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Federal Minister for the Environment and Heritage
The Hon Dr David Kemp, MP

Economic Value of Biodiversity National Workshop, Melbourne
Wednesday, 22 October 2003

Valuing Biodiversity


I'm delighted to have the opportunity to be here today, to welcome you to the Economic Value of Biodiversity National Workshop. I congratulate my co-sponsors, Land and Water Australia, the CRC for Sustainable Tourism and the Biological Diversity Advisory Committee, for making this workshop possible…and I thank you, the participants, for taking the time to be here to tackle this challenging task.

Biodiversity plays a fundamental role in supporting our way of life, our health and our economic prosperity. Biodiversity refers to the variety inherent in life. It includes plants, animals, fungi, bacteria and other micro-organisms as well as the ecosystems and natural process of which they are part.

The benefits that come to humans from biodiversity and these natural processes are the goods, services and products we receive them. For instance:

Not to mention:

Our biodiversity provides us with goods and services that are essential for life and which are costly to replace with technological solutions.

As our natural ecosystems have come under greater degrees of stress - we have begun to recognize that the goods and services that the environment provides are not endlessly renewable, or "free".

Without a doubt, this is a critical issue - for if biodiversity can appropriately valued, decision makers - both in Government and in the community, and in their economic activities - will be well informed to make decisions and investments which will help put Australia on a more sustainable path.

There is something of a paradox in the valuation of biodiversity in Australia. On the one hand, Australia's biodiversity has a place close to the hearts of most Australians, and indeed forms an important part of Australians sense of what it means to be Australian.

At the Bali commemoration ceremony in Canberra last week, it was significant, I thought, that when the concluding hymn about Australia was sung, the images projected on the screen were all images of Australia's natural environment, particularly its magnificent vegetation and landscapes.

When you ask Australians what are they most proud of about being Australian, the answers that come most readily to mind are the gum trees, the unique animals, the extraordinary vistas of our mountains, plains and beaches.

Yet, on the other hand, for most of our history we have just taken this biodiversity for granted - as if it were so extensive and so vast that no actions of ours could damage it. Yet we now know that one of the major reasons why many of our rivers have become polluted, why salinity has destroyed the productivity of too much agricultural land, why so many of our unique species are threatened, is that an economic value has not been given to key aspects of our environment. Our rivers, our air, our biodiversity for a long time were treated as free goods, to be used up in the productive process though not recognised as factors of production.

The National Land and Water Resources Audit Biodiversity Assessment 2002, released in April this year, showed the consequences of failing to value appropriately our biodiversity, identifying in particular vegetation clearing as "the most significant threat to species and ecosystems in eastern Australia". It went on to say that "overgrazing, exotic weeds, feral animals and changed fire regimes are additional threats to wetlands, riparian zones, threatened species and threatened ecosystems across much of Australia" (p.vii).

This attitude is certainly changing, but it needs to change further, and we need to expand our understanding of the extent to which this biodiversity underpins our economic and social systems.

This conference can play an important role in helping to bring this wider understanding of the importance of our biodiversity into being.

Australia's Unique Biodiversity

I am sure I do not have tell those of you here this morning that Australia is one of the most biologically diverse countries on the planet. It is home to more than one million species of plants and animals, and more than 80 per cent of these species do not exist outside Australia. Australia is home to approximately 10 per cent of the world's entire biodiversity.

Our unique situation is further highlighted by the fact that we are the most mega-diverse of all OECD countries. Sustainable development in this country is therefore a unique challenge. Australia is in a position to make a globally significant contribution in recognizing the value of our natural heritage and managing it sustainably.

No Government since Federation has invested as heavily in environmental sustainability as the Howard Government. Through the $2.7 billion Natural Heritage Trust and the Australian Government's contribution to the $1.4 billion National Action Plan for Salinity and Water Quality, direct investment by the national Government on the environment, and on biodiversity in particular, has more than doubled in real terms.

This has been possible, to a large extent, as a result of our sustainable management of government finances and the recognition that economic prosperity and a dynamic, flexible economy are integral to the sustainable management of our natural resources.

We have backed these resources with the most important piece of environmental legislation to protect biodiversity in Australian history, the Environment Protection and Biodiversity Conservation Act 1999. No development which threatens nationally listed species or internationally important environmental assets can now proceed until the proponent has agreed to act in ways which preserve and protect these values.

And we have sought to work with the States and local governments to put in place across the whole continent regional catchment arrangements which will allow priorities for environmental rescue to be set in a strategic way by those who, in the end, will have to put in place the remedies.

These arrangements are now coming into place, the first environmental investment plans are being accredited and regional communities are being empowered to undertake the works necessary to effect the environmental rescue strategy.

The Government and the community rely heavily on expert advice in identifying and protecting our biodiversity. The Australian Biological Resources Study provides fundamentally important information to underpin a range of decisions.

Only a week or so ago in Perth I announced in fulfillment of an election commitment that the Australian Government, on the advice of the Threatened Species Scientific Committee, has identified 15 national Biodiversity Hotspots, and will be providing detailed information on the endemic species and conservation threats to these hotspots which will be needed to inform the regional planning process.

From a governmental perspective, the policy issue centers on what is necessary to ensure that this biodiversity is valued, protected, allowed to regenerate, and contributes to the wider prosperity of the community as a whole.

Underlying our approach to this issue is a belief, that while Governments play a key role in facilitating greater recognition of the value of our biodiversity, it is ultimately the individuals on the ground - the farmers and communities who have the greatest role to play in achieving ecologically sustainable natural resource management.

This is the challenge for you here today. As Australia's leading resource economists and ecologists we are looking to you to show us how we can help individuals, communities and Governments make more sustainable decisions by taking decisions affecting biodiversity based on a better understanding of their values.

The Value of Biodiversity

There is much to be done to communicate the value of biodiversity to policy makers and the wider community. To illustrate the value of the goods and services that the environment provides I was impressed with a case study of New York's water supply that may be familiar to many of you.

As a result of new standards relating to drinking water quality the water from the catchment of the Catskill Mountains didn't comply. Investing in treatment plants to solve the problem was estimated to cost US $6 - 8 billion over 10 years. The alternative was to repair the degraded ecosystem of the catchment so that it could deliver cleaner water to the existing infrastructure. This alternative was estimated to cost US $1 - 1.5 billion in total.

In 1994, an independent study of Melbourne's water catchment found that the value of clean fresh water outweighs that of the timber in the forest. Extending the current harvest rotation from 80 to 200 years would deliver benefits of $81 million, while shorter 20-year rotations would decrease the benefits derived from the catchment by $525 million and require building a $250 million water treatment works.

The value of pollination to Agriculture in Australia is estimated as $1.2 billion p.a.

According to the Productivity Commission, the Great Barrier Reef brings in more than $4.2 billion per annum and employs almost 48, 000 people in the tourism sector. Combined with the value of recreational and commercial fishing on the reef this brings the value of bio-diversity related industries to almost $5 billion per annum.

All these examples highlight the importance of getting the frameworks in place for a sustainable Australia.

We already place an economic value on some of biodiversity's goods and services -such as food, fibre, tourism and medicines - although these goods are probably still undervalued.

The dollar value of many of these goods and services is high and of enormous importance to the Australian economy- for example, commercial fisheries in Australia, which depend largely on wild caught species, are worth $1.8 billion annually and one intriguing estimate is that the koala alone brings in more than $300 million tourism dollars each year.

It is worth mentioning here that economic value is just one component of the overall value of biodiversity. Some things are very difficult to value. For example - although we can try to estimate the tourism income associated with the koala, such icons underpin the cultural identity of Australia - which is more difficult, if not impossible to quantify.

A series of examples of how the farming community is already valuing the goods and services biodiversity provides, was recently brought to my attention in a publication of the NSW branch of the National Farmers Federation, called Sustaining the Land: Case Studies of Farmers Working for the Future.

This inspirational collection of accounts, produced with the assistance of the Natural Heritage Trust, provides 34 case studies where - and I quote from Mal Peter's forward of the document:

"Farmers are acknowledging the links between environmental degradation and loss of agricultural productivity. They are developing practical techniques and best management practice strategies to overcome regional conservation challenges including salinity, environmental weeds, soil erosion and feral animals. Farmers are also enhancing the environment through revegetation, improving water and air quality and, increasing biodiversity".

I hear increasingly of cases where the increased value of rural properties through the fostering of biodiversity has been recognised in the marketplace. The market recognition of the environmental sustainability of a property will be an important driver of change in the years ahead.

A Practical Role for Government

While we still face huge challenges, there have been significant advances biodiversity outcomes in recent years and some are being put in place virtually as we speak.

Since 1996 some 18 million hectares have been added to the Natural Heritage Trust's National Reserve System.

In recognition of the enormous value Australians place on our magnificent native forests, 10 Regional Forest Agreements have been completed covering 11 regions in four States. Since 1996, the Australian Government has invested around $100 million to ensure the success of these agreements.

The agreements ensure a comprehensive, adequate and representative national reserve system of forests.

Australia's forest reserve system as a whole well exceeds the recommendation by the World Wide Fund for Nature and the International Union for the Conservation of Nature (IUCN) that 10 per cent of existing forest areas be represented within the protected area network.

The Australian Government is also working with the States and Territories to reform vegetation management and implement the nationally agreed minimum 'biodiversity related' retention standards for vegetation through the NHT Extension bilateral agreements. All Governments have agreed to prevent all clearing of endangered and vulnerable vegetation.

In New South Wales the Australian Government, through the NHT and NAP has provided essential resources to underpin the recently announced vegetation management reforms that will lead to the end of broadscale clearing of remnant native vegetation in that State.

In Queensland, the Australian and Queensland Governments are consulting landholders on the State proposal for vegetation management reform that will achieve immediate protection of Queensland's threatened vegetation communities, substantial greenhouse gas reduction and the phasing out of broadscale remnant clearing.

There is presently under way a huge community consultation process in relation to a proposal to increase the highly protected areas of the Great Barrier Reef from 5% of the marine park to some 30%, and I am confident that we will see greatly enhanced protections for the biodiversity of Great Barrier Reef come into place in the not too distant future.

And then there is the immensely encouraging effort in the Murray Darling Basin to provide good environmental outcomes for some of the major environmental assets of the Murray River, such as the Coorong, the Chowilla Floodplain and the Barmah-Millewa Forest, arising from the recent agreement of the Prime Minister and Premiers at COAG to provide $500 million to support enhanced environmental flows.

These major government initiatives are being matched by volunteer community efforts which will be increasingly strategic, and by a growing exploration of the role of market-based instruments.

Government Helping Communities Help Themselves

That the community is placing a high value on biodiversity in clearly visible in the 430,000 volunteers which have, to date, been mobilised through Natural Heritage Trust Projects to help restore and protect our environment.

Market-based mechanisms have a critical role in providing an effective, equitable and sustainable response to our environmental challenges. Market instruments are also very good at delivering policy outcomes efficiently compared with other instruments such as regulation or politically directed spending.

The Australian Government, in partnership with the States and Territories, is funding a National Market-based Instruments Pilots Program, as part of the National Action Plan for Salinity and Water Quality. The program involves a series of 10 natural resource management projects, which will pioneer in Australia innovative market-based mechanisms to encourage better land and water management and reduce salinity.

One of these ten pilot projects is in the Southern Desert Uplands bioregion of Queensland, where rapid land development is placing pressure on the landscape. The project is investigating how we can use auctions to create biodiversity corridors across neighbouring properties. Project managers used recent economic valuation studies to compare the benefits of different corridors and to choose the best option.

Better Valuation of Biodiversity on the International Level

Internationally, Australia is a world leader across a wide range of environment and sustainable development issues and has actively participated in efforts to understand, value and conserve biodiversity beyond our national borders.

Global warming, ozone protection, forest management, marine policy, coral reef protection, world heritage protection, Antarctic research and protection and wildlife conservation are just some of the areas where Australia has played a leadership role in delivering a better domestic, regional and global outcome for the environment.

Renewed international commitment to improve environmental, social and economic conditions, particularly in developing countries, was a significant achievement of the World Summit on Sustainable Development. Australia took a lead in promoting and securing practical and pragmatic responses to key issues, particularly on oceans management where Australia's expertise was clearly recognised.

Announcement - $3 Million for Measuring Australia's Progress

A key part of understanding the value of our natural ecosystems is the knowledge of the extent and condition of our natural resources. This information is important so that we can be aware of the management opportunities and challenges on our land and also so that we can track the effectiveness of our conservation efforts.

The production of this information has been a priority for the Natural Heritage Trust. Through the National Land and Water Audit $34 million has already been invested in providing Australians with information about land use and associated natural resource condition.

Today I am pleased to announce that the Howard Government will be spending an additional $3 million and has outlined a new strategic plan to extend and improve the Audit.

The data in the audit will provide a critical ongoing role in providing indicators on the health of the environment across Australia. This new funding and strategic direction will ensure that we will know whether we are making progress or falling further behind in putting our environment onto a more sustainable basis.


It is clear that gaining a better understanding of the value of the goods and services that our environment provides us with will help us make better natural resource management decisions.

I believe Australia can have a sustainable future - one where we can pass onto our children a better world, with more options and a higher quality of life, than what was afforded to our generation.

The Howard Government has recognised the scope of this challenge and is making available record resources to meet it.

It will be, however, up to you to help inform these strategies and help shape community attitudes to the way we interact with the environment.

The Australian community must be shown more clearly what the value having healthy ecosystems or protecting engendered species and ecological communities is - to form the basis for further conservation progress. We know that there are significant values there - but we need much better information of what these values are.

The publications generated from this workshop will be an important part of communicating this message.

I am pleased to see that we have a range of experts here at this workshop - from economists to ecologists and policy makers - to tackle these challenges.

I wish you a productive and enjoyable couple of days and I look forward to hearing about the outcomes of the workshop.

Commonwealth of Australia