Biodiversity publications archive

Reimbursing the future: an evaluation of motivational, voluntary, price-based, property-right, and regulatory incentives for the conservation of biodiversity

Biodiversity Series, Paper No. 9
M.D. Young, N. Gunningham, J. Elix, J. Lambert, B. Howard, P. Grabosky and E. McCrone
CSIRO Division of Wildlife and Ecology, the Australian Centre for Environmental Law, and Community Solutions
Biodiversity Unit, Department of the Environment, Sport and Territories, 1996
ISBN 0 642 24429 4

Appendix 1: Literature review

Prepared by Tim Clairs, Mike Young and Bruce Howard,
CSIRO Division of Wildlife and Ecology, Canberra


The use of mechanisms that have influenced biological diversity has a long history in Australia. Aboriginal utilisation of fire resulted in extensive land management, which means many 'natural' ecosystems are actually human artefacts. The first instrument used after European settlement was the creation of the Royal National Park, south of Sydney, in 1879. This was the second national park to be created in the world (Thackway and Stevenson, 1989), after Yellowstone National Park in 1872. Legal measures were the first formal native wildlife conservation instruments implemented in Australia. In Western Australia the Oyster Fisheries Act 1881 and the Parks and Reserves Act 1895 both contained restrictions on activities. So too in NSW with the Birds Protection Act 1893-1901 and the Native Animals Protection Act 1903.

More recently there has been a move towards the greater use of economic instruments and incentives in an effort to influence the behaviour of natural resource users outside national parks and other protected areas. This is in part due to the realisation that the area available for protection may not be greatly increased. Furthermore, roughly 70% of Australia's land area is under control of private landholders and community resource managers, including indigenous peoples (Bridgewater, et al., 1992). Not all species and habitats are represented on public land and hence a landscape approach to conserving flora and fauna must involve private land. Moreover, a conservation-oriented approach to property management has benefits to landholders and for the sustainability of agricultural systems. The need to include private land in conservation programs has been recognised and increasingly, advice on nature conservation is available to landholders and resource users. All Australian States and Territories now provide opportunities for private landholders to contribute to nature conservation although the level of resources committed vary widely (Platt and Ahern, 1994).

The range of economic and other instruments available to deliver management options continues to be developed. This document provides examples of the application of incentives to conserve biodiversity both within Australia and overseas. It should be noted that few economic instruments have been introduced specifically for biodiversity conservation. Moreover, as most incentive programs are in the infancy of their use, limited information is available concerning their effectiveness in terms of biodiversity conservation.

Bringing order to a complex array of instruments is difficult, particularly when some programs address threats to biodiversity values by mixing voluntary, compulsory, regulatory and monetary mechanisms. Essentially the choice is to write either by type of threat or type of instrument and mechanism. In this document, we group the mechanisms and instruments into those that shape the institutional and community framework within which resources are used and biodiversity is conserved; then into mechanisms that make conservation happen; and finally, mechanisms used to finance biodiversity conservation. To produce further order from the complex web, we then proceed by type of instrument partitioned first into direct mechanisms, which mix biodiversity conservation objectives with other economic development and resource conservation objectives, and then indirect mechanisms.

Building a framework


Voluntary programs

Within Australia at present, voluntary programs are generally favoured over binding contractual arrangements or compensatory measures, as a mechanism for conserving biodiversity on private property. Voluntary programs require no legal undertaking on the part of the landholder or resource user that she or he will participate for any set period of time. In this respect program participation relies upon the enthusiasm and goodwill of the landholder or resource user and withdrawal from a program results only in a cessation of assistance. The effectiveness of voluntary programs is unclear. The low operating costs of voluntary programs make this approach preferable to alternatives such as land purchase or ongoing management by government. Voluntary programs are also a good vehicle for promoting an awareness of biodiversity conservation. However, they are restricted by landholder or resource user willingness and enthusiasm. Although it is true that many landholders wish to contribute to biodiversity conservation on private land (Platt and Ahern, 1994), it has been suggested that outcomes that produce favourable conservation results would only be found in 40% of cases under wholly voluntary arrangements, compared to 70% under grant forfeiture (ie. compensation) and 90% with enforced controls (Brotherton, 1990).

Australian programs

Most States and Territories operate voluntary schemes to protect specific habitats or to restrict farming practices, as indicated below.


Land for Wildlife (Vic. Dept. of Conservation and Natural Resources, 1994b; 1994c).

Land for Wildlife is run by the Department of Conservation and Natural Resources and the Bird Observers Club of Australia, a community-based organisation. It began in 1981 and was substantially upgraded in mid-1990. The objectives of the scheme are to encourage private landholders to conserve flora and fauna and habitat by fostering attitudinal change and the adoption of a conservation ethic. The scheme does not involve landholders entering into agreements with the government, but it does provide a structural framework for the support of voluntary management of wildlife habitat on private land.

Program support consists of a State-wide coordinator who provides policy and planning direction, extension officers that coordinate the program at a local level, and other staff and volunteers who assist with on-site property assessment. No direct financial assistance is available to landholders, however the framework does provide support by building landholder networks. Targeted extension projects are being aimed at areas of high priority for flora and fauna conservation. As at 1994, the scheme covered 2,500 registered properties, representing 270,000 ha, with over 40,000 ha containing many species and habitats of conservation significance being voluntarily managed as wildlife habitat. As a result of Land for Wildlife's perceived effectiveness in involving landholders, the program is now mooted as the basis for a national approach to voluntary nature conservation on private land (Australian and New Zealand Environment and Conservation Council, pers com.).

Land Management Co-operative Agreements and Wildlife Management Co-operative Areas (Max Kitchell, pers com.; Platt and Ahern, 1994; Thackway and Stevenson, 1989).

Land Management Co-operative Agreements are also available under the Conservation, Forest and Lands Act 1987. These have been mainly used for agreements with landholders to grow trees. Although no direct payment is made to landholders under these agreements, they can include grants and loans. It is possible for the agreements to lead to the creation of a covenant that restricts future development and land use options. Wildlife Management Co-operative Areas represent another type of agreement. They are voluntary agreements for a period of time to conserve wildlife, under the Wildlife Act 1975. No specific financial assistance is provided, but help is given in preparing a management plan. Only a handful of both types of agreements have been established.

Action Statement program (Vic. Dept. of Conservation and Natural Resources, 1994c).

Under the Victorian Flora and Fauna Guarantee Act 1988, Action Statements are required following the listing (on scientific ground) of taxa, communities, and potentially threatening processes. They set out conservation objectives and management issues and can cover a number of actions that influence the management of marine, freshwater, forest and land habitats. The statements are concise documents that set out achievable conservation objectives, management issues and intended and desirable outcomes.

Since 1990, 61 Action Statements have been prepared with another 25 near completion. About 32 of the 53 relate to private land, including the undertaking of weed and pest control and fencing. Although Action Statements are a legislative requirement, they nevertheless rely on the goodwill and assistance of landholders for the statements to be followed. The preparation of an Action Statement has helped support the case for funding bids under other State and Commonwealth programs for nature conservation on private lands. According to the Victorian Department of Conservation and Natural Resources, the statement is a valuable tool in educating landholders and others because, in a six or eight page document, it places the action required on private land in the overall context of survival requirements and threats to specified species and landscapes, in addition to other action being taken.

New South Wales

Wildlife Refuges and Wildlife Management Areas (Tom Fox, NSW National Parks and Wildlife Service, pers com.; Ferguson et al., 1994).

Wildlife Refuges can be proclaimed on private land if considered suitable by the NSW National Parks and Wildlife Service and upon the landholder's acceptance of a scheme of operations. Participation is voluntary but acceptance for proclamation is limited to those who meet a prespecified set of criteria. In return, technical assistance is sometimes provided. There are now over 500 Wildlife Refuges in NSW, covering five million hectares. Wildlife Management Areas are similar to Wildlife Refuges, except during game season, when managed hunting is allowed. The NSW National Parks and Wildlife Service is currently reviewing the Wildlife Refuge System with reference to the Victorian 'Land for Wildlife' scheme.


Fauna sanctuary (Thackway and Stevenson, 1989; Ferguson et al., 1994).

Queensland runs a simple voluntary agreement system which aims to protect habitat by attaching a restriction to a land title. The restriction is on landuse and the agreement is recorded on the Administrative Advices File. These restrictions, however, can be revoked by a subsequent owner. No financial assistance is available.

Land for Nature (SRMC, 1994).

The State is trialing a Land for Nature scheme based on Land for Wildlife in Victoria. The scheme has been under trial in south-eastern Queensland since March 1993.

Northern Territory

Joint management agreement and protected area management scheme (Thackway and Stevenson, 1989; Ferguson et al., 1994).

These agreements were established to encourage conservation of wildlife on Aboriginal land. The duration of such an agreement may be fixed or indefinite and there are provisions for financial assistance, advice and signs if required.

Territory Parks and Wildlife Conservation Act 1993

Under this Act, there are two avenues for the negotiation of voluntary conservation agreements. Agreements with landholders can be made under Section 73 in respect to Aboriginal land, negotiations being conducted with Aboriginal Land Councils and under Section 74 in regard to other freehold or leasehold lands. In both cases financial assistance may be provided to the landholder in order to achieve the objectives of the agreement.

Aboriginal land

Specific legislation for the purpose of conservation has been enacted in these three areas of Aboriginal land: Cobourg Peninsula, Barranyi, Gulf of Carpentaria and Nitmiluk. They are managed by the Conservation Commission operating under an agreed Plan of Management.

Western Australia

Conservation on private land (Thackway and Stevenson, 1989; Ferguson et al., 1994).

Under the Conservation and Land Management Act 1984, landholders can apply to manage private land as a timber reserve, National Park, or Nature Reserve, the aim being to provide total protection for flora and fauna values. At the time of writing WA is proposing to introduce a scheme similar to the Victorian 'Land for Wildlife'.

South Australia

Private sanctuary (SRMC, 1994).

Landholders may nominate land as a sanctuary to manage wildlife in its natural habitat and can retract by submitting a letter to the Minister of Environment and Natural Resources. There is no financial gain for the landholder, however the program is effective in identifying and linking landholders with similar interests. Forty sanctuaries have been established, but only one or two significant pieces of habitat have been preserved under this program.


Land for wildlife (Naomi Lawrence, Tasmanian Parks and Wildlife Service, pers com.; SRMC, 1994).

The program is based on the Victorian scheme and although it has not yet been formally launched, 60 landholders have expressed interest in having their properties registered.


Agreements used in the Netherlands run for six years and the contract cannot be cancelled. The contract refers to the intensity of land use and the manner of land use itself.

In Quebec ZECs (zones d'exploitation controllées), which are non-profit organisations, are licensed to manage local salmon streams and other fisheries under management plans approved by the government (Pearse and Jessee, 1994). The ZECs manage fish stocks, assume regulatory and enforcement responsibilities and charge fees for fishing.

Some interesting training programs have been run in the USA, including workshops at the University of California regarding the integration of timber and sensitive species into resource management decisions, and also estate planning for family forest land (Gregory Giusti, University of California, pers com.). The estate planning workshop is particularly relevant as it is a response to the opportunity that exists in the USA to avoid estate tax through the use of conservation easements.

Community groups

Community support of conservation policies is vital for successful implementation. Encouraging attitudinal change and the adoption of an ethic of conserving nature on private land is therefore an integral part of any efforts to introduce incentives to conserve biodiversity.


The Landcare Program has its origins as a Western Australian initiative but arose nationally as a result of Prime Minister Hawke's 1989 environment statement. Landcare forms a central part of the Commonwealth Government's efforts to achieve sustainable management of Australia's natural resources. It includes the Save the Bush Program, and the One Billion Trees Program. The Save the Bush Program seeks to assist in the protection, management and investigation of remnant native vegetation located outside national parks and reserves. The aim of the One Billion Trees Program is to help re-establish and maintain native trees and other vegetation for the purpose of natural resource management and biodiversity conservation.

According to Cameron and Elix (1991), "Landcare reflects our history of restricting government intervention to ameliorate land degradation to the encouragement of voluntary activity and the provision of extension services." Landcare has been a particularly successful program in gaining support from landholders. While focused on improvements in management for agricultural production, it provides opportunities for joint activities and community involvement by invoking a sense of responsibility for land conservation. It also provides an avenue for the dissemination of environmental information. These factors, coupled with the fact that Landcare objectives are largely undefined, create the possibility of incorporating biodiversity conservation measures into the program.

Other community groups

The Australian Trust for Conservation Volunteers organises landcare and conservation groups through its Echidna Package Program (Preece et al., 1995). Volunteers are provided for conservation projects on both public and private lands. During 1993-1994, 22,664 working days were accumulated on projects throughout Australia. Earth Watch has had success in combining research and ecotourism world-wide by packaging volunteer projects in the same manner.

Groups that form an attachment to a particular place or species contribute to the management of conservation areas and help conserve biodiversity. The Victorian National Parks Association has 102 Friends of Parks groups and 11 Friends of Flora and Fauna groups involved in the conservation of particular species (Vic. Dept. of Conservation and Natural Resources, 1992). Other groups such as the 'Friends of the Melbourne Botanical Gardens' contribute to the conservation of biodiversity by holding seminars and providing guest speakers in an effort to influence the behaviour of others. The Threatened Species Network has involved the community in many 'Friends of X Species' groups, which sometimes work to protect species found on private land (Vic. Dept. of Conservation and Natural Resources, 1992). Schemes such as Save the Bush and Land for Wildlife are having an influence on community attitudes towards the importance of biodiversity conservation. As a result, targeted extension projects aimed at areas of high priority for flora and fauna conservation are being created. For example, landholders in North-East Victoria have formed 'The Superb Parrot Action Faction' (Max Kitchell, Vic. Dept. of Conservation and Natural Resources, pers com.).

As far as we can ascertain, local government involvement in purely voluntary conservation schemes is limited to the provision of facilities used by non-government organisations like Field Naturalist Societies and, in addition, a range of publicity programs designed to enhance community awareness of biodiversity values. This last group of programs are usually associated with attempts to promote ecotourism.

Promotion of biodiversity

Voluntary programs and community groups can significantly raise the awareness of biodiversity concerns in the community and amongst landholders and resource users. According to the Australian and New Zealand Environment and Conservation Council (pers com.), voluntary programs can gain considerable leverage through landholder willingness and enthusiasm. The linking up of like-minded landholders through networks, as is occurring in a large proportion of voluntary programs, is based on sound psychological principles of promotion. Networks allow for exchange of information, reinforcement of attitudes, encouragement, pooling and efficient use of limited resources, teamwork and a way to overcome a sense of isolation within the community. Effective networks can eventually become self-promoting, as is the case for Land for Wildlife in Victoria (Platt and Ahern, 1994).

Landcare takes the use of psychological principles to promote biodiversity conservation beyond landholder and spouse networks. As Andrew Campbell notes, 'probably the most powerful aspect of Landcare is our work in the schools under a program called Land Literacy (1994). Land Literacy includes assignments such as Salt Watch, which involves six-year-olds or eight-year-olds mapping the salt areas on their parents' farm and displaying the results at school. According to Campbell this is a very powerful form of social learning.

Involving the community and increasing public awareness through education is recognised as a need in the international Convention on Biological Diversity (article 13) and is addressed in the National Biodiversity Conservation Strategy (Australian and New Zealand Environment and Conservation Council, 1993). The Humane Society International's drafting for a Biological Diversity Conservation Act in Australia includes a suggested section on the establishment, funding, and implementation of a National Biological Diversity Education Program (Michael Kennedy, pers com.). Short-term funding for a Community Biodiversity Network provides a first step in this initiative. The Australian Nature Conservation Agency also notes the power of schools in promoting biodiversity conservation. One of its proposed goals for the Biosphere Reserve Action Plan (Parker, 1993) is to develop education packages at the primary, secondary and tertiary levels.

Ecotourism represents a possible conduit for influencing resource user behaviour although its role in conserving biodiversity in a particular area is not always clear-cut. The National Ecotourism Strategy (Commonwealth Dept. of Tourism, 1994) includes education and interpretation as an element of ecotourism and outlines an education package for implementation. Corporate sponsorship, by, for example, adopting an animal, is another method of gaining a degree of moral leverage over the public to maintain a species. Using measures based on psychological principles to bring about attitudinal change within corporations is also important.


Resource planning
National strategies

The Prime Minister of Australia, in his Environment Statement in December 1992 committed the Commonwealth to the progressive establishment, in cooperation with the States and Territories, of a comprehensive, adequate and representative system of protected areas by the year 2000. The initiative is administered by the Australian Nature Conservation Agency as the National Reserves System Co-operative Program (NRSCP). One of the outcomes from discussions between the Australian Nature Conservation Agency and the State and Territory nature conservation agencies regarding the development of the National Reserves System, was the need to produce a biogeographic regionalisation. As such, an Interim Biogeographic Regionalisation of Australia (IBRA) has been developed (Thackway and Cresswell, 1994). IBRA represents a national classification of ecosystems that transcends political boundaries. The regions have been developed on the basis of geology, geomorphology, climate, present and natural vegetation, disturbance, and flora and fauna. All States and Territories in Australia contain a variety of National Parks, reserves and conservation areas of varying status.

Australia has 12 sites that have been designated as Biosphere Reserves by UNESCO and an action plan for implementing the national biosphere reserve program has been approved (Parker, 1993). A Biosphere Reserve contains a protected core of undisturbed representative terrestrial and/or coastal environments and one or more surrounding 'buffer zones' in which experimental work and other human activity can be carried out (Hooy and Shaughnessy, 1992).

The Department of the Environment operates a scheme that provides for salaries to employ Environment Resource Officers in each State Local Government Association. These officers serve to translate DEST programs to local government and provide feedback from the local government level to the Commonwealth Department. Funding for these positions is evaluated annually.

Regional strategies

Some government programs provide for regional administration. Queensland's Management of Riverine Vegetation program, for instance (see p.19), includes legislative guidelines that have been developed on a regional basis, in recognition of the wide variety of stream and catchment types across the State. This approach allows local land management practices to be addressed. In South Australia, the State Revegetation Strategy aims to establish regional plans to incorporate revegetation and management of existing vegetation into land management plans (SRMC, 1994).

Bioregional management plans are not widely used in Australia. A plan has been established for the Great Barrier Reef Marine Park. This management plan is in line with internationally established guidelines for marine protected areas (Kelleher and Kenchington, 1991).

Overseas experience includes the Serengeti Greater Ecosystem in Kenya and Tanzania, the Waddensee program along the coasts of Denmark, Germany and Netherlands, and Yellowstone in the USA (UNEP, 1994). In 1991 California initiated a coordinated approach to bioregional management. The State was divided into bioregions and an action plan for each ecosystem was then developed (Giusti, 1993).

Local strategies

Local Conservation Strategies are prepared by local councils and communities in most States. Depending upon the priorities of the community, the strategies may or may not relate to the conservation of biodiversity on either public or private lands. In relation to agricultural land, strategies have been most effective when providing a planning framework whereby planning powers deal with the effect on nature conservation of urban development proposals. For instance, the Ballarat strategy which covers not just the City of Ballarat but five surrounding Shires provides such guidance. Some strategies have also proposed rating incentives to maintain conservation values of broadacre agricultural land (see p.23 for further detail regarding rating incentives). As at August 1993, 24 rural/regional centre councils had prepared, or were preparing, strategies (Vic. Dept. of Conservation and Natural Resources, 1994c).

Many local government organisations, for example Gunnedah Shire Council in NSW, use tree clearing ordinances that require landholders to obtain permission to remove a tree. Land use with potentially adverse effects on biodiversity, like the construction of a feed lot, may require planning approval, however this usually only applies to urban circumstances. Not many of these restrictions affect farmers and large scale developers.

Institutional arrangements
Institution building

The creation of institutions specifically designed to deal with biodiversity conservation will in themselves create incentives through education and increased awareness of the issues. The Biodiversity Unit within the Department of the Environment, Sport, and Territories is a good example. The Australian Nature Conservation Agency also has a major role to play in conserving biodiversity generally, and in administering the implementation of incentive mechanisms.

It should also be noted that the Australian Biodiversity Council was established in November 1994 by a group of scientists concerned about the future of Australia's biodiversity. The goals of the Council are to advocate scientifically based policies and mechanisms for the conservation of biodiversity and to stimulate informed public discussion about issues that affect biodiversity values.

Government research

Whilst the Department of the Environment, Sport and Territories and the Australian Nature Conservation Agency routinely fund research on biodiversity conservation, funds are limited and no biodiversity research and development (R&D) corporation exists in Australia. R&D corporations, under the direction of the Minister of Primary Industry and Energy such as the Land and Water Resources Research and Development Corporation (LWRRDC) are paying increased attention to the importance of biodiversity conservation. Such mechanisms provide a financial incentive for researchers to study biodiversity problems. Other government created research mechanisms exist. In South Australia, oyster farmers are obliged to contribute to the Environmental Monitoring Fund, an R&D organisation which carries out environmental impact studies of oyster farm conditions (Vic Neverauskas, Primary Industries SA, pers com.). This R&D may need to be integrated and coordinated in order to address biodiversity issues more effectively.

International conventions and conferences

Australia is a party to the Convention of International Trade in Endangered Species (CITES) which restricts the international trade in endangered species and bans the trade in the most vulnerable species. It has also ratified the Convention on Biological Diversity, which came into effect on 29 December 1993. Article 11 of the Convention calls upon countries "to adopt economically and socially sound measures that act as incentives for the conservation and sustainable use of components of biological diversity." Many countries are now in the process of developing national strategies which include the use of incentives. This document is one Australian contribution to that process. Canada, Mexico and the USA have planned three conferences on the use of incentives. The first North American Conference on Social and Economic Incentives for the Conservation of Biodiversity took place at the Mexican Foundation for Environmental Education, in Tepotzotlan, in March, 1994. O'Toole (1994) writes that the conference generated a careful discussion of the problems and produced a wide range of ideas for protecting biodiversity.

The Organisation for Economic Cooperation and Development (OECD) has set up a Council on the Use of Economic Instruments in Environmental Policy which provides an institutional incentive in relation to the conservation of biodiversity through the recommendations that OECD member countries adopt. The OECD Environment Policy Committee's Group on Economic and Environment Policy Integration; Expert Group on Economic Aspects of Biodiversity has also undertaken Country Case Studies that address these issues (OECD, 1994c). It was hoped that these case studies would enable a comparison of the measures undertaken in each country and an evaluation of the effectiveness of the economic incentives. The outcome, however, indicates countries only have limited experience in the use of economic instruments to conserve biodiversity (OECD, 1994d). Another feature is that virtually all the instruments identified in these studies have been targeted to land use and land management, while options for the use of incentive mechanisms to conserve marine habitats and species and genetic resources have not been developed. Finally, there has been very little evaluation of policy instruments.

Government programs

Government consideration of biodiversity values and the possible impacts on biodiversity conservation of all Commonwealth, State and local programs could serve to heighten awareness of the importance of biodiversity conservation. The Task Force on Economic Instruments and Disincentives to Sound Environmental Practices in Canada recently endorsed such a recommendation (1994). The explicit recognition of biodiversity conservation objectives in programs that do not pursue biodiversity conservation as a primary goal, could not only guide government officials, but encourage business, other levels of government, and individuals to become more aware of the need to conserve biodiversity. For example, where land management plans are now required as a Crown lease condition, as is the case in Queensland (SRMC, 1994), the management plan could specifically address biodiversity values.

Investment in local natural resources could be encouraged through government programs. This might simply mean the creation of land-tenure institutions, or it may mean creating more complex mechanisms to encourage investment in ecotourism or non-timber forest products (OECD, 1994c). Regardless, there is a need for government structures to recognise the changing nature of land management in Australia. It has been noted that the landholders whom the incentives are intended to influence are not the population at large, but very small and specific subsets with quite identifiable characteristics (Margaret Blakers, pers com.). Local community institutions such as Landcare have been created, but the possibility for introducing schemes, such as revenue-sharing arrangements with local communities, still exists.

The introduction of government programs that indirectly assist biodiversity conservation, can also promote biodiversity and create incentives. Aboriginal Assistance Programs are a good example. Under the National Parks and Wildlife Conservation Act 1975, the Australian Nature Conservation Agency (formerly the Australian National Parks and Wildlife Service) can assist Aboriginal people to manage their land for conservation purposes. There are no specific provisions other than allowing consultation (Thackway and Stevenson, 1989). The Commonwealth government also runs the Contract Employment Program for Aboriginal People in Nature Conservation. Finally, an investigation of the feasibility of voluntary inclusion of appropriate Aboriginal and Torres Strait Islander land and marine estates into a protected area system is currently being undertaken by the Australian Nature Conservation Agency.

Monitoring systems and information

The use of environmental information as a means of creating environmental objectives has produced national responses such as the Environmental Resource Information Network (ERIN) and the National Resource Information Centre (NRIC). The State of the Environment reporting process that is under way will also create information systems on the environment, as well as provide a set of environmental indicators that can be monitored.

Making it happen


Management agreements

A management agreement is a legally binding contract, entered into for a set period of time, under which a landholder agrees to refrain from particular activities and to undertake other activities, with or without reimbursement. The reimbursement is based on the net profit foregone or on the diminution in capital value as a result of the agreement (Brotherton, 1991) and made on a case-by-case basis. This, however, can lead to high transaction costs. To overcome high transaction costs, Standard Payment Systems operate in the United Kingdom, such as those for Environmentally Sensitive Areas and the Countryside Premium Scheme. Under these systems, payment levels are set per hectare or per unit of work done and apply to all landholders who accept the standard contract. Contracts usually remain fixed for about five years and are not binding on subsequent owners. Due to the short-term nature of most management agreements, they do not ensure the long-term maintenance of flora and fauna.

Contractually binding management agreements are not as prevalent in Australia as voluntary arrangements, however they are commonly used overseas (Colman, et al., 1992; IISD, 1994).

Regulatory agreement

A good example of a regulatory agreement is the Potentially Damaging Operations (PDO) on Sites of Special Scientific Interest (SSSI) in the United Kingdom. An SSSI is designated on the basis of the quality of existing habitat types (grasslands, wetland etc) in each region (Webster and Felton, 1993). Under the Wildlife and Countryside Act 1981, the Nature Conservancy Council (NCC) can offer a landholder a management agreement after the landholder has provided notification of an intention to undertake PDO on an SSSI. If the landholder refuses the offer and the site is considered too valuable to lose, the NCC can gain a one year moratorium in which to make another offer. If this is again refused (not usually the case) the NCC cannot stop the PDO (except if relief is sought under the 1949 National Parks and Access to the Countryside Act for the compulsory purchase of the land. This avenue is rarely pursued). As at March 1990 there were 1,759 management agreements with the NCC, most running for 21 years.

In Australia, regulatory agreements operate in some States. In Victoria, agreements between local authorities and landholders are required, in some cases, under section 173 of the Planning and Environment Act 1987 before a planning permit will be granted (Vic. Dept. of Conservation and Natural Resources, 1994a). These agreements can lead to the registration of the conditions on the title in the manner of a covenant, however, section 173 powers have been rarely used for biodiversity conservation purposes.

Incentive agreements

The use of management agreements, that are entered into voluntarily by landholders as a response to financial incentives offered, is not widespread in Australia, due to the funding requirements of such agreements. The South Australian Conservation Area Scheme, operated under the National Parks and Wildlife Act 1970, does provide for compensation for financial hardship resulting from the protection of wildlife or habitat. The conservation areas are leased by the State, with the lease payments representing the financial compensation (Ferguson, et al., 1994). In the Northern Territory binding management agreements can be entered into with landholders allowing government assistance for the protection and conservation of wildlife on private land (SRMC, 1994).

Within the European community, landholders receive compensation if they agree via a management agreement, to maintain features of the landscape (UNEP, 1994). The United Kingdom, for example, has introduced voluntary management agreements through the Countryside Stewardship program, which provides 10 year agreements that cover management and capital costs required to conserve wildlife habitats. The UK also operates the Environmentally Sensitive Areas Scheme (ESA) with similar 10 year agreements. Payments are on a per hectare basis. There are currently 43 ESAs in the UK, covering 15% of agricultural land (3.5 million hectares). The cost of ESAs is steadily rising; from (£13 million in 1991/2, to a budgeted (£64.5 million in 1994/5 (Webster and Felton, 1993). Switzerland runs the Integrated Production Programme (IPP) complementary to the Ecological Compensation Programme (see p.17). The IPP is a voluntary scheme whereby farmers are given standard amounts based on profits foregone in return for agreeing to certain restrictions (OECD, 1994d).

As Hodge (1991) points out, management agreements can overcome firstly, the "stigma of paying farmers for doing nothing, and secondly, the incentive for farmers to threaten changes in an attempt to obtain compensation," by stipulating in the contract what actions represent responsible stewardship for which compensation should not be expected. Hodge advocates that landholders should be expected to meet the standards regardless of whether they wish to enter into a management agreement. Enforcement of the standard may be achieved by specific preservation orders, such as Landscape Areas Special Development Orders used in the UK.

Easements and covenants

Although the precise definition and use of these terms varies from State to State, an easement or covenant essentially limits a landholder's ability to exercise certain rights over his or her land. There are advantages accruing to a government or organisation that acquires an easement or covenant instead of purchasing land outright. Apart from the fact that easements and covenants are cheaper to acquire, because the land remains privately owned, the government will still obtain some property tax and it does not have to pay maintenance costs on the land. Benefits that accrue to the landholder may include a reduction of property taxes and estate taxes because of the 'reduced market value' that may occur when easements or covenants are attached. This however may be considered as a disincentive to landholders who wish to sell their property. In the USA, tax benefits are also possible if easements are donated to an agency or conservation organisation (Crompton, 1990). Easements or covenants can be acquired by organisations other than government institutions. They are particularly attractive when no action is required for their maintenance.

The literature reviewed portrayed a significant divergence in the definitions of covenants and easements. UNEP's Global Biodiversity Assessment report (1994) draws a technical distinction between a covenant and an easement by stating that an easement secures a benefit (like an access walkway) for one piece of land at the expense of surrounding (contiguous) land. Further, it is held that easements generally may not impose positive obligations upon the landholder. The differences are blurred, however, when the contiguity requirement is waived and a conservation agency merely enters a contract with a landholder to prevent certain land uses such as the right to clear or log a timbered area.

UNEP also describes an easement as a contract, whereas a covenant is stated to be a legal instrument. This descriptive difference may imply that compensation is available under an easement, but not generally available under a covenant. Compensation may be available under either an easement or a covenant, and in all cases that we are aware of, they are entered into on a voluntary basis.


The Wetlands Reserve Programme in the USA is a good example of the application of easements. Payments are provided if participants agree to a long-term easement (30 years) to set aside wetland and implement a conservation plan (OECD, 1994d). As an illustration of the different uses for easements, Crompton (1990) provides an overview of the various easements that are available. It is worth noting that the author makes particular reference to the situation in the USA and therefore some easement definitions may be peculiar to the USA.

Affirmative and negative easements

An easement that permits an action on the land is an affirmative easement, for example an access walkway through private land. Negative easements limit the activities that can be undertaken on the land, such as a restriction against development or restriction against altering or intensifying a land use.

Appurtenant and in gross easements

An appurtenant easement is designed to provide protection or some sort of benefit to land that is usually, but not necessarily, adjoining the land to be protected – for example, a clearing ban on land adjacent to reserves. Where it is desirable to negotiate several appurtenant easements with neighbouring landholders, there may be some trepidation amongst the landholders to commit to the easement with no guarantee that fellow landholders will cooperate. This problem can be overcome by placing the easements in escrow and allowing all landholders concerned to inspect each other's easement arrangements (Crompton, 1990). An in gross easement is one where the holder of the easement does not own land adjacent to the land subject to the easement. Easements in gross cannot always be transferred without the consent of the party who owns the adjacent land.

Term and perpetual easements

Easements may be granted for a fixed term or in perpetuity. A term easement may be used, except in Queensland, by a conservation agency to buy time to acquire the land or undertake research. Easements granted in perpetuity are permanent because they legally bind all present and future owners of the land. They transfer the rights or obligations with the title to the land thereafter. Conceptually, an easement could also attach to any renewal right associated with a lease.


A covenant is tied to the land and binds successors in title. The beneficiary (usually a government department or conservation trust) can enforce the terms of the covenant in the courts. Such instruments only exist in a few countries. In the USA there are covenants called 'dedications' that preserve land from expropriation by government agencies, in zoned protected areas and around zoned protected areas. In British Colombia, Canada, statutory covenants are in regular use.

A covenant, according to Colman et al. (1992), is "a promise made by one party (the 'covenantor') for the benefit of another party (the 'covenantee'), which is contained in a deed signed by the covenantor." The covenantor assumes the 'burden' of the covenant, while the covenantee derives the benefit. The authors state further that, where the covenant restricts the covenantor's activities, the burden can normally be passed on only as long as the original covenantee retains an adjoining piece of land. This can be overcome, however, by using Covenants in Gross. Once the adjoining land is sold the power of the covenant lapses.

Australian examples of easements and covenants

South Australian Heritage Agreements (Bradsen, 1994; SRMC, 1994; Ferguson et al., 1994; Native Vegetation Council, 1994; Forge, 1994; Thackway and Stevenson, 1989).

An ineffective voluntary scheme to reduce native vegetation clearance was introduced in 1980, of which entering into a Heritage Agreement, under the Heritage Act 1978, was one of the options available to landholders. Heritage Agreements (statutory contracts between the landholder and the Minister) are in effect easements, as contract details are registered on the land title, thus binding succeeding landholders. In return the landholder receives some compensation and fencing assistance.

To boost the effect of measures against clearing, Development Control Regulations were introduced in 1983 by characterising clearance as development under the South Australian Development Act. The High Court held that uncleared land on farms was notionally being used for agricultural purposes and thus was protected by the 'existing use' provisions of the Planning Act 1982. This resulted in the introduction of the Native Vegetation Management Act 1985 which prohibited clearance without the consent of the Native Vegetation Authority. Consent could only be obtained by applying to the Authority for a clearing licence. Over 90% of applications for a clearing licence were refused and the refusals were entitled to compensation. A condition of the compensation was that the landholder accept a Heritage Agreement.

By 1989-90 it was apparent that some landholders were applying for clearing licences with the purpose of being refused and receiving compensation. In 1991 a new Native Vegetation Act was introduced partly as a response to greater acceptance of clearing reductions by the community, and partly in an effort to cap compensation payments. The Act provides incentives and assistance to landholders to preserve and enhance native vegetation, but applications for clearing licences are no longer automatically entitled to compensation. The compensation that is granted is now discretionary and may or may not include entering into a Heritage Agreement as a condition.

Heritage Agreements are now entered into independently of clearing applications and are available to landholders who want to better care for native vegetation. They also apply to coastal waters. There are now 750 Heritage Agreements registered, covering about 420,000 ha, with another 150 agreements to be finalised by 1995/96 which will take the total area covered up to 600,000 ha (20% of native vegetation within the State agricultural regions). Yet it has been noted that there are difficulties in servicing 750 agreements scattered over large areas and furthermore, the measures require a large commitment over a long period of time (SRMC, 1994). Heritage Agreements have so far cost the government $71.5 million. In cases where land managers are hostile, there is also difficulty in achieving land manager ownership and responsibility for ongoing maintenance.

Victorian Conservation Trust, Conservation Covenant Program (Vic. Dept. of Conservation and Natural Resources, 1994c; Thackway and Stevenson, 1989).

The Victorian Conservation Covenant Program is an example of statutory covenants (Conservation Trust Act 1972) whereby entry into the agreements is voluntary. The covenant is registered on title and binds all future owners. The aims of the program are to conserve areas on private land which are ecologically significant, of natural beauty, or of historical interest, and to conserve wildlife and native plants. Properties are inspected every 3 years to ensure that conservation values are being maintained and the costs of registering the covenant, about $2,300, are met by the Trust. A total of 309 covenants covering 10,000 ha have been approved. Of these, 136 (5,000 ha) have been registered on title. Conservation covenants are increasingly being used to achieve negotiated planning solutions in rural areas that secure nature conservation values whilst allowing higher density land use. The Trust considers this to be an effective program that is steadily gaining popularity, however acceptance by mainstream farmers has been slow. The Trust intends to address this issue by means of publicity and educational materials directed specifically to farmers, and through building more flexibility into the covenant program to better accommodate the diversity of nature conservation and land management concerns on farming lands.

Victorian Land Management Co-operative Agreements (Thackway and Stevenson, 1989).

Victorian Land Management Agreements are entered into under the Conservation, Forests and Lands Act 1987.

Queensland Fauna Refuges (Thackway and Stevenson, 1989).

Under the Queensland Nature Conservation Act 1992, which replaced the Fauna Conservation Act 1974-1985, Fauna Refuges can be created on private land at the request of the landholder. A binding management plan is agreed upon which then runs with the title or lease. The purpose of the refuges is to provide indirect protection of flora, through the maintenance of habitat, and to provide protection to fauna specified in the management plan. No financial assistance is available, but management advice and technical support is provided.

Tasmanian conservation covenants (SRMC, 1994; Thackway and Stevenson, 1989; Naomi Lawrence, pers com.).

Conservation covenants can be entered into under a recent amendment to the Public Land Administration of Forests Act 1991 amended from the National Parks and Wildlife Act 1970. These covenants can be initiated at the request of the landholder or as a result of an application by the landholder for, for example, a timber harvesting plan. As at 1994 no conservation covenants had been implemented. The effectiveness of the covenants is limited by the lack of a compensation fund for covenants arising from private forestry operations and also the lack of resources available to prepare general conservation covenants (SRMC, 1994). Conservation covenants could be utilised in conjunction with Private Wildlife Sanctuaries and the Land for Wildlife program.

NSW conservation agreements (Ferguson et al., 1994; Tom Fox and Rob Gillespie, NSW National Parks and Wildlife Services, pers com.).

Conservation Agreements are made under the NSW National Parks and Wildlife Act 1974. They can be initiated by NSW National Parks and Wildlife Service's identification and assessment, or by the application of the landholder or a third party. The agreements are in effect easements as they run with the land title and can bind subsequent owners. The agreements can contain terms that restrict land use, require landholders to carry out activities or to permit access to specified persons, or require the landholder to contribute towards the costs. The Service's current brochure on conservation agreements states that only limited assistance, such as fencing materials and technical advice, are available. Nine conservation agreements have been finalised, two have been signed by the landholders, and up to one hundred are proposed for negotiation (Janine Williams, NSW NPWS, pers com.).

Positive action

Economic incentives to encourage positive action, in terms of biodiversity conservation, are applied in some countries. In the USA non-government organisations have recently begun paying landholders to conserve particular species. Defenders of Wildlife introduced The Wolf Reward Program in 1992, which pays $5,000 to private landholders if wild wolves successfully raise a litter of pups on their land (Clark and Downes, 1994). In Scotland, the Goose Management Scheme, run by the Scottish Natural Heritage Trust, pays farmers per head of Greenland White-Fronted Goose recorded on their land over a 12 month period (OECD, 1994d). Farmers in the Peak District Dales in the United Kingdom are paid on the basis of the number of wild flower species found in their meadows (Hodge, 1991). The Austrian National Association for Genetic Resources carries out a program of premiums to farmers for the cultivation of endangered breeds of traditional cattle (OECD, 1994d). Positive action is also compensated under Switzerland's Ecological Compensation Program, which offers payments in return for maintaining or establishing various types of natural landscapes. This system has a scale of rates of compensation depending upon the type of land. Since 1993, 4% (47,000 hectares) of agricultural areas have benefited (OECD, 1994d).

Hodge (1991) highlights a possible concern with compensating landholders to conserve particular species, as it is not necessarily the number of species per se which is important but the conservation of the habitat. Receiving such payments could in fact provide an incentive to cultivate the habitat in such a way that was beneficial only to the species in question. The question is one of whether or not the species is being used as an indicator of biodiversity conservation values at work, or whether conservation of that species is the sole objective.

Withdrawal of property rights

The acquisition of land for conservation purposes does not in itself ensure the conservation of biodiversity values. Areas of biodiversity value also require ongoing management to maintain and protect values. Compensation or reimbursement of incremental costs provides an incentive for landholders to enter into voluntary management agreements.

The Western Australian Public Works Act 1902 allows for land to be taken by the Governor. Where such acquisition is necessary for nature conservation, a purchase price is normally agreed based on Crown valuation. Land exchange as an alternative to cash compensation is available in Western Australia as is compensation for the loss of rights other than land ownership. Under the Western Australian Country Areas Water Supply Act 1947, the government may refuse a landowner permission to clear vegetation where the clearing may threaten water supplies. Where permission to clear is refused, the landowner may claim compensation. In Western Australia, compensation may also be payable where a landowner is refused permission to take threatened flora and as a consequence suffers a loss of use or enjoyment of the land.

As reimbursement for incremental costs

The financial assistance applicable as part of many of the voluntary management schemes offered by the States and Territories is sometimes provided on the costs of material associated with the work required. For instance, payments are made in Victoria under the Land Protection Incentive Scheme and 50% of fencing costs are paid under the Conservation of Native Vegetation on Private Land in Rural Areas scheme in Western Australia (Thackway and Stevenson, 1989).

As indicated earlier, financial assistance can also be obtained from non-governmental organisations. Although not undertaken in Australia, conservation organisations in the USA often compensate landholders. Ducks Unlimited pay farmers to conserve waterfowl habitat (Poole, 1993), and the Defenders of Wildlife's Wolf Compensation Fund compensate for the effects of wolf predation on livestock (Defenders of Wildlife, 1994; Clark and Downes, 1994). In France, hunters pay into a fund to compensate farmers against the damage done by game (Tisdell, 1994). In such cases, reimbursement is for incremental costs so that expected net profit from the land is similar to that obtainable if the desired practice has not been adopted.


There is a wide range of grants available in Australia but very few go beyond providing funds for the encouragement of sustainable land use. Schemes with criteria relevant to biodiversity include Landcare, Tree Victoria, Land Protection Incentive Scheme (Victoria), Community Salinity Grants (Victoria), Salt Action (NSW), the Tasmanian Soil Management Assistance Fund and National Estate.

One grant scheme, which has close links with biodiversity conservation, is the Save the Bush program (STB). This operated originally as the National Tree Program from 1982 as a revegetation program and was replaced in 1989 by the One Billion Trees (OBT) and the STB program as part of the Prime Minister's Statement on the Environment.

The objective of STB is:

to encourage, facilitate and support programs and activities associated with the protection, management and investigation of remnant native vegetation, particularly outside National Parks and other reserves, which directly or indirectly assist with the maintenance of biological diversity in Australia (Ferguson et al., 1994).

STB funds are disbursed to the community and local governments, State and Territory governments, and to research institutions. In addition, funds are used for the provision of education and information services.

Apart from providing grants to entice landholders to undertake conservation measures on their property, grants can also be provided to enable voluntary bodies or Environmental Funds to purchase land. The World Wide Fund for Nature is involved in providing grants for such purposes (Colman et al., 1992), but on the whole these grants are provided by public agencies.

There has been a level of criticism directed towards the lack of funding that Australian grants provide (Elix, 1991). Further, where grants do not operate within a legislative or policy framework, they remain dependent upon the will of the landowner rather than on ecological criteria.

Despite these perceived shortcomings, grants can nevertheless prove effective in involving private landholders and communities in biodiversity conservation matters. Young (cited in Elix, 1991) makes the point that "taxation legislation cannot be targeted to specific areas. In virtually all cases it would be much more efficient to introduce a grant scheme which provides a subsidy over, say, a 5 year period. The subsidy in the first year might be 20%, 15% in the second year, 10% in the third, 5% in the fourth and the last year 0%. The aim is to speed up the rate of adjustment, not to provide a permanent and ongoing support for structural change."

Removal of perverse incentives

A perverse incentive is any incentive that induces behaviour that results in loss of biodiversity or creates a threat to biodiversity conservation (McNeely, 1988). Often perverse incentives occur because the government has intervened in the market to secure social or economic ends without fully understanding or considering their implications for biodiversity conservation. The OECD lists administered resource prices, output pricing, irrigation subsidies, below cost timber pricing, subsidised crop insurance, and agricultural support programs, as examples of government intervention that causes perverse incentives (1994c). Many of these examples are present in the Common Agricultural Policy of the European Union (Moran and Pearce, 1994; IISD, 1994). Yet the removal of perverse incentives is one of the most cost-effective means of financing the conservation of biodiversity values.

Perverse incentives within Australia's agricultural sector are generally lower than in other OECD countries, in terms of aggregate support as measured by the Producer Subsidy Equivalent, an index of perverse incentives (Moran and Pearce, 1994). In 1990 Australia's overall agricultural support was 11%, compared to Japan's 68% and the EU's 48% and an OECD average of 44%. Industries where levels of protection are still high include sugar and a variety of irrigation industries where water is still supplied at concessional prices and the native forest logging industry, where timber is supplied at less than full cost.

In the past, it has been argued that drought policy has encouraged land degradation, including the loss of biodiversity values. Recent changes to drought policy at both the State and Commonwealth level are making farmers more self reliant in a way that may reduce threats to biodiversity values in times of biological stress.

Protective legislation
Species and habitat protection

Legislative controls aimed at protecting native vegetation vary from State to State. Multifarious clearing controls operate around Australia (Donald, 1994), but only two States have acted on a State-wide basis (Elix, 1991). Broadacre clearing has been effectively prohibited in South Australia under the Native Vegetation Management Act 1985 then the Native Vegetation Act 1991. In Victoria, the Native Vegetation Retention Planning Control program was introduced in 1989 as part of an overall package of measures to reduce broad scale clearing of native vegetation, which also includes information, advice and assistance. The program requires a permit, under the Planning and Environment Act 1987, before any clearing is undertaken. According to the information provided to the SCARM Sustainable Resource Management Committee, the controls have resulted in a reduction in annual clearing of native forest from 13,000 ha to around 6,000 ha. These controls have met with resistance from local authorities and the community and there are difficulties in enforcing the controls. In an effort to overcome these concerns, controls are to be devolved to the regional level.

The Flora and Fauna Guarantee Act 1988 of Victoria provides for determination of critical habitat, although no areas have yet been determined. Removal of native wildlife (including fish) from within these areas, even if on private land, requires a permit. Access to critical habitat areas can also be restricted under an Interim Conservation Order. To protect critical habitat which is listed under the Flora and Fauna Guarantee Act 1988 and threatened by proposed development, the orders provide a two year moratorium to protect biodiversity values and to sort out a long-term solution. To date no such orders have been put in place (Max Kitchell, pers com.), nevertheless the opportunity exists for compensation, in cash or in kind, for orders and any resultant work undertaken. The Catchment and Land Protection Act 1994 of Victoria, although primarily aimed at production values, also has some capacity towards implementing native vegetation controls. Under this Act, certain land use practices can be restricted in designated areas. The Act also provides a framework for integrated catchment management through a system that is based upon a community-government partnership.

Victoria also operates the Grasslands Planning and Extension Program (Vic. Dept. of Conservation and Natural Resources, 1994c) which began in September, 1993. The program encourages landholders to manage remnants of lowland grasslands by showing them sites and explaining the benefits of retention in terms of production and conservation. As of December 1994 fifty properties had been inspected. Training is also provided by way of public presentations and local radio/newspaper publicity. The main long-term measure of success will be the number of significant grassland sites and areas that remain intact.

In Queensland an interesting Management of Riverine Vegetation (Non-Tidal) program operates. The Water Resources Amendment Act 1993 requires a permit to be obtained to clear vegetation or to excavate or to fill in a non-tidal watercourse. Large penalties apply and a comprehensive program of Riverine Protection Education is concurrently under way in the community, commencing with an attitude survey (SRMC, 1994).

Endangered flora are protected in all States and Territories. Similarly, a permit or licence is required in most States and Territories to take, kill, trade, or export protected fauna. These licences, however, are usually issued for a short period of time with no guarantee of renewal. The Commonwealth's Endangered Species Protection Act 1992, although it does not have wide ranging application, requires Recovery and Threat Abatement Plans to precede Commonwealth actions which endanger listed species, and provides for Commonwealth financial assistance to help States prepare such plans (Judy Lambert and Jane Elix, Community Solutions, pers com.).

Marine habitat is generally protected through input controls for commercial fishing and more recently through management incentives. In most commercial fisheries, the total number of trawlers operating in a fishery are controlled by limiting available licences and by imposing licence conditions. Fisheries can be closed for periods to allow habitat recovery and fishing equipment that is particularly destructive to the habitat can be banned from use. If licence conditions are not met and habitat is unduly destroyed, licences can be revoked. In NSW, under the new Fisheries Management Act 1994 fishery rights (shares) are also held for set periods. During each period the condition of the fishery and its habitat is reviewed, which may result in new restrictions for the share holders. If they accept the restrictions their shares are rolled over for a new period. If they are not willing to accept the changes they may sell their shares so that their investment is protected.

Many of Australia's fisheries are currently implementing management plans so as to involve fishers in decisions on how best to avoid habitat loss. Further stakeholder involvement is guaranteed in NSW under the Fisheries Management Act 1994. Fishery-share systems are being introduced that make fishery rights fully transferable and mortgageable. As a result of gaining increased investment security, fishery managers have a greater incentive to avoid habitat loss. As such they are being forced to adopt an adaptive strategic approach to the conservation of marine biodiversity.

Recreation fishing is regulated in all States by restricting the type of gear that may be used and setting limits, known as bag limits, to the total amount that may be caught in any period and requiring small fish to be returned to the ocean. Engine powered boats have to be licensed, but there is no restriction on numbers.


Traditionally zoning is used to define what activities take place in certain areas but can also be used to create and protect a wide range of public amenities. Zoning can be used in conjunction with other measures, such as offsetting arrangements, cross-compliance (see p.27), and development rights to create incentives. For example, incentive zoning can take the form of a permit system that allows developers a concession to zoning regulations in return for a public amenity such as open space. Alternatively, a permit may allow a developer to consolidate lot size and lot layout in exchange for public access areas.

In NSW, for example, zoning can occur by way of State Environmental Planning Policies (SEPPs) and Local Environmental Plans (LEPs). Two SEPPs are currently in place protecting coastal wetlands and littoral rainforest on privately owned land. These policies do not prohibit activities or development proposals, but ensure that impact assessments are carried out. LEPs are prepared by local government and can result in land zones that prohibit activities which are detrimental to the area's habitat value or other nature value (Tom Fox, pers com.).

Australia's marine resources are protected by the designation of marine protected areas within which certain practices like trawling or fishing are prohibited. In some areas, all forms of use are prohibited and boats may not enter without special permission.


Tax policy1
Income tax

The existing taxation arrangements that provide an incentive for landholders to undertake landcare activities are set out in sections 75B and 75D of the Income Tax Assessment Act 1936. Under these provisions full deductibility in year of expenditure is available for land degradation control. On land used for primary production, land degradation expenditure can be claimed for controlling pests and weeds, fencing out degraded areas, fencing out areas identified in an approved management plan, and building levee banks and drainage works necessary to address land degradation problems. Under a different section of the Act, a 20% rebate is available for approved work on buildings and structures of cultural significance and recorded on a prescribed heritage list. Before work commences, a provisional certificate of approval must be obtained from the Minister for Communication and the Arts. The rebate is only available after a certificate of completion has been obtained.

Expenditure on prevention of land degradation is limited to that identified in an approved management plan. Expenditure on environmental protection is limited to pollution control and prevention and does not extend to include the protection of biodiversity or other aspects of natural heritage. Furthermore, allowable measures include activities that may not conserve biodiversity, such as the construction of dams and irrigation channels (Commonwealth Department of Finance, 1994).

Specific proposals to amend the current tax legislation so as to specifically include provisions for biodiversity conservation, and to incorporate deductions for expenses incurred in maintaining the conservation works, have been suggested (Thomson, 1986). According to Thomson, such proposals would transfer $8 million per year to the farm sector if 20% of farmland was dedicated to native vegetation.

One of the main tax distortions that operated in Australia related to the clearing of native vegetation under section 75A. Although capital 'write-offs' are no longer available for clearing (unless the expenditure relates to a contract prior to 1983), some tree clearing may qualify as a business deduction (Ferguson, et al., 1994). Moreover, tax relief remains primarily an aid to owners of cleared land, or those undertaking basic land protection works, whilst landholders with original native vegetation receive few concessions (Robert Begg, pers com.). Tax provisions also do not extend to hobby farmers and other people who own native vegetation.

Colman et al., (1992) note that any tax related incentive favours those with larger land holdings, and those who are in the higher income tax brackets. As Hodge states "the value of the incentive is determined by some factor quite unrelated to the desirability of the outcome" (1991). This has been illustrated in Australia by the forestry tax incentive system that used to operate, allowing individuals on very high incomes with no direct connection with land or forestry to gain large tax savings by investing in reforestation. A comparable situation arose in relation to incentives for the film industry.

In Finland the forest taxation system has been reformed. Whereas tax was previously based on estimated yield per hectare, tax is now only payable on actual proceeds from timber sales. No tax is paid if the forest is not under commercial use and perverse incentives such as tax exemptions for draining off peatland have been removed (OECD, 1994d).


A deduction for cash contributions to a non-government conservation organisation is available for all organisations listed on the Register of Environmental Organisations. The availability of tax deductions for the donation of land with conservation value would be a major incentive for landholders and such a provision would have the potential to significantly contribute to the conservation of biodiversity on private lands. Presently, deductions can only be claimed for donations of land under section 78 of the Income Tax Assessment Act 1936, if the land has been owned for less than twelve months, or if the land is of national heritage significance (not conservation) and is accepted by the National Trust. Gifts of land are still subject to capital gains tax.

The possibility of a deduction being available for the donation of a conservation easement or covenant (see pp.31-32 for details of these mechanisms) under current Australian tax legislation has not yet been tested. Nevertheless, one interpretation of the requirements under section 78 and the definitions of 'property' and 'asset' in section 160A and the Treasurer's statement of 26 June 1992, would be that a deduction is allowed.

In the USA a deduction for the monetary value of a conservation easement is specifically provided for. The example of the James River Corporation was recently referred to in the New York Times (Cushman, 1994). The corporation donated an easement to the American Farmland Trust and Nature Conservancy and in return received an $8 million tax deduction (the diminution in property value resulting from the easement). There are over 1,000 land trusts in the USA which use this provision as an incentive for attracting easements (Forge, 1994).

It is interesting to note that land value calculations are required to illustrate the attractiveness of this provision (and likewise for the rating incentives under the South Australian Heritage Agreements, see pp.23-24) and that these can conflict with the calculations offered for revolving funds, which often indicate property values increasing after the imposition of a covenant (see p.33). Forge (1994) addresses this oxymoron and concludes that diminution in land value in rural areas does not normally occur as a result of applying a conservation covenant. Hence he states:

the introduction of (the deductions for covenant donations) would have little impact upon tax revenues, but would help reduce losses for some generous benefactors and, more importantly, stimulate a more positive attitude on the part of apprehensive farmers (1994).

Experience with South Australia's Heritage Agreements, however, suggests that effects on land value can be substantial.

Life income gifts

Through the use of Life Income Gift schemes it is possible for donors of conservation land to receive another benefit besides a tax deduction. These schemes operate in the USA for donors over 50 years of age (Forge, 1994). In return for the donation of land (or cash or securities), the donor receives an annuity from the land trust. Hence the trust obtains the conservation land (and calculates the annuity in line with average life expectancies in the hope of making a gain on the difference between the value of the land and the annuity payments made) and the donor obtains a guaranteed income stream in addition to the tax deduction. Life Income Gift schemes are not possible under current taxation provisions in Australia.

Capital gains tax

Donating an easement or covenant, or simply donating lands will attract Capital Gains Tax (CGT). In the United Kingdom, exemption from CGT is available for gifts of Heritage Property (in this case taken to mean land of scenic, historic or scientific interest) as long as the recipient agrees to abide by a management plan. Full CGT liability applies for any breach of the management plan. A similar scheme has recently been recommended in Canada to allow CGT exemption for all donations of ecologically sensitive land made in perpetuity to all levels of government and charitable organisations (Task Force on Economic Instruments and Disincentives to Sound Environmental Practices, 1994).

It should be noted that the mere creation of a conservation easement or covenant triggers some extremely complex CGT considerations in Australia, involving the creation and disposal of an asset (sections 160M (6), (6A), (6B), (7) and 160R of the Income Tax Assessment Act 1936). Given the complexities raised, perhaps the most effective use of conservation easements and covenants as incentive mechanisms could be achieved if a CGT exemption applied.

Tax credits

Costa Rica runs a transferable reforestation tax credit scheme under which landholders receive a tax credit for keeping their land forested or for returning land to native species cover (Panayotou, 1994a). To overcome the problem of tax credits being of little value to landholders who do not have a tax liability, if they keep their land forested these forest landholders can sell the resultant tax credits to wealthier landholders. Recommendations for the use of transferable conservation tax credits have also been made in the USA (Morgenweck, 1993).

Although tax credits in Australia are not transferable as such, there are ways in which the benefits of tax credits can be transferred. Consideration in such cases need not be cash, but could take the form of debt restructuring or improved finance terms. It would no doubt be possible for tax experts to devise a scheme to effectively transfer tax credits arising from, for example, the reforestation of land with native vegetation. Yet whether the transfer of credits from one farmer to another would be worth the transaction costs (which may include restructuring and company formations) is uncertain. An ability to directly transfer conservation tax credits would make such complex arrangements unnecessary. Unlike tax rebates, the value of a tax credit is not dependent upon the rate of tax paid by the purchaser, and hence a 'tax credit market' would not favour any bracket of income earners. On the other hand, the point has been made that many landholders have had some experience with tax rebates and might therefore be more comfortable using rebates (Don Pfitzner, pers com.).

Tax credits to entice polluting industries to move to specially zoned industrial areas have been tried in some countries, including recent schemes in Turkey. As a method of conserving biodiversity, it should be noted that, if such tax credits are maintained after the desired zoning has occurred, they become a subsidy for polluting industries and can create other problems, more 'perverse incentives.'

Land tax and property rates

Land tax is an annual State tax and is generally assessed on the unimproved value of land. In relation to the conservation of biodiversity, this means that cleared and developed land is assessed at the same rate as land retaining a cover of native vegetation. Victoria and Tasmania do, however, adjust the unimproved value of the land by an 'equalisation factor' that approximates the land value to the commercial worth of the property (CCH Tax Editors, 1995). Land tax is normally based on ownership of the land, except in the ACT where tax is payable on leased land which is rented to a third party. Although rate reductions apply in some States for land with high conservation values, it is worth noting that most States also provide land tax exemptions for primary production land, thus reducing the effectiveness of any conservation incentives for primary producers.

A recent amendment to the NSW Land Tax Management Act allows for land that is primarily used for the maintenance of endangered species native to Australia to be exempt from land tax. The Director-General of National Parks and Wildlife must approve of the maintenance of the animals (including birds) and can also specify conditions. Land values for calculating land tax in NSW also take into account conservation agreements (CCH Tax Editors, 1995). The amount of rate relief will depend upon the extent of restrictions imposed by the agreement as it compares to other land uses in the rating area (Rob Gillespie, pers com.).

In Victoria, land tax reductions can apply with respect to conservation values of broadacre agricultural land. However, it seems that these provisions have not been used frequently (Max Kitchell, pers com.). According to some sources (Thackway and Stevenson, 1989; Ferguson et al., 1994), rate reductions can be obtained upon application and assessment under the Victorian Conservation Trust's covenants. However, although the Trust has been lobbying for rate relief, it is not available at this stage (Tim Offor, Victorian Conservation Trust, pers com.).

The Draft Flora and Fauna Guarantee Strategy states that new financial provisions were introduced under section 169 of the Local Government Act 1991, allowing local governments to adopt the Capital Improved Valuation (CIV) method of charging property rates (Victorian Department of Conservation and Natural Resources, 1992). However, these provisions have not yet been used (Max Kitchell, pers com.). A proposal by the Victorian Shire of Sherbrooke (now Yarra Ranges) to use CIV in conjunction with a 20% - 30% rate reduction for active Landcare participants and an additional 10% reduction for owners of land under a Victorian Conservation Trust covenant, has also not yet eventuated (Tim Offor, pers com.). A joint review into rating and conservation sponsored by the Municipal Association of Victoria and the Department of Conservation and Natural Resources, is due for release and may influence the adoption of rating measures for on-farm conservation in Victoria (Vic. Dept. of Conservation and Natural Resources, 1994c).

In Queensland and Tasmania, the Australian Bush Heritage Fund has gained exemption from Land Tax on the basis that their lands are used for public purposes and are considered as public reserves.

Tax reimbursements operate in South Australia, although the introduction of the Native Vegetation Act 1991 has changed proceedings somewhat. Previously, owners of land under a Heritage Agreement were reimbursed for the estimated decrease in value of the land from, say, potential cropping land to rough grazing, as determined by the Valuer-General. The new clearing provisions are based on the premise that broadacre clearing is no longer appropriate in South Australia. Therefore, the unimproved market value of all native scrub land, regardless of whether it is under a Heritage Agreement or not, is being valued by the Valuer-General on the basis of its suitability for rough grazing rather than as potential cropping land. This results in rate reductions to all owners of scrub land. Further rate reductions are available under Heritage Agreements because the land is valued at a nominal level (for tax purposes). The greatest rate reductions under a Heritage Agreement therefore, will occur where native scrub land is highly valued, usually the urban fringe, resulting in substantial land value reductions (Craig Whisson, SA Dept. of Environment and Natural Resources, pers com.; Forge, 1994). A key consideration with such schemes is the issue of who pays for the reduction. Whenever local rate income is reduced, the local community pays, whilst if a State government pays a rebate, the State as a whole pays for the benefit.

Three sophisticated rate relief programs operate in the USA (Crompton, 1990), which could provide a basis for the expansion of programs in Australia. They are:

Tax rebates are available in Canada under the Ontario Conservation Land Tax Reduction Program (Government of Canada, 1991). The rebate is up to 100% of eligible property tax on wetlands, areas of natural and scientific interest, and escarpment natural areas, but is conditional upon landholders entering into a long term management agreement. Landholders who cease to maintain conservation land in its natural state must repay an amount equal to the total rebates received in the previous 10 years, plus 10% interest. Ontario has roughly 6,000 participating landholders involving about 77,000 ha (J. Powell, Ministry of Natural Resources, Ontario, pers com.).

A differential land-use tax program also operates in Germany. Land is classified into categories on the basis of environmental benefit (eg from natural forest to industrial site). A charge is applied if a landholder changes to a more environmentally destructive land use and the charge increases as more steps of environmental downgrading are transgressed (Panayotou, 1994a).

Ownership rights

Many management options for the sustainable use of natural resources hinge on the allocation of property rights. The separation of resource control rights, or the strengthening of unclear rights frameworks, will create incentives for resource owners to maintain their asset. For example, land ownership consists of a bundle of rights which the landholder is entitled to exercise. The Forest Service of Victoria has developed a draft Bill which advocates the separation of tree and land ownership, in an effort to encourage commercial tree planting on private land (Max Kitchell, pers com.).

Communal ownership has been recognised for some time as a viable alternative to private or State ownership. In Papua New Guinea customary community-rights over land and forest resources have been formally recognised. Customary land-tenure systems often specify who may use, inhabit, harvest, collect or hunt from the forests (UNEP, 1994). Indonesia's Irian Jaya also has traditional laws governing forest use, but they are not recognised by national forestry law (Barber and Churchill, 1987).

Intellectual property rights

One of the underlying tenets of the 1992 International Convention on Biological Diversity is that the benefits of using genetic resources should be equally distributed among all who help conserve them (Reid, 1993). According to the OECD (1994a) two mechanisms can be used to capture economic rents embodied in wild genetic resources. Prospecting agreements are one mechanism (see pp.34-35). Alternatively, property rights can be strengthened. There are significant intellectual property right obstacles to overcome before an equitable return to nations and/or indigenous groups (Rubin and Fish, 1994; Perrings, Folke and Mäler, 1992) (see also pp.36-37.). For example, cattle embryos from Zimbabwe were sent to Australia in 1990 to improve Friesian herds with no compensation to the region (Makokha, 1994).

Rights to intervene in ecosystems

Perverse incentives often exist for the use of public goods. Vegetation, forest, wildlife and fishery resources are public goods which are often held by the government on behalf of its people. The government controls the use of these resources through the allocation of licences and permits. The rights and obligations granted can sometimes be structured so as to create conditions favourable to exploitation and a lack of concern for biodiversity conservation. For instance, logging concessions granted in countries such as Australia, the USA, Indonesia and Malaysia have led to the depletion and loss of forests. Conditions more favourable to biodiversity conservation can be created by strengthening the usufructuary rights of the licence or permit holders. This includes longer terms (or guaranteed renewal rights as per NSW Fisheries Management), structured provisions for renewal and compensation, increased divisibility and transferability, and defining an exclusive area for each licence. In some countries similar conditions apply to fishing and wildlife hunting rights. Many countries allow exploitation and use of wildlife but require people to obtain export licences.

Use rights

A large portion of Australia's agricultural and pastoral land is held on lease. Although leasehold tenure provides the opportunity for greater control over land use, it has been suggested that the lease conditions have worked against land management practices commensurate with the conservation of biodiversity (Elix, 1991). Efforts have been made in South Australia to overcome perverse lease incentives through new pastoral legislation introduced in 1989. Pastoral lease terms of 42 years have a provision for an extension of 14 years to take place every 14 year period. The extension (but not the remainder of the lease's term) is dependent upon the leaseholder demonstrating ecologically responsible management of the property. Lease conditions can be changed at each extension by the government on the basis of a review and monitoring of the condition of vegetation on the property.

In the Philippines, 25 year communal forest leases have recently been granted through a Community Forest Management Bureau. The community agrees to protect the remaining forest area and in return the community receives legal recognition of its occupation (Panayotou, 1994a). This leads to greater certainty for the community in its use of the natural resources.

Tradeable salinity rights

At the State level, a system of tradeable salinity rights was introduced by the Murray Darling Basin Commission in 1992. Capital works that "manage salt entering the river system and enhance river flow" gain 'salt credits' (Commonwealth Dept. of Finance, 1994). These credits are tradeable between States and the Commonwealth, however the credits are not freely tradeable by industries or individuals. The trade amongst the States has been minimal with the credits generally being used to offset State salinity debits from drainage entering the river system. There have been cases, however, of one State financing salinity irrigation works in another State and gaining an appropriate credit for this.

Tradeable water entitlements

Legislation is in place in South Australia, Victoria, NSW and Queensland for tradeable water entitlements, but permanent trades between States have not been permitted. The merits of the proposed systems are still being debated, with arguments as to whether the entitlements should be freehold title or the property rights remain with the States, and in addition, how entitlements can be allocated so as to maintain environmental values (Commonwealth Department of Finance, 1994; Alexandra, 1994). Once a system is in place, concern also arises as to the capital gains tax liability of traders. States have just agreed with the Commonwealth to make water entitlements fully transferable in return for an agreement that will ensure that they will be compensated for revenue losses.

Tradeable water rights are used in Chile. Individuals are granted perpetual, irreversible and freely tradeable water use rights. When the ecological requirement of minimum flow is reached, no more rights are granted (Panayotou, 1994a). This system would have difficulty in allowing for annual or seasonal flow fluctuations unless the ecological requirements were fully understood.

Tradeable permit programs have been used in the USA for controlling water pollution. The Wisconsin Fox River water permits relate to the control of point pollution sources and the Colorado Dillon Reservoir water permits are issued for non-point source pollution (Panayotou, 1994a). In both cases, no trades have yet taken place despite the fact that both systems have been operating for over a decade. One way of forcing trade is to introduce a zero-revenue auction market where all permit holders are forced to place a proportion of their permits up for auction or tender. Permit holders may buy their permits back or accept the money offered.

Individual transferable fishing quotas

Individual Transferable Fishing Quotas have been implemented in Australia and around the world with varying degrees of success. The Southern Bluefin Tuna system introduced in 1984 provided individuals with rights to harvest a given quota of stock. The sum of all quotas represented the Total Allowable Catch (TAC) which was theoretically equivalent to the species maximum sustainable yield. Difficulties in estimating the maximum sustainable yield, and therefore the TAC, meant the system has not been successful at maintaining species stocks (Bureau of Industry Economics, 1992).

Other systems are slightly different. For example, the one proposed under the NSW Fisheries Management Act 1994 provides individuals with tradeable 'shares' in the fishery. These shares entitle the holder to a percentage of the TAC. This allows for annual changes to the TAC in line with scientific data concerning the maximum sustainable yield. Shares are also held for set periods that rollover after a review, or have phase-out periods, for investment security as well as environmental security. Allowing shares to be bought and sold means that fishers can more efficiently set their involvement in the industry. The legislation permits a return to the community via retention of part of the revenue received from a process similar to a zero-revenue auction; however, it has yet to be implemented.

Transferable development rights

The bundle of rights that often go together as property rights can be separated into development and other rights. The government can then restrict the total amount of development in a conservation zone, allocate rights on a pro-rata basis and make them transferable. In order to recover the full market value of this right, the landholder can transfer the right to other sites or sell it to others (Panayotou, 1994a).

As the development rights are transferable, landholders who place the highest value on development will be able to purchase additional rights from landholders with a high marginal cost of development. Generally such systems require a much more strategic approach to management.

Tradeable development rights have been applied as part of comprehensive management plans in New Jersey's Pinelands and Montgomery County, in the USA (Goldstein, 1994; OECD, 1994d). In both cases, development rights operate in conjunction with zoning restrictions so that landholders who own valuable habitat can trade with landholders in zones of land of lesser biological importance. The use of transferable development rights is also allowed under the Resource Management Act 1991 in New Zealand (Blakeley, New Zealand Ministry for the Environment, pers com.), and opportunities exist for their application in Australia.

Panayotou suggests that transferable development rights can be used to conserve biodiversity on an international level (Panayotou, 1994a; 1994b; Panayotou and Glover, 1994). In this scenario, developing countries would sell development rights over critical habitats to international environmental foundations, developed country governments and other international foundations. There are still many problems to overcome in setting trade conditions and in stimulating sufficient demand for the rights. One suggested method for creating demand for international development rights in developed countries is the introduction of a conservation tax. Those who forego rights would then be eligible for conservation tax credits. Alternatively, development rights could simply give rise to income tax credits. So far development rights have not been used on this scale, although Costa Rica is apparently experimenting with them as an extension of the biodiversity prospecting rights that it has offered (Panayotou, 1994a). Transferable development rights could be used to control such issues as wetland drainage.

Transferable easements

Conceptually, transferable easements could be used in situations where biodiversity is threatened by a non-point source process, but we have been unable to identify an example of their application. In application, they would be very similar to the 'bubble' approach which is used elsewhere in the environment domain. The 'bubble' approach treats non-point source pollutants in a region as a single polluting entity. This method is used by the Western Australian Environment Protection Authority in the Kwinana Industrial Area (Commonwealth Dept. of Finance, 1994). Sulphur dioxide emission permits are traded within the bubble. A limited number of bubble licences are also issued in Victoria for certain components or areas of a site (Victorian EPA, 1994). It can be seen that transferable easements are not that different from transferable development rights, except that the overall aim (ie. the restrictions placed on activities) is legally set and tied to the title of all the relevant properties.


Generically, cross-compliance is the provision of support for one objective subject to compliance with another. Unlike conditional loans and grants which tie payment to a specified undertaking, cross-compliance involves linking otherwise unrelated benefits to the desired conservation outcome. Linking price support to conservation measures came about following the 1985 Farm Bill in the USA. The right of farmers to various forms of Federal support was linked to the setting aside of land that is susceptible to erosion (Clark and Downes, 1994).

In the USA cross-compliance measures have also been included in legislation. The 'Swampbuster' provisions of the Food Security Act 1985 and the Food, Agriculture, Conservation, and Trade Act 1990 reduce the incentive to convert wetlands to croplands by denying eligibility for agricultural assistance schemes to landholders who convert wetlands (OECD, 1994d; US Department of the Interior, 1994). It is important to note that the linking of conservation to support schemes will not create a strong conservation incentive where reliance upon support schemes does not constitute a major source of benefits. This can occur when support schemes are indirect. This sometimes occurs in dairy industries, as governments buy surplus dairy products from manufacturers, not dairy farmers (US Department of the Interior, 1994).

According to Elix (1991), cross-compliance measures have not been used in Australia in the past due to the perceived administrative complexities and the low level of assistance given to Australian agriculture. More recently, however, cross-compliance-like arrangements are being introduced by requiring farmers to prepare management plans as a precondition to the receipt of drought assistance. Increasingly, environmental conditions are becoming a mandatory part of such plans.

Cross-compliance does not have to be contingent upon landholders' attainment of specific conservation standards ('red-ticket approach'). It can be used as an incentive for positive conservation efforts ('green-ticket approach') (Colman, et al., 1992). The green-ticket approach could apply so that landholders or resource users who attain prescribed environmental standards are rewarded with preferential lease or licence renewal. Under the Environment Protection (General Amendment) Act 1994 in Victoria, such an opportunity now exists. The Environment Protection Authority can issue 'accredited licences' to companies that adopt an accredited environment management system. These licences provide companies with greater scope to manage their own environmental performance and can also include licence fee reductions (Victorian EPA, 1994). For companies with an eye to profits, measures such as this attribute savings to environment cost-centres that are otherwise seen as a burden on profitability.

Legal liability

Legal liability can apply to natural resource damage, environmental damage, non-compliance with environmental laws, or non-payment of taxes, charges and fees. Liability incentives operate on one level by encouraging compliance in order to prevent legal action. If liability insurance is available and premiums reflect individual performance, then an incentive to avoid damage also arises out of the effort to obtain the lowest premium (Panayotou, 1994a). The USA has adopted natural resource damage liabilities as part of its environmental legislation, allowing class action to be taken (OECD, 1993). This is not possible in Australia. Individual director liability is another option that could be extended to biodiversity considerations. These penalties can be further enhanced by introducing the capacity for people to take action against a person, company or agency on behalf of a class of people.

"Safe" minimum standards

A policy of safe minimum standards in relation to the conservation of biodiversity means that a minimum standard of resource use would be invoked to prevent the extinction of a species, unless the cost of doing so is unacceptably large. This will involve maintaining minimum viable populations for species. Given that the future value of species is uncertain, a policy of precautionary minimum standards should be adopted, in line with the precautionary principle and the philosophy that a lack of scientific information should not be used as a reason for postponing measures to prevent biodiversity loss. Perrings and Pearce note that "standards are in fact the oldest and most extensive of all biodiversity conservation instruments" (1994). Harvest limits, closed hunting and fishing seasons are examples of conservation instruments that have long been used in most societies. Perrings and Pearce go on to suggest that at the microeconomic level they are re-emerging as favoured instruments amongst environmental economists because they can be used to set only the aggregate limit on the exploitation of species or habitats, leaving the allocation within that limit to the market (as was seen on p.26).

Accreditation schemes

Accreditation schemes provide a strong incentive to conserve biodiversity through the creation of standards of behaviour and the corresponding kudos. Standards of behaviour can be particularly important in industries, such as tourism, that are in a position to influence the behaviour of others. The Australian Tourism Industry Association gained international recognition when it introduced a Code of Environmental Practice in 1990 (Preece et al., 1995). The code is an ambit code covering all sectors of the tourist industry. In 1992, the Ecotourism Association of Australia produced a code of practice for ecotourism operators. The codes of practice are binding neither on the industry nor travellers.

Affirmation programs, while also not binding, create a sense of awareness within the ecotourism industry and for travellers. A Green Globe scheme has been introduced in conjunction with the 1993 World Tourism and Travel Council's Environmental Guidelines for Travel and Tourism Companies. This scheme encourages corporate commitment to environmental sustainability and increased traveller awareness (Preece et al., 1995). A similar affirmation program is operated by the Pacific Asia Travel Association, called Green Leaf.

Ambit codes and affirmation programs differ from accreditation schemes in that they are concerned with creating an awareness of environmental issues, rather than being concerned with improving standards within an industry. An accreditation scheme designed to improve the ability of eco-tour operators to convey information on biodiversity operates in Victoria and includes courses run by the Victorian Tourist Operators Association (VTOA), the Victorian Department of Conservation and Natural Resources, and by the Australian Nature Conservation Agency (Preece et al., 1995). Guide accreditation schemes are run by the Inbound Tourism Organisation of Australia and in far north Queensland and Northern Territory by Savannah Guides. An Australian National Ecotourism Accreditation Scheme is being developed by the Commonwealth Dept. of Tourism (Manidis Roberts Consultants, 1994).

Product eco-labelling

Eco-labelling provides companies with recognition for their efforts to mitigate environmental impacts, including the effects of threatening processes on biodiversity values. It also attracts consumers and thus has the effect of rewarding producers for good environmental behaviour. Nevertheless, the use of eco-labels must be controlled to avoid misleading marketing claims. Overseas, this is achieved through environmental certification systems. In 1991, the Commonwealth government introduced a certification scheme called 'Environmental Choice Australia', but it was abandoned in May 1993, in part because it was not effectual (Dawson, 1994) but also because of industry resistance. The scheme allowed companies to use a logo in return for a commitment to a code of ethics, an annual fee and the submission of products for testing. The scheme's logo did not receive much recognition and the code of ethics did not go beyond the requirements of the Trade Practices Commission. Product testing was possible in participating companies' laboratories and did not examine the 'life cycle' effects of products. Standards Australia has made substantial efforts to start a 'cradle to grave' environmental labelling scheme, but has met strong industry resistance to this concept.

Non-government organisations operate private labelling programs in Australia and overseas. The World Wide Fund for Nature (WWF) carries out licensing arrangements with companies wishing to use its Panda symbol, as is illustrated by the 'Panda' bread available in Europe (Preece et al., 1995) and a brand of toilet and other cleaners available in Australia. WWF does not have the laboratories or funds to fully investigate company compliance with its conditions. The Australian Conservation Foundation claims that it tests products 'cradle to grave,' however there are arguments that the assessment is only a basic overview (Dawson, 1994). The Foundation also has a corporate sponsor program, where companies' entire operations are endorsed, and a 'green leap' program to congratulate poor environmental performers for improvements which they make. An Earth Trust logo scheme is to commence operations in Australia soon.


One way to encourage biodiversity conservation is to formally acknowledge efforts that have voluntarily been made to improve biodiversity values. Non-monetary recognition awards are frequently used as a mechanism for creating conservation incentives. Presidential and Commonwealth awards exist throughout the world. Awards include the National Landcare Award for Nature Conservation that is sponsored by ANCA. UNEP recognises individuals and organisations by way of the Global 500 – Roll of Honour for Environmental Achievement. Alcoa earned a Global 500 Award for its rehabilitation of jarrah forests in Western Australia (Preece et al., 1995). The Banksia Environmental Foundation each year presents the Banksia Awards, recognising individuals and corporations for their environmental achievements in such categories as Rural Community Groups, Land Management, and Resource Conservation and Waste Minimisation Management. In South Australia, the Ibis Awards recognise excellence in both farm business management and nature conservation.

In South Africa, Telemecanique, a French electrical company, are sponsoring a Natural Heritage Program (McNeely, 1993). Farmers who voluntarily register their land as a heritage site receive a certificate of appreciation signed by the President, a bronze plaque indicating that the site is of national importance, and management advice regarding the maintenance of the site. Awards also encourage innovation. For example, the Mining Association of Nevada in the USA, recently won an award for the creation of a sustainable wetland (Ben Whiting, Queen's University, pers com.).


An approach receiving increasing acceptance in Australia is the use of grants to assist networks to form and generate. Australia's Landcare, the National Threatened Species Network, the Marine and Coastal Community Network and the Arid Lands Coalition programs have all used this mechanism very effectively. A Community Biodiversity Network has recently received seed funding from the Commonwealth. Research is showing that the multiplier effects for such arrangements are very powerful.

Making it pay


Charges and levies

Charges, levies and the setting of prices to fund biodiversity management have rarely been used in Australia, and are limited to park-entry fees, trail-access and other user fees within reserves. In response to the threats to biodiversity conservation from tourism, environmental pricing has been introduced by the Great Barrier Reef Marine Park Authority. A $1 visitor fee is paid by passengers on commercial vessels visiting the Great Barrier Reef Marine Park. This is expected to raise about $1 million per year and most of the funds will be allocated to a Cooperative Research Centre concentrating on research directed towards the ecological management of the Reef (Preece et al., 1995). In 1989 the NSW government established a levy in the related environmental field of polluted waterways. A Special Environmental Levy (SEL) was introduced as a financing mechanism at a rate of $80 per household per annum. Due to perceived accounting irregularities, and public perception that the funds were going to consolidated revenue, the SEL was abolished in 1993 and the program has since been financed through 'user pays' charges (Commonwealth Dept. of Finance, 1994).

The infrequent use of environmental pricing is also reflected overseas. Recently the OECD surveyed the use of economic incentive measures for the conservation of biodiversity. They only found two examples of a development tax that is levied on all new buildings in Sensitive Natural Areas. Both examples were from France. The first involved a levy on all new buildings in Sensitive Natural Areas that is used to finance the acquisition and maintenance of these natural areas. The second was a charge on wood-based products used to assist with forestry management (OECD 1994d). No such levies apply in Australia.

Tourism represents a mode for the application of conservation charges. Revenue can be raised from a bed levy or through the application of airport levies. According to Preece et al., (1995) bed levies are already used by some States and Territories.

Examples of Australian park entry fees, how they are calculated and how they are collected, are presented in Table A1.1.

Table A1.1: Examples of park entry fees used in Australia
  South Australia Northern Territory Queensland New South Wales Western Australia Victoria
Are there standard user fees for parks across the state? There are no standard fees. Each park is at liberty to charge its own fees according to facilities provided, etc. Fees apply in three categories according to facilities. Fees at Kakadu and Uluru may differ. There are standard fees for parks across four categories A-D There are standard fees. There are standard fees. There are standard fees, but also variations by park and by season.
What are the fees? The level of fee varies depending on the nature of each park, and services provided. Camping fees are based on the category of facilities, ranging from $4 per person and $10 per family per night, to $1 per person and $3 per family. There is an entry fee for guided tours only. Camping fees are A=$7.50 per person per night; B=$5 per night; C and D=$2 per night. There is an entry fee of $7.50 per car and a surcharge for o'night camping. Annual entry permits are available for $50 (a higher fee is charged for Kosciusko. Entry fee of between $4 - $5. Entry fee of $6 per car with annual passes available for $45.
How are fees collected? Most fees are paid at the Dept. of Conservation offices or at the entrance to the park. The fees are collected using an honesty box. Many methods: people can pay at park entrances, by credit card over the phone, and rangers collect fees while on patrol. Fees are collected at the entrances to the parks and passes can be purchased from a number of other places. Fees are collected by rangers at the entrance to the parks unless access is difficult, in which case there may be an honour box. Fees are collected by toll booths at the entrance to the parks.
Are concessions available? Concessions are given for children, and pensioners who pay half price. Other concessions are at the discretion of park management. The only concessions are for children under five years of age who are admitted free. School groups are admitted for half price. This is the only concession. Children arriving on a bus pay $2, pensioners receive free entry with a Pensioner Health Benefit Card and there are lower rates for children camping. School children are admitted free of charge. Group concessions are available and also concessions for pensioners and families at some parks.

Source: Dept of Treasury and Finance (1994) Submission to the Park Entry Fee System Review Panel, Hobart, May, 1994.

Hypothecation involves the pledging of funds from a conservation project to those facing the immediate costs of the project. The 'earmarking' of funds is held to be an effective method of gaining communities' cooperation in conserving biodiversity (Preece, et al., 1995). Hypothecation can be achieved by issuing shares to local people and paying them 'dividends' from income gained from entrance fees and the sale of usufructual permits within protected areas. This will provide an incentive not to encroach into the protected area or take flora and fauna from it (Tisdell, 1994). A similar approach has been developed in France where a contractual agreement operates between the communes within a park area and other interested organisations so that they share the economic benefits of the park (OECD, 1994d).

Jacobs (1992) points out that the hypothecation of revenues will unquestionably increase the political acceptability of charges. He gives the example of the apparent popularity of the Liberal Democrats' 'penny on income tax for education' in the 1992 UK General Election, as compared to Labor's proposed general tax increases (1992). Jacobs also notes the unwillingness of treasuries and finance departments to hypothecate and thus recommends direct collection of charges and in some instances, taxes, so that the financial instruments can be integrated with planning and regulatory instruments by those agencies responsible for environmental policy.

Environmental performance bonds

Environmental performance bonds are best suited to situations where there is one source of potential environmental damage and that damage can be reasonably estimated. They usually take the form of a lump-sum payment. Apart from the use of Table A1.1 environmental bonds for land rehabilitation in the mining industry or use with hazardous wastes, bonds are also used in Australia as a permit condition for aquaculture (OECD, 1993). In South Australia oyster farmers must either contribute to an industry fund, or deposit a bank note or securities. The funds are kept for site rehabilitation (Vic Neverauskus, pers com.).

Under the new Fisheries Management Act 1994 in NSW, aquaculture permit holders must provide security by way of cash or a bank guarantee on a per hectare basis. The security is forfeited if certain environmental improvements are necessary to the permit area (Damien Ogburn, NSW Fisheries, pers com.). This part of the new package is being introduced gradually via a series of annual contributions to the land. A possibility exists to build a financial incentive into the administration of bonds. Reduced assurance payments could apply to operators who can demonstrate good environmental stewardship.

Off-setting arrangements

One innovative use of offsetting arrangements, which could easily be adapted to biodiversity conservation measures, has been suggested in relation to CO2 reductions. With the ratification of international environmental conventions, governments are starting to come under increasing pressure to meet specified targets, such as CO2 reductions. Panayotou and Glover (1994) raise the possibility of creating international contracts to provide offsets for these reductions. Forest compacts (voluntary contracts) could be entered into whereby a developed country provides financial and technological resources to a developing country in exchange for policy reforms, conservation and investment programs that would lead to a specified target of forest preservation. The developed country is then entitled to the CO2 reduction credits that arise from maintaining the forest.

Although carbon offsets, such as forest compacts, have not been formally backed by the international community as a legitimate means of meeting CO2 reduction obligations, several pilot schemes have been entered into. New England Electrical System has reached agreement with the Sabah Foundation, and Applied Energy Systems of Virginia have done likewise with Guatemala (Panayotou and Glover, 1994). The transferable easement concept mentioned earlier could be implemented via a series of offset policies. In application, this would require the easement to be transferred to a new location that off-set the expected loss in an equivalent manner.

Mitigation banking

Mitigation banking allows for offsetting to occur on a local level and is synonymous with wetlands conservation. It involves offsetting the damage that would result from a project, by restoring or protecting another area (US Department of the Interior, 1994). In this way a reserve is established of restored or artificially created wetlands. Private or public entities could purchase shares of the reserve to offset further unavoidable wetland losses associated with development projects (OECD, 1993). Mitigation of wetlands is undertaken in the USA, but no mechanisms yet extend the mechanism to real banking, where landholders or developers could deposit, borrow, sell, purchase and withdraw wetlands credits (Goldstein and Heintz, 1993; Clark and Downes, 1994).

Environmental Funds

Environmental Funds have been established by private, non-profit organisations so that they can use voluntary land use control techniques to conserve areas of ecological, recreational or historical value. They use methods such as direct purchase, land donations and exchanges and easements. Funds also provide a mechanism to accept and distribute money for conservation derived from donations, fund-raising and sponsorship (Vic. Dept of Conservation and Natural Resources, 1992). The Victorian Conservation Trust, the NSW National Parks and Wildlife Foundation and the Australian Bush Heritage Fund all operate as Environmental Funds. Farmland Trust and the Audubon Society operate in the USA, the Forest and Bird Protection Society in New Zealand, and the National Trust in the UK (OECD, 1993).

Leverage on grants to Environmental Funds

Government grants to Environmental Funds provide government with the opportunity to gain some leverage on their funding as a result of the conservation work done by the recipients. An analysis, for example, of the Grants to Voluntary Conservation Organisations program (GVCO) run by the Commonwealth government, shows just how much leverage the government can obtain from its contributions. By assuming that every dollar expended by Voluntary Conservation Organisations (VCOs) generated an equal conservation output, and estimating the value of the conservation work that could be attributed to the proportion of expenditure represented by GVCO grants, Henry and Olson (1992) calculated that for every dollar of GVCO expenditure in 1991, VCOs generated $3.22 for the conservation effort in Australia. As the GVCO program also raises community awareness and understanding of environmental and heritage issues, it is possible that this 3.22 multiplier is an underestimate.

Revolving funds

A revolving fund is a mechanism used to acquire land, attach an easement to it and then on-selling the property so encumbered. The money made from the sale of the land is then reused to purchase other property. Provided there is a degree of cooperation with the final purchaser, or there are sufficient enforcement mechanisms, the conservation outcome under such a scheme will be the same as if the property had been purchased and managed accordingly. Using revolving funds to attach covenants or easements can be a more efficient method of achieving conservation aims than outright purchases or management agreements that involve annual payments over long periods (Colman et al., 1992).

Environmental Funds make particular use of revolving funds to increase the size of their conservation land portfolio at the lowest possible cost. By doing so, the only overall expense incurred by the fund is the difference in market value of the land once an easement is attached. This will be substantially less than the cost of purchasing property outright. The Nature Conservancy in the USA has made considerable use of revolving funds, but taxation provisions in Australia do not favour a similar community investment. Most Environmental Funds in Australia are in their infancy and thus do not yet have sufficient capital to instigate a revolving fund. Future use of revolving funds looks certain, however, as the Australian Bush Heritage Fund intends to operate such a mechanism (Janice Bird, Australian Bush Heritage Fund, pers com.) and one of the actions proposed as a result of Victoria's Draft Flora and Fauna Guarantee Strategy (Vic. Dept. of Conservation and Natural Resources, 1992) was to establish a revolving fund as part of the Victorian Conservation Trust. Indeed the Trust currently operates an informal revolving fund out of a property account and has utilised the procedure on eight occasions, each time on-selling the properties for slightly more than the purchase price (Tim Offor, pers com.). Revolving funds are most attractive when the organisation is not required to pay sales tax on the double transaction.

In Norway, a concept called the right of pre-emption is used (Crompton, 1990). This allows a government agency to pre-empt a sale of land once a buyer and seller have been established. Thus, if the government is concerned about conserving biodiversity on a block of land, it can override the sale between willing buyer and seller and purchase the land itself. It must however pay the same amount as the willing buyer was prepared to pay. The agency can then attach an easement and lease or on-sell the land to the original buyer. The lease payments can be calculated in such a way as to reduce the cost of maintaining such a scheme.

In the Luangwa Valley of Zambia, a revolving fund is used for charging concession fees, selling wildlife products and other commercial ventures. The money is then directed towards managing the natural resources of the area. In the Cross River National Park of Nigeria, a revolving credit fund provides money at low rates of interest provided the money is invested in activities that are compatible with the park (McNeely, 1993).

Debt-for-nature swaps

A debt-for-nature swap usually involves a government or private organisation agreeing to purchase another country's debt on the secondary debt market (OECD, 1994c). In exchange, the country may have to introduce specific actions aimed at conserving biodiversity, relinquish certain ownership or use rights over an ecologically significant area or habitat (ie. attach a conservation easement), or cease policies that create perverse incentives. Poland has reduced its official debt by 50% through the creation of ECOFUND which retires debt in return for environmental protection (Moran and Osgood, 1994).

Debt is usually purchased on the secondary market because the purchaser assesses the risk of non-payment from the debtor as being less than the discount margin available on the price of the debt. This assessment may be due to the purchaser having superior knowledge about the risk than the market, or because the purchaser is less risk averse. Governments may indeed have privileged knowledge, however NGOs are unlikely to. Moreover, NGOs are unlikely to be less averse to financial risk than the average trader. Nevertheless, because NGOs are prepared to write off all or part of the debt's income stream in return for nature, the risk of non-payment is reduced. In other words the NGOs are prepared to trade environmental risk for financial risk.

Once the NGO becomes the new title holder of the debt, it converts the debt into the debtor country's currency, government bonds or other assets. The NGO usually pays the debtor country a levy for doing this so as to share the original discount. Thus the NGO redeems (in domestic currency equivalent) the face value of the debt less the levy. The leverage is the ratio between the amount redeemed and the price paid on the secondary market (Moran and Osgood, 1994).

A high degree of leverage is the aim of all traders in the market. NGOs can increase their leverage because debtor governments are willing to pay. Willingness to pay arises because the NGOs return the money to the country in return for a commitment to establish a National Park or other similar measure with significantly less short-term budget implications. Alternatively NGOs can restructure the debt so that payments can be made in local currency into an environmental fund that then finances environmental projects. This system was initiated by the Enterprise for the Americas scheme in the USA (OECD, 1993).

The usual, international debt swap has limited application for Australia, however it is possible to consider a domestic application of debt-for-nature swaps. A secondary market could be created from the sale by banks of their farm mortgage income streams. Once again, if NGOs are prepared to write off some of the debt in return for a conservation easement, they would be able to seek out farms with serious repayment problems and areas of significance for the conservation of biodiversity. This debt would also carry the highest discount. This arrangement may be satisfactory from the banks' point of view as they would be off-loading their riskiest debt. In return NGOs would be picking up conservation easements at discount prices.

Of course this situation will only be viable if the heavily discounted mortgage streams correspond with significant ecological areas or habitats and banks' security is insufficient to recover the outstanding debt. Furthermore, the benefit of allowing the debtor to repay interest and capital in local currency is lost in a domestically applied swap. As such, NGOs would not be able to create environmental funds into which debtors make repayments, with the intention of using the funds as leverage to finance other environmental projects (because NGOs are chasing high discounts, they end up with doubtful debts). Thus the NGOs must have the initial funds to afford write-off agreements in order to gain conservation easements from domestic debt-for-nature swaps.

Biodiversity prospecting contracts

Genetic prospecting is the search of an ecosystem for products of potential commercial value (OECD, 1994a). Prospecting agreements provide remuneration to a country (often through a public research institution) for the right of access to that country's biodiversity and consideration for the commercialisation of such resources (Rubin and Fish, 1994). Such agreements were first suggested by Cornell University entomologist Thomas Eisner in 1989 (Lyons, 1991; Reid, 1993). They provide an incentive to conserve biodiversity through the direct payment (often paid in advance), the royalties, as well as the services and technology that is transferred (Reid et al., 1993). However, the World Resources Institute warns that contracts made in a 'policy vacuum' may increase the threats to biodiversity conservation, as an unregulated rush to screen genetic material could lead to habitat destruction. In one example, the entire adult population of an anticancer compound generating plant species was harvested. In all, 27,215 kg of the plant was harvested in Kenya from just one mission (Reid, 1993).

There is also a view that prospecting agreements do not serve as a vehicle for protecting biodiversity because the returns to product development are not usually great enough to provide an income stream sufficient to finance biodiversity conservation (Sedjo and Simpson, 1994). Sedjo and Simpson contend that financial returns only reach conservation activities if the pharmaceutical company 'scores a hit' (1994). This can be overcome by insisting upon prepayment before prospecting begins and ensuring that a proportion of this prepayment is used for conservation.

The most prominent biodiversity prospecting contract is a contract between Costa Rica's National Biodiversity Institute (INBio) and Merck & Co. Ltd., a large pharmaceutical firm. In 1991, Merck agreed to pay INBio US$1.13 million for the right to screen samples from INBio's biotic collection. If the screening results in a commercial application for Merck, INBio will share royalties on product sales (UNEP, 1994). A set amount of the direct payment (10%) to INBio and 50% of any royalties must be returned to conservation projects or National Parks under the agreement. Another firm, Biotics, has negotiated contracts with suppliers in three countries, including New Zealand, however these contracts only provide for a share of royalties and do not include an up-front payment (OECD, 1993). An agreement similar to that of Merck/INBio has been negotiated in Australia. Astra Pharmaceuticals has paid the Queensland Pharmaceutical Research Institute so as to benefit from the Institute's screening process.

Australia has also taken action, in line with the International Convention on Biological Diversity, to reaffirm its sovereign rights over its biological resources, while at the same time facilitating access to other contracting parties (Reid, 1993). Australia hopes to share in any commercial benefits arising from the USA's National Cancer Institute's interest in a chemical from a Western Australian shrub which showed promise against Human Immune-deficiency Virus (HIV). The Western Australian Conservation and Land Management Act 1984 was amended in 1993 so as to allow the patenting of unmanipulated, naturally occurring organisms, however the Parliamentary Committee reviewing the Bill recommended the formation of a Select Committee to investigate the issue and the issue has also been examined by the World Intellectual Property Organisation (Karingal Consultants, 1994).

Commercialisation of wildlife

If clear and enforceable property rights and obligations are created for wildlife with commercial value, then it can be argued that an incentive (for those holding the property rights) will exist to maintain the species and their habitats (OECD, 1994c). At the same time funds will be generated, some of which could be used for further conservation measures. Some examples of the commercialisation of the products of seabirds, such as eggs, feathers, and meat, that have led to improved seabird conservation, are provided by Goldstein (1991). The CAMPFIRE program in Zimbabwe is a good example of efforts to commercialise wildlife (Jones, 1993; Muir and Bojö, 1994). Nevertheless, there are concerns that commercialisation is not sustainable in the long term. It is held that it encourages illegal use, giving rise to black markets and smuggling operations. With an emphasis on export markets, rather than conservation, it is argued that it would be difficult to control the industry as critical population levels are approached (Michael Kennedy, pers com.). Furthermore, commercial utilisation could threaten the genetic diversity of a species as people select for those animals or plants that maximise short-term profits. Genetic diversity refers to the overall variety of a species' characteristics or traits. The maintenance of a wide selection of traits is important for a species as it is its 'life insurance' against future changes in its environment.

A reduction in the traits of a species can result, often incidentally, from commercial utilisation. Salmon farming in the northern hemisphere, for example, has resulted in the development of salmon with specific traits advantageous to commercial use. The commercially bred salmon invariably escape into the wild and threaten native species who can not compete, or are susceptible to diseases which the commercially bred salmon carry (Bruce Phillips, Australian Fisheries Management Authority, pers com.). Commercial development of wildlife could lead to similar problems in Australia and is reported to be occurring in New South Wales where the Pacific Oyster is displacing the local rock oyster.

Rights to harvest and/or use Australia's flora and fauna vary considerably between States in detail and economic sophistication. In all cases these use rights are underpinned by a mixture of regulatory, economic and social incentives. A permit or licence is required in all States and Territories to take, kill, trade, or export protected fauna. These licences, however, are usually issued for a short period of time with no guarantee of renewal. Most licences can be cancelled when people abuse licence conditions and regulations. Licence fees are usually charged and offer a means to recover administrative costs and, in some cases, meet some of the costs of maintaining biodiversity values.

When a licence is not reissued, opportunities for compensation are limited. In recent years, several States have started to increase the market orientation of harvesting licences, particularly in the fishing industry. In NSW, fishing licences will soon offer conditional resource security and a framework that formally links fishery management plans to licence conditions. Arguably, this new framework may reduce overfishing and bring the industry onto a more sustainable footing. Similar problems exist in native timber harvesting and some parts of agriculture. Kangaroo harvesting is going through significant economic change as markets for kangaroo meat for human consumption are developed. In most States, however, 'damage mitigation' rather than 'sustained use' remains the official reason for issuing kangaroo licences but this situation may soon change.

The Australian wildflower industry represents a major commercialisation of native flora. According to a recent review of the industry (Karingal Consultants, 1994), it is one of the fastest growing rural industries in Australia, worth $22 million in 1993. The Wildlife Protection Authority of the Australian Nature Conservation Agency administers the Commonwealth Wildlife Protection (Regulation of Exports and Imports) Act 1982 which controls, amongst other things, the export of protected Australian native plant material. A very high proportion of native plant species used for commercial cut flower production is on the protected list. An export licence is required before any protected plant material can be exported. Under the Wildlife Protection Act, if the material is bush picked (rather than cultivated) then a State management strategy must also be in place. The harvesting itself requires monitoring in relation to its impact on other species and to ensure compliance. The Western Australian strategy holds that commercial harvesting of protected flora must be sustainable formally, at the level of the individual plant where it occurs, for the species and for the ecosystem in which it occurs.

An interesting example of the extent of opportunities to develop markets for Australian flora and fauna is the export of sphagnum moss from Tasmanian forests. Licences are required to collect this moss and to export it. A related issue is the harvesting of native timber both from State forests and from privately owned land. State authorities control logging conditions and the Commonwealth government controls exports. The export of wood chips is a controversial issue, notably no biodiversity considerations are currently associated with woodchip exports.

A major issue regarding the commercialisation of native flora is the loss of control over the exploitation of Australian germplasm. Despite formal controls, including the International Convention on Biological Diversity, obtaining native plant material for breeding is apparently not difficult either with proper documentation or by smuggling, and evidently Australian breeders have used similar access for their own benefit in overseas countries (Karingal Consultants; David Godden, University of Sydney, pers com.). The industry review states that formal controls will never succeed in totally preventing loss of unique germplasm to overseas plant breeders and recommends joint development arrangements with other countries, particularly Israel, be entered into. Such arrangements could include contracts similar to biodiversity prospecting contracts.

International franchise agreements

An international franchise agreement is a concession, by the state, of exclusive rights on land to a franchisee, with limitations on allowable uses in the interest of a third party (Cervigni, 1993). They provide a method of funding the attenuation of property rights through the international trade of development rights. If a government wishes to create specific restrictions on land use over an area, it can separate out the rights to the restrictions, much as it would for a conservation easement. The removal of these rights is funded by renting them to the global community, while the local farmer pays a purchase price for the remainder of the uses (Swanson, 1994). Thus the international franchise agreement represents a three way agreement between the international community, the government, and the franchisee (local farmer). The attraction of international franchise agreements as a funding mechanism is that they capture the international willingness to pay for a nation's conservation (Brown, Pearce, Perrings and Swanson, 1993). As far as we are aware, such schemes have only been set up in association with a debt-for-nature swap.

Franchise agreements could apply domestically in Australia simply by including local NGOs, corporations, and the local scientific community as the third party. Alternatively, the third party could be the 'public interest,' in which case the government would retain the restriction rights and taxpayers would fund the franchise agreement (Swanson, 1994).


Environmental business

Ecotourism is a growing Australian environmental business and it has the potential to multiply the effect of other conservation instruments, such as education and the provision of donations. Most States in Australia have developed strategies for ecotourism that at least recognise the importance of natural resources and the role ecotourism can have in conserving these resources (Preece et al., 1995). Nevertheless, as yet there are few examples of ecotourism funding the conservation of biodiversity in Australia, and fewer still examples of direct incentives to conserve biodiversity 'off-reserve.' The National Ecotourism Strategy (Commonwealth Dept. of Tourism, 1994) suggests that ecotourism can contribute to the conservation of biodiversity financially or by way of scientific monitoring. Yet the strategy also warns that financial contributions generated from pricing mechanisms such as fees and charges that control the number of visitors, can be seen to be elitist.


Specific causes tend to evoke the greatest response from the public. The campaign to 'Save the Whale' and also the effort to 'Save the Franklin' are good examples of successful causes. A smaller, less well known cause was the Mala Fund established by the Central Australian Tourism Industry Association and the Pacific Asia Travel Association, which raised money for this endangered marsupial (Preece et al., 1995).

Corporate contributions

As Preece et al., (1995) make clear, "corporations often make significant contributions to enhance their corporate image and publicise their commitment to nature conservation." Such contributions can be an important source of funds and at the same time create incentives to conserve biodiversity. Animal sponsorship schemes are another way of raising funds. Identification with individual animals could be extended to identification with species, ecosystems, or bioregions. Naming rights could be negotiated so that government agencies agree to refer to a particular species by its 'corporate' name in return for funding of conservation programs. However, some conservation groups and the Australian Nature Conservation Agency express concern over exactly how this would contribute to biodiversity conservation.


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1. Caveat: the Australian taxation provisions described in this section have been simplified and should not be considered adequate for taxation planning purposes.