Impacts of Native Vegetation and Biodiversity Regulations, Report No
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Impacts of Native Vegetation Productivity and Biodiversity Commission Regulations Inquiry Report No. 29, 8 April 2004 © Commonwealth of Australia 2004 ISSN 1447-1329 ISBN 1-74037-145-3 This work is subject to copyright. Apart from any use as permitted under the Copyright Act 1968, the work may be reproduced in whole or in part for study or training purposes, subject to the inclusion of an acknowledgment of the source. Reproduction for commercial use or sale requires prior written permission from the Department of Communications, IT and the Arts. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Intellectual Property Branch, Department of Communications, IT and the Arts, GPO Box 2154, Canberra ACT 2601. This publication is available in hard copy or PDF format from the Productivity Commission website at www.pc.gov.au. If you require part or all of this publication in a different format, please contact Media and Publications (see below). Publications Inquiries: Media and Publications Productivity Commission Locked Bag 2 Collins Street East Melbourne VIC 8003 Tel: (03) 9653 2244 Fax: (03) 9653 2303 Email: [email protected] General Inquiries: Tel: (03) 9653 2100 or (02) 6240 3200 An appropriate citation for this paper is: Productivity Commission 2004, Impacts of Native Vegetation and Biodiversity Regulations, Report no. 29, Melbourne. JEL code: Q, R The Productivity Commission The Productivity Commission, an independent agency, is the Australian Government’s principal review and advisory body on microeconomic policy and regulation. It conducts public inquiries and research into a broad range of economic and social issues affecting the welfare of Australians. The Commission’s independence is underpinned by an Act of Parliament. Its processes and outputs are open to public scrutiny and are driven by concern for the wellbeing of the community as a whole. Information on the Productivity Commission, its publications and its current work program can be found on the World Wide Web at www.pc.gov.au or by contacting Media and Publications on (03) 9653 2244. Terms of reference I, IAN CAMPBELL, Parliamentary Secretary to the Treasurer, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, hereby refer the following to the Commission for inquiry and report within twelve months of receipt of this reference. Background 2. Regulatory regimes in a number of States and Territories, along with the Commonwealth’s Environment Protection and Biodiversity Conservation Act 1999, form part of an important transition to more sustainable management of Australia’s native vegetation and biodiversity. The introduction of these regimes, particularly within the past five years, has raised concerns over possible negative impacts on farming practices, productivity, property values and returns and the investment behaviour of affected landholders. These concerns appear to have been exacerbated, in part, by a lack of information and awareness about the implications of the new regimes. Scope of Inquiry 3. The Commission is to report on: (a) the impacts on farming practices, productivity, sustainability, property values and returns, landholders’ investment patterns and the attitude of finance providers, and on other economic activities such as infrastructure development and mineral exploration, and flow on effects to regional communities, arising from the regulation of native vegetation clearance and/or biodiversity conservation, including: (i) both positive and negative impacts; (ii) the level of understanding of the relevant legislative and regulatory regimes among stakeholders; (iii) the likely duration of such impacts and the factors influencing their duration; and (iv) the extent to which existing government measures are mitigating any negative impacts; (b) the efficiency and effectiveness of the above regimes in reducing the costs of resource degradation and the appropriateness of the current distribution of costs for preventing environmental degradation across industry, all levels of government, and the community; (c) whether there is any overlap or inconsistency between Commonwealth and State/Territory regimes, including their administration; IV TERMS OF REFERENCE (d) the evidence for possible perverse environmental outcomes, including those that may result from perceptions of a financial impact, arising from the implementation of the above regimes; (e) the adequacy of assessments of economic and social impacts of decisions made under the above regulatory regimes; (f) the degree of transparency and extent of community consultation when developing and implementing the above regimes; and (g) recommendations (of a regulatory or non-regulatory nature) that governments could consider to minimise the adverse impacts of the above regimes, while achieving the desired environmental outcomes, including measures to clarify the responsibilities and rights of resource users. 4. In assessing the matters in (3), the Commission is to have regard to the legislative and regulatory regimes, and associated implementation measures, in all States, Territories and the Commonwealth whose primary purpose includes the regulation of native vegetation clearance and/or the conservation of biodiversity. 5. In undertaking the inquiry, the Commission is to advertise nationally inviting submissions, hold public hearings, consult with relevant Commonwealth, State and Territory agencies, local government, and other key interest groups and affected parties, and produce a report. 6. The Commonwealth Government will consider the Commission’s recommendations, and the Government’s response will be announced as soon as possible after the receipt of the Commission’s report. IAN CAMPBELL 14 April 2003 TERMS OF V REFERENCE Contents Terms of reference IV Abbreviations and explanations XIV Glossary XVIII Overview XXI Recommendations and findings XLVII Recommendations XLVII Findings XLIX 1 Introduction 1 1.1 About this inquiry 1 1.2 Background to the inquiry 1 1.3 Scope of the inquiry 3 1.4 The Commission’s approach 5 1.5 Conduct of the inquiry 7 2 Analytical framework 9 2.1 Benefits of native vegetation and biodiversity 9 2.2 ‘Optimal’ provision of native vegetation and biodiversity 13 2.3 Private provision of native vegetation and biodiversity 18 2.4 A role for government? 24 2.5 Who should pay? 26 2.6 Summary 35 3 State and Territory regulatory arrangements 37 3.1 State and Territory native vegetation and biodiversity legislation 37 3.2 Development and introduction of the regimes 41 3.3 Key features of the regimes 55 3.4 Implementation and administration 61 CONTENTS VII 3.5 Summary 75 4 Environment Protection and Biodiversity Conservation Act 77 4.1 Description of the EPBC Act 78 4.2 Development of the EPBC Act 94 4.3 Administration and implementation 95 4.4 Summary 95 5 Promoting environmental goals 97 5.1 Environmental objectives 97 5.2 Environmental benefits 100 5.3 Perverse environmental outcomes 106 5.4 Summary 114 6 Impacts on landholders, other industries and regional communities 117 6.1 Impacts on landholders 117 6.2 Quantitative assessment of regional economic impacts 139 6.3 Impacts on regional communities and other industries 144 6.4 Government measures to mitigate negative impacts 154 6.5 Summary 159 7 Assessment of current regimes 161 7.1 A framework for assessing regulation 161 7.2 Achieving environmental goals 163 7.3 Prescription and flexibility 165 7.4 Accessibility, transparency and accountability 167 7.5 Integration and consistency with other regulations 170 7.6 Effective communication 171 7.7 Compliance burden 172 7.8 Monitoring and enforcement 172 7.9 Overall assessment and reform of current arrangements 174 8 Criteria for policy selection 177 8.1 Characteristics of the policy problem 177 8.2 Objectives 179 8.3 Context 181 8.4 Criteria for evaluating policy options 181 VIII CONTENTS 9 Policy options for native vegetation and biodiversity conservation 185 9.1 Non-market approaches 186 9.2 Market approaches 189 9.3 Government approaches 198 9.4 Conclusions 219 10 Conclusions and recommendations 221 Step 1: Implement regulatory best practice 221 Step 2: Encourage private conservation effort 226 Externalities and public goods 228 Step 3: Clarify landholder and community responsibilities 228 Concluding remarks 238 A Public consultation 243 A.1 List of submissions 243 A.2 Visits 249 A.3 Initial public hearings 251 A.4 Draft report public hearings 254 A.5 Modelling workshop 257 B Environment Protection and Biodiversity Conservation Act 259 C New South Wales 297 D Victoria 347 E Queensland 381 F South Australia 421 G Western Australia 447 H Tasmania 479 I Northern Territory 509 J Australian Capital Territory 529 K Estimating regional impacts of broadscale clearing restrictions 541 References 567 CONTENTS IX BOXES 1.1 Australian Native Vegetation Assessment 2001: selected findings 2 1.2 Productivity Commission: operating principles and general policy guidelines 5 1.3 Regulation Impact Statements — adequacy criteria 7 2.1 Defining native vegetation and biodiversity 10 2.2 Potential benefits of native vegetation and biodiversity 10 2.3 Externalities and public goods 12 2.4 Socially-optimal provision of native vegetation 14 2.5 The precautionary principle 18 2.6 Agriculture since European settlement 19 2.7 Examples of sustainable agricultural practices 22 2.8 Participants’ views on property rights and compensation 28 3.1 State and Territory native vegetation and biodiversity legislation 38 3.2 Key definitions