money can be put into the future conservation of the species. An enforceable undertaking is a good alternative to a lengthy court proceeding."

Under national environment law, a written undertaking of an agreed sum can be agreed between the federal government and a company that has breached national environment law. In many cases, an enforceable undertaking is preferred to court action as it allows the money to directly benefit a specific environmental and/or conservation cause.

This is the seventh enforceable undertaking agreed by the federal environment department, and the second this year relating to the natural temperate grasslands of the Victorian Volcanic Plain.

Last month, Cromwell Property agreed to contribute $62,000 towards research and secured 13 hectares of the grasslands to offset the damaged caused when they cleared half a hectare of the grassland at Altona North.