England, Philippa --- "Conservation Covenants: Are They Working and What Have We Learned?" [2015] UTasLawRw 5; (2015) 34(1) University of Tasmania Law Review 92

Conservation Covenants: Are They Working and What Have We Learned?

PHILIPPA ENGLAND^[1]

Abstract

Australia's current Biodiversity Strategy aims to increase by 25% the number of Australians and public and private organisations participating in biodiversity conservation activities by 2015 and to increase by 600,000 km² the amount of native habitat managed primarily for conservation purposes. One method of helping to realise these goals is to secure voluntary conservation covenants over privately tenured land. Throughout Australia, various statutes provide for conservation covenants - that is, voluntary agreements between private landholders and a government or other authorised body for the conservation of land. This article reviews current field work reporting on how well existing conservation covenant programs are working both in law and in practice. It then speculates on what bearing these 'lessons already learned' may have on recent initiatives aimed at expanding the use of conservation covenants.

I INTRODUCTION

Throughout Australia, various statutes provide for the conservation of nature on privately owned land. One method is by agreement with landowners who may enter into a permanent conservation covenant to protect and preserve natural heritage on their land. This article investigates how well land subject to a conservation covenant is actually managed, both in law and in practice, to achieve sustainable and perpetual conservation. This issue is topical and important because permanent conservation agreements with private landowners are at the heart of programs involving environmental offsets and carbon farming initiatives. Their number and spread is likely to grow exponentially over the next few years so any evidence of ‘lessons already learned’ from existing related models should be very valuable.

II THE CONSERVATION IMPERATIVE

In Australia, more than 1,700 species and ecological communities are known to be at risk of extinction.¹ These threatened species and communities are merely ^[2]‘the tip of an ecological iceberg’ because the full extent of current biodiversity loss is simply unknown.^[3] The 1990s saw growing awareness of the scale of biodiversity loss in Australia as well as enhanced understanding of the role played by deforestation and land clearance.

Australia became a party to the UN Convention on Biological Diversity in 1992. Working with the states and territories, the Commonwealth Government formulated a National Strategy for Conservation of Australia’s Biodiversity in 1996^[4] and a National Framework for the Management and Monitoring of Australia’s Native Vegetation in 1999.^[5] Also in 1999, the Commonwealth Government passed landmark environmental legislation, the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (‘EPBC Act’). This Act included in its objectives the conservation of biodiversity.^[6] The Act aims to promote ‘a co-operative approach to the protection and management of the environment involving governments, the community, land-holders and indigenous peoples’.^[7]

Australia’s current Biodiversity Strategy sets 10 national targets to be realised by 2015. These include:

▪ a 25% increase in the number of Australians and public and private organisations who participate in biodiversity conservation activities;

▪ a doubling of the value of complementary markets for ecosystem services by 2015; and

▪ an additional 600,000 km² of native habitat managed primarily for biodiversity conservation across terrestrial, aquatic and marine environments.

The current Biodiversity Strategy identifies a number of Priorities for Action including ‘[e]ngaging all Australians’.^[8] This Priority calls for ‘[e]nhancing strategic investments and priorities’ aiming for ‘complementary management within and outside protected areas’ and ‘using a mix of complementary legislative and incentive mechanisms to address specific behaviours’.^[9] Within this matrix, particular emphasis is given to developing markets for biodiversity as the Strategy seeks a doubling in the value of complementary markets for ecosystem services as well as an increase in private expenditure on biodiversity conservation.^[10]

The Strategy’s second Priority for Action is ‘[b]uilding ecosystem resilience in a changing climate’. This will include ‘[c]reating nature reserves or conservation management agreements on public and private land’. The Strategy suggests:

[t]hese approaches can be used to complement each other. Different approaches may be best suited to a particular scale, resource use or context. However, all have a role in helping us to protect diversity ... Governments need to work closely with and support private land managers and users to build landscape and seascape-scale approaches to conservation.^[11]

The Strategy makes it clear that, in order to meets its goals, conservation efforts will need to be increased dramatically on both publicly and privately tenured land. Conservation covenants operating over privately tenured land are one method of achieving this.

III CONSERVATION COVENANTS – WHAT ARE THEY AND HOW DO THEY OPERATE?

Historically, pastoral leases often required landholders to clear their land and maintain a minimum level of stock on it.^[12] In more recent years, in line with our growing awareness of the causes and impacts of biodiversity loss, leasehold tenures across Australia have been widely reviewed to allow for multiple uses, including conservation.^[13][14][15] One method of securing this outcome is by the use of a conservation covenant. A conservation covenant is a voluntary agreement between a private landholder and a government or other authorised body for the conservation of privately tenured land. The landholder continues to hold, use and live on the land subject to the conservation requirements of the covenant.¹³

Conservation covenants are now statutorily recognised in Commonwealth legislation as well as various state Acts.¹⁴ In Queensland, for example, the Nature Conservation Act 1992 (Qld) (‘NCA’) enables the State to enter into voluntary conservation agreements with private landholders to declare and manage land as a nature refuge.¹⁵ A conservation agreement may include provisions providing for financial or other assistance to the landholder or restricting the use or management of land in the area.¹⁶ It may also contain provisions about the expiry or termination of the agreement.¹⁷ Once registered, it is binding on the landholder, successors in title and persons who have an interest in the land (including mining interests)¹⁸ unless it is varied or replaced by another agreement.¹⁹

Since 2001, conservation covenants on freehold land, agreed through Commonwealth approved programs, are eligible for specific tax concessions - an income tax deduction and /or concessional treatment on capital gains tax. A number of eligibility requirements must be met. For example, to claim an income tax deduction, a landowner must demonstrate:

▪ the covenant was entered into on or after 1 July 2002;

▪ the covenant was entered into over the freehold land;

▪ the covenant is perpetual;

<http://www.abc.net.au/austory/content/2014/s4135087.htm> Thynne and Macartney,

Australia: Rural Leasehold Land Reforms in Queensland (15 September 2014) Mondaq <http://www.mondaq.com/australia/x/338576/landlord+tenant+leases/Rural+leasehold+lan d+reforms+in+Queensland> .

¹³ Department of the Environment, Conservation Covenants (2015)

<http://www.environment.gov.au/topics/biodiversity/biodiversity conservation/conservation - covenants> .

¹⁴ See, eg, EPBC Act ss 305-309; National Parks and Wildlife Act 1974 (NSW) s 69B; Conservation, Forests and Lands Act 1987 (Vic) s 69; National Parks and Wildlife Act 1972 (SA) s 45F; Nature Conservation Act 2002 (Tas) s 12.

¹⁵ NCA s 45.

¹⁶ Ibid s 46.

¹⁷ Ibid s 47.

¹⁸ Ibid s 51.

¹⁹ Ibid s 48.

▪ the landowner did not receive money, property or any other material benefit for entering into the covenant;^[16]

▪ the covenant was entered into with a recognised Covenant Scheme Provider; the Commonwealth or a state, territory or local governing body; or an authority of the Commonwealth or a state or territory; and

▪ the market value of the land decreased by more than $5,000 as a result of entering into the covenant.^[17]

Stoianoff and Kelly report that, in the three years immediately following the introduction of these tax concessions, the area of land under conservation covenants almost doubled.^[18] However, despite the national availability of these tax concessions, the uptake across different states was very varied. For instance, South Australia had 550,000 ha of land committed to conservation covenants before 2001 and an additional 21,032 ha three years after the tax incentives were introduced. Queensland had 35,100 ha of land committed to conservation covenants before 2001 and an additional 338,716 ha committed three years after the incentive. The remaining states participating in the programmes displayed a doubling of land committed to conservation, but the size of land committed in any one of those states was at least 10 times smaller than that in either Queensland or South Australia.²³ These figures suggest the uptake of conservation measures on privately tenured land is not solely dependent on financial incentives and other factors are also at work.

More recent research has highlighted a range of considerations landholders take into account when deciding whether or not to enter into a conservation covenant. The purpose of this article is, firstly, to collate and analyse these views and, secondly, to speculate on what bearing these findings may have on recent initiatives aimed at expanding the use of conservation covenants.

IV RISKS AND OPPORTUNITIES: LANDHOLDERS’ VIEWS ON CONSERVATION COVENANTS

Several authors have investigated the barriers to participation in conservation covenant programs.^[19] The research highlights the following issues raised by landholders (owning freehold or leasehold land):

A Suspicion – Mistrust of Government

One of the strongest themes highlighted by the literature is that, in many cases, landholders do not believe governments will tow a consistent line over time nor refrain from introducing additional agendas. Thackway and Olsson found some landholders feared their land might be ‘taken over by government and declared a public area’ or ‘indigenous people may make a claim over their land and the land could be handed to indigenous people’.^[20] In general, the vagaries of politics are such that governments (and their policies) do not stick around for the long term whilst departmental staffing is always subject to budgetary constraints etc. This makes government bodies a poor long term conservation partner.

This issue was addressed relatively early in Victoria. The Victorian Conservation Trust Act 1972 (Vic) established an independent statutory corporation, the Trust for Nature (TFN), which operates outside any government department.^[21] Like many of its government counterparts, the TFN has power to purchase and sell land and to negotiate voluntary covenants.^[22] However, the TFN has some additional statutory powers which distinguish it from a government department. It may accept gifts and bequests from members of the public, run public appeals, deliver education and training programs, and it also runs a membership program.^[23] In contrast to the low levels of landholder confidence in government institutions, the TFN ‘attracts the support of the whole community and provides a conduit for community investment in conservation’.^[24]

The Commonwealth statutory scheme replicates the success of the TFN by authorising qualified Covenant Scheme Providers to enter into conservation covenants with landowners. Covenant Scheme Providers may be not-for-profit organisations, government agencies or local

Councils.^[25]

B Resource Conflicts

The issue of inconsistent government policy remains a matter of concern for some landholders despite the greater use of independent covenant providers. Queensland legislation exemplifies the problem. In Queensland, conservation agreements under the NCA must be consistent with the statutory management principles for nature refuges. These are:

▪ to conserve the area’s significant cultural and natural resources;

▪ to provide for their controlled use; and

▪ to ensure the interests of landholders are taken into account.^[26]

Despite these exemplary management principles, the Queensland government has retained its power to allocate mining permits over land subject to a conservation agreement.^[27] In Queensland, as of 2012, there were 273 mineral exploration permits operating within the boundaries of 149 of 379 nature refuges. 186 of these exploration permits were approved after the nature refuge was gazetted. Even national parks are not entirely protected from resource conflicts. Of the 284 IUCN Class IIIIV protected areas in Queensland (which excludes nature refuges) 173 have approved exploration permits.^[28] Furthermore, a declaration of a nature refuge (pursuant to a conservation agreement) may be revoked by the Governor-in-Council at any time in which case any conservation agreement for the area expires.^[29]

The fate of the Bimblebox Nature Refuge is a case in point. This 8000 hectare property is situated 30km north west of Alpha in the Galilee Basin (or Desert Uplands) of central west Queensland. The area is one of 15 national biodiversity hotspots. The Bimblebox estate was purchased in 2000 by a group of concerned individuals with private funds and support from the Australian National Reserve System program. The landowners signed the Bimblebox Nature Refuge Agreement with the Queensland Government in 2003 hoping to permanently protect the conservation values of their property. However, between June 2006 and March 2008 the Queensland Government issued four permits for exploration within the Bimblebox Nature Refuge. In August 2013, the Queensland Government approved the China First (or Galilee Coal) coal mine and in December 2013 the Federal Government followed suit. This mine will see open cut mining on more than half of the Bimblebox Nature Refuge and underground mining in the remainder.^[30]

The Bimblebox Nature Refuge comprises remnant semi-arid woodlands. It includes a rich diversity of reptiles and birds (150 species recorded) including the endangered Black Throated Finch. Unfortunately, it also sits atop the Galilee Basin which contains vast thermal coal deposits and is, effectively, the ‘new frontier’ for coal mining in Queensland. Coal mines proposed or approved to date in the Galilee Basin are:

▪ Waratah Coal’s China First (approved), Alpha North and Carmichael East mines;

▪ GVK and Hancock’s Alpha (approved) Kevin Corner (approved) and Alpha West Mines;

▪ AMCI and Bandanna’s South Galilee mine;

▪ Adani’s Carmichael mine (approved July 2014); ^[31]

▪ MacMines’ China Stone Mine; and

▪ Vale’s Degulla Mine. ³⁷

If all these mines go ahead, over 300 million tonnes of coal will be extracted annually from the Galilee Basin over the next forty years.^[32] The Galilee Basin truly is a ‘hotspot’.

C Lack of Flexibility

Another important concern for many landholders is the perceived inflexibility of perpetual conservation covenants.^[33] For instance, over a ten year period the TFN in Victoria concluded 170 conservation covenants protecting over 6,000 hectares of land. Nevertheless, it found:

[c]onservation covenants suffer from a bad image problem in rural Victoria. Farmers have been loathe in the past to sign such a binding agreement which limits their options for future development of their land while still requiring them to pay rates and expend resources on managing the land. Covenants are also seen to be too ‘big-brother-like’ telling landowners what they can and cannot do on their land.^[34]

The inflexibility of a ‘permanent’ covenant is not necessarily a disincentive for everyone. Moon and Cocklin recently interviewed 45 landholders participating in three different conservation programs in Queensland.^[35] They categorised program participants as production (farming business) or non-production participants (for instance, lifestyle or hobby farmers). They noted that many non-production landholders were motivated by a conservation ethos so the availability of a permanent encumbrance was one of the main incentives for their participation.^[36] Their research demonstrates voluntary conservation programs need to be tailored to meet the diverse motivations of different participants.⁴³

In Queensland, some flexibility is offered to NCA program participants by allowing them to negotiate some of the terms of their conservation agreements. For instance, landholders may be allowed to maintain a light grazing regime provided it does not adversely impact on environmental outcomes in the long term.^[37] In the Cassowary Coast Conservation Covenant Rate Reduction Scheme, a conservation program run by local government, landholders are given the additional option of choosing between a conservation agreement that is ongoing but revocable (at the option of the landholder) and an irrevocable conservation covenant. Landholders who revoke a conservation agreement are liable to repay the Council for the number of years they received the rate reduction, to a maximum of 10 years.^[38]

D Loss of Income and/or Future Development Potential

In general, the more inflexible (or permanent) a program is, the more it constrains landholders’ future financial options – whether in terms of lost productivity or development potential foregone. In the research conducted by Moon and Cocklin this issue emerged as a critical barrier to participation for many production landholders whose financial security depends on the success of their farming activities. Even among nonproduction landholders, the threat of modified property rights and devalued property prices were major barriers to participation.^[39]

Interestingly, these fears have not entirely been borne out in Victoria. One of the activities of the TFN is to assist landholders with finding a purchaser for their land, which

entails liaising with prospective purchasers, talking to real estate agents and attending auctions where required. Experience suggests that the covenant will generally not impact on the sale price of the land but it can reduce the potential market and covenanted properties may take longer to sell as a result.^[40]

Interview respondents in the Moon and Cocklin research identified ongoing government funding, rate rebates^[41] or carbon trading as measures that could compensate for the costs of placing land under a conservation covenant but short term or one-off government payments were considered insufficient to balance the long-term cost of conservation.^[42] Interestingly, Moon and Cocklin’s research was conducted almost ten years after the introduction of Commonwealth tax concessions suggesting many landholders are either ineligible or inadequately informed about these opportunities.

Another possibility is that the existing financial concessions on offer are simply not sufficient to outweigh the significant restrictions placed on landholders who sign up for a conservation covenant. Although long term payments for conservation initiatives (whether funded directly by government or indirectly by market mechanisms) provide an important incentive for some participants, many landholders simply cannot afford to risk limiting their future options; nor do they wish to sacrifice their autonomy to ‘big brother’ style government programs:

Respondents iterated their need to maintain control over their benefit stream and were unwilling to participate in a program to the extent that it endangered that control. For example, some respondents were unwilling to participate in perpetual programs or were only willing to commit unproductive areas of their property ...[I]n Australia, property ownership is commonly viewed as ‘freedom from the reach of government’ and the law as ‘the embodiment of intrusion by government, not as a legitimate democratic expression of the public interest’.^[43]

This evidence suggests financial incentives may be a necessary but not sufficient inducement to participation in these programs. If that is the case, what other incentives are required to interest potential participants? The research by Moon and Cocklin indicates landholders are also motivated by the desire to see their overall production improve and/or to see conservation outcomes realised. These aspirations are confirmed by other authors.^[44] Program designers should be mindful of the advice of Thackway and Olsson, who conclude that public-private partnerships are likely to be most successful where ‘the interests and aspirations of the stakeholders are considered and acknowledged, and where the outcomes involve spin-offs which are mutually beneficial to the regional community.’^[45]

E Biodiversity Outcomes Not Guaranteed

Financial incentives increase the appeal of conservation programs and are a significant incentive for participation but they do have some drawbacks (in addition to their cost). Good quality conservation projects require maintenance and upkeep. Program participants motivated primarily by financial incentives may change their minds if the costs (lost productivity combined with ongoing maintenance requirements) outweigh the benefits, if the financial benefit diminishes over time, or if participants’ financial circumstances change. These dilemmas may lead to program slippage – a decline in real conservation outcomes over time as participants lose interest or cease to participate effectively in the program. A flexible program design can cater for this reality – by, for instance allowing participants to buy their way out of the program - but optimum environmental outcomes may be sacrificed as a result.^[46]

Some landholders may select land of low productivity to include in their conservation agreement so they ‘have nothing to lose’. Unfortunately this land is often low in conservation value offering ‘low additionality’ in conservation terms.^[47] One way to overcome this problem is for administrators to target financial packages to optimise conservation outcomes. For instance, both the NCA covenant program and the Cassowary Coast Rate Reduction Scheme factor the environmental significance of the land into the method for calculating incentive payments and hold landholders financially responsible for backtracking on their commitments.

Participation in conservation covenant programs is almost always voluntary. As such, the achievement of strategic biodiversity outcomes is not guaranteed. In Victoria, Todd found the TFN’s conservation covenant program was relatively successful at protecting habitats already well represented in the public reserve system but the program struggled to recruit participants in highly productive agricultural areas. These areas are under-represented in the public reserve system.^[48] A voluntary, privatepublic conservation program cannot wholly replace the need for prescriptive regulation when necessary.

F Monitoring, Enforcement and Support

Not surprisingly, conservation covenant programs on private land are not frequently monitored.^[49] That may suit private landholders who resent ‘big brother’ governance styles but it provides no guarantee of environmental results. It also makes the long term impacts of the program difficult to measure. Without any quantified results, it may be difficult to secure ongoing political and financial support for the program.^[50] This is especially the case when establishment and ongoing transaction costs are relatively high – requiring individually negotiated agreements, for example.

However, compared to other areas of environmental regulation, securing compliance may not be so problematic in voluntary conservation programs. Whelan observes:

[c]ovenants are an effective means of conservation management in that they have a permanent ‘ranger’ being the resident owner on the property. The commitment of the owners are [sic] such that the covenant conditions are generally executed very closely.^[51]

In the specific context of voluntary conservation covenants, monitoring and enforcement are not the sole or even primary considerations that contribute to effective implementation. Instead it is the cultural issue. Voluntary conservation covenants require a long term, ’partnership’ approach in which government officers and covenant providers advise, assist and communicate with responsible (and usually committed) landholders. Evaluating the low uptake of an environmental pollution reduction program in the United States, Sexton, Murdock and Marcus argue ‘cooperative environmental competence’ is an important, first order pre-requisite for successful environmental partnerships:

[w]e believe a basic, first order cause of the setbacks to XL is the deficiency within both public and private sector organisations of crucial aptitudes, expertise and skills necessary for multi-stakeholder collaboration. In our opinion these essential organisational abilities, which we call cooperative environmental competence, are essential to forming successful environmental partnerships between governments and businesses.... Regulatory agencies and firms will have to acquire cooperative environmental competence, which we define as the organisational capacity (the combination of abilities, aptitudes, endowments, expertise, proficiencies and skills) to: take shared responsibility for solving environmental problems; participate effectively in multi-stakeholder collaborations; use resources and capabilities to achieve cooperative and sustainable environmental solutions.^[52]

Unfortunately, Australia’s recent history of unpopular and disputed native vegetation controls may work against the goal of effective partnering between government and private landholders.^[53] On a brighter note, the greater use of non-government service providers, such as TFN in Victoria, could help promote cooperative environmental competence.^[54]

V IMPLICATIONS FOR EXPANDING CONSERVATION COVENANT PROGRAMS

Where covenants are voluntarily entered into with a genuine conservation motive (whether to improve sustainable agricultural production or to protect biodiversity) there is a good chance they will deliver long lasting environmental outcomes whether or not in perpetuity. They also offer a cost effective method of increasing the conservation estate. For instance, in 1997, Whelan estimated that, for a cost of approximately $1 million, the TFN had achieved a level of protection that would have required more than $15 million had the land been purchased outright for conservation purposes by government.^[55] Nevertheless, despite their attractive environmental and cost advantages, conservation covenants currently make only a very small contribution to the amount of land managed primarily for conservation purposes. Adams and Moon report that, in 2011, conservation covenants covered 30,277km² of land across Australia,^[56] an almost insignificant amount when considering the current national target is to increase the amount of land managed primarily for conservation purposes by 600,000km². This is despite the introduction of national tax incentives in 2001 and increasing reliance on nongovernment service providers. Will it be feasible then to increase by 25% the number of Australians and public and private organisations who participate in biodiversity conservation activities (whether or not through conservation covenants) or to achieve a doubling of the value of complementary markets for ecosystem services?

The evidence from current research indicates the sorts of issues that will need to be addressed if conservation covenants are to play a greater role in conserving biodiversity in Australia. This evidence suggests ongoing financial incentives that compensate for lost productivity and/or development potential and pay landholders to manage their conservation estate are a vital but not necessarily sufficient inducement for wider participation in these types of programs. Even with long term, financial incentives in place, administrators need to be aware that:

▪ many landholders are reluctant to tie up their land indefinitely regardless of any compensatory incentive payments;

▪ perpetual biodiversity outcomes are not assured, especially where participants are motivated primarily by a financial carrot without a genuine interest in achieving conservation objectives;

▪ start-up and administration costs are likely to be high as individual contracts need to be negotiated; and

▪ uncertainty in the policy and regulatory context undermines the faith of participants and the long term success of these initiatives.

To sum up the views of landholders, an attractive program needs to include ongoing financial incentives; multiple and measurable benefits (or at least no additional burdens) preferably in terms of improved productivity; freedom from government intervention and/or some flexibility in program design. Adapting programs to meet these requirements may well mean compromising on environmental outcomes or, alternatively, designing programs that appeal to only a small number of landholders.

VI LESSONS TO BE LEARNED FOR ENVIRONMENTAL OFFSETS, THE CARBON FARMING INITIATIVE (CFI) AND PERI-URBAN CONSERVATION PROGRAMS

What does our experience with conservation covenants to date suggest for various new initiatives which involve negotiating conservation covenants with private landholders? The discussion below speculates on some of the implications for environmental offsets in development approvals pursuant to the carbon farming initiative. It also considers the utility of conservation covenants in the context of peri-urban conservation programs.

Pursuant to the EPBC Act and planning and development legislation in the states and territories, development approvals may be granted subject to requirements for environmental offsets.^[57] Environmental offsets are measures that should compensate for the residual impacts of an action on the environment after avoidance and mitigation measures have been exhausted.^[58] Conservation covenants are one of the favoured methods of securing land for environmental offsets.^[59]

However, experience learned from existing conservation covenant programs suggests at best, no basis for comparison, or at worst a fairly dismal prospect for environmental offsets. The main reason for the success of existing conservation covenant programs is their voluntary nature. Environmental offsets, on the other hand, are generally entered into as part of a reluctant bargain to advance a development proposal. The need for an ongoing financial incentive is another problematic issue for environmental offsets as they are generally a once off condition imposed at the time of development approval. Development conditions are notoriously poorly monitored and enforced. With respect to biodiversity offsets in particular, problems with securing comparable or improved environmental outcomes – at least in the short term – are also well recognised.^[60] In sum, environmental offsets exhibit all the short falls of poorly designed conservation covenant programs: they fail to include a long term financial incentive; mutual benefits for landholders are absent; the ‘perpetual’ nature of the encumbrance is likely to be unpopular; the long term environmental benefits are at best uncertain and the start-up and transaction costs are likely to be high. In all these respects, the experience from existing conservation covenant programs suggests environmental offsets tick all the wrong boxes.

Recent legislative and policy changes in several states have opened the door to indirect biodiversity offsets including payments into trust funds that can deliver ‘off the shelf’ offsetting projects.^[61] There are justifiable concerns about this new strategy, particularly with respect to achieving like-for-like biodiversity conservation outcomes.^[62] Nevertheless, the experience of voluntary conservation covenants suggests that landholders have more confidence in programs that will be delivered by a relatively independent body equipped with sufficient funding (raised from development conditions) and sufficient statutory powers to implement and maintain coordinated projects over the long term. There may be lessons here for the future of environmental offsets.

The prospects for conservation covenants under the carbon farming initiative look more promising. Experience from existing voluntary conservation covenant programs suggests ongoing financial inducements are a necessary (albeit not necessarily sufficient) incentive to encourage widespread participation. This is qualified good news for the carbon farming initiative (CFI) which was designed to enable participants to earn marketable Australian carbon credit units (ACCUs) under the former carbon pricing mechanism. To December 2014, 11,847,595 ACCUs were issued under the CFI.^[63]

The CFI has now been integrated into the Emissions Reduction Fund (ERF). The ERF offers ongoing payments (up to a maximum of 25 years) for sequestration initiatives that qualify as an approved eligible project and succeed in a competitive auction run by the Clean Energy Regulator. Existing approved methodologies for assessing sequestration projects include various forest regeneration, regrowth and plantation projects as well as a methodology for assessing carbon sequestration in soil in grazing systems.⁷¹ In the first auction, run in April 2015, sequestration projects accounted for 28 of approximately 47 million tonnes of abatement in awarded contracts.⁷² Although many of these projects are already in operation – so their ‘additionality’ is minimal⁷³ – this result suggests sequestration projects have the potential to make cost effective bids in future rounds of the ERF auction.⁷⁴

Amendments to the CFI regime also deal with the reluctance of many landholders to tie up their land in perpetual covenants. The ERF now allows proponents for sequestration projects to elect a 100 year or 25 year permanence period (the period for which the carbon must be stored). Proponents choosing the 25 year option will incur a 20% reduction in the number of ACCUs they are issued. Existing projects will be able to switch to the 25 year option within two years of the legislation passing.⁷⁵ The 25 year option may attract landholders who are reluctant to commit their land permanently but it may also interest commercial forest operators by opening a window to industrial forest plantations operating on a 25 year rotation (provided they do not fall within the negative list of ineligible projects).⁷⁶ Ultimately, this change may limit the opportunities for more genuine conservation programs to win funding under the ERF.

Other identified barriers to participation in voluntary conservation covenant programs are highly pertinent in the context of the ERF. These include high start-up and transaction costs and general mistrust of stopstart government agendas. The experience of the TFN in Victoria is that

71

Clean Energy Regulator, Opportunities for the Land Sector (9 May 2015) <http://www.cleanenergyregulator.gov.au/ERF/Choosing - a - project - type/Opportunities - for the - land - sector> .

72

Clean Energy Regulator, Auction Results: April 2015 (25 May 2015)

<http://www.cleanenergyregulator.gov.au/ERF/Published - information/auction results/auction - results - april - 2015> .

73

Steve Cannane, Direct Action’s Old Projects (27 May 2015) ABC – Lateline <http://www.abc.net.au/lateline/content/2015/s4243793.htm> .

74

For alternative views on the viability of carbon sequestration bids in ERF auctions see

Penny van Oosterzee, ‘Carbon Farming Initiative will Fail Farmers and Rural

Communities’, The Conversation (online), 8 July 2014

<https://theconversation.com/carbon-farming-initiative-will-fail-farmers-and-ruralcommunities-28276>; Alexi Lynch, The Emissions Reduction Fund, Greg Hunt and Local

Government (27 May 2014)

<http://www.ironbarksustainability.com.au/resources/news/article/direct - action - ceep - local government - and - energy - efficiency/> Aboriginal Carbon Fund, Emissions Reduction Fund – What it Means for Aboriginal Projects (16 February 2015)

<http://aboriginalcarbonfund.com.au/erf - what - it - means - for - aboriginal - carbon - projects/> .

75

Clean Energy Regulator, Transition to the ERF (10 June 2015)

<http://www.cleanenergyregulator.gov.au/ERF/Transition - to - the - Emissions - Reduction Fund> .

76

The negative list for CFI excludes projects that are likely to cause adverse environmental impacts from claiming CFI funding. See further Department of the Environment, The Negative List <http://www.environment.gov.au/climate - change/emissions - reduction fund/cfi/negative - list> .

landholders have more confidence in independent statutory bodies that are relatively free of government intervention. Such a scenario seems at best a distant prospect for the ERF. Voluntary carbon markets may offer an alternative source of funding but even here it is likely high start-up and transaction costs will remain a formidable barrier for many individual landholders.

The potential for extending existing conservation covenant programs into peri-urban areas perhaps seems most promising. Although not a major proportion of the conservation estate, conservation covenants remain a potent mechanism for securing strategic conservation outcomes on privately tenured land.^[64] They show potential for linking fragmented wildlife corridors, remnant vegetation and critical habitats. Furthermore, many hobby farmers exhibit a strong conservation ethos and view a conservation covenant as securing a permanent legacy for their environmental initiatives. As these farmers typically have or have had an alternative source of income, it seems reasonable to expect the peri-urban fringe to be home to a greater proportion of these types of landholders.

However, two provisos need to be made. First, it is uncertain whether or to what extent the potential for voluntary conservation covenants has already been fully realised by existing programs – that is, whether hobby farmers have already signed up to these sorts of programs to the full extent of their interest. This was certainly an issue identified by Moon and Cocklin in their research.

Secondly, there is a strong tradition of speculative landholding on the fringe of Australian cities. Many peri-urban landholders typically hope to sell their land to development interests at some point in the future. It is yet to be seen whether stronger restrictions on urban development in the peri-urban fringe – now a feature of most regional planning policies and instruments – have or will succeed in dampening these speculative interests. The short life span of some green belt programs in the past suggests the battle is still an uphill one.⁷⁸

Perhaps the most important point to note is that complementary land-use planning controls may, over the long term, have a role to play in changing peoples’ expectations and making conservation covenants a more attractive option. That said, the most potent incentive available to local government is their power to grant targeted rates relief.

VII CONCLUSION

This article has reviewed evidence ‘from the field’ about the achievements, difficulties and drawbacks associated with implementing voluntary conservation covenants on privately tenured land. Voluntary conservation covenants offer a cost effective method of securing land for conservation purposes. They have been embraced by some landholders yet others remain wary. The evidence suggests greater participation in these programs requires not only the existence of financial incentives but also a true ‘partnership approach’ in which mutual trust, long term stability and conservation co-benefits for landholders are openly recognised and actively fostered. This evidence provides a salutary warning to decision-makers who advocate much greater use of market mechanisms (such as carbon trading or the ERF) to foster a rapid growth in private conservation initiatives including conservation covenants.^[65] The experience from existing conservation covenant programs is that there is still a long way to go in refining the implementation of, and encouraging widespread participation in, voluntary and /or market based conservation initiatives.

^[1] (PhD, Lon) Senior Lecturer, Griffith University.

^[2] Natural Resource Management Ministerial Council, ‘Australia’ Biodiversity Strategy, 2010-2030’ (Commonwealth of Australia, Department of Sustainability, Environment, Water, Population and Communities, 2010) 18 (‘Australia’s Biodiversity Conservation Strategy’).

^[3] Ibid.

^[4] Department of the Environment, Sport and Territories, ‘National Strategy for the Conservation of Australia’s Biological Diversity’ (Commonwealth of Australia, 1996).

^[5] National Resource Management Ministerial Council, ‘National Framework for the

Management and Monitoring of Australia’s Native Vegetation’ (Commonwealth of Australia, 1999).

^[6] EPBC Act s 3.

^[7] Ibid.

^[8] Australia’s Biodiversity Conservation Strategy, above n 1, 39.

^[9] Ibid 32.

^[10] Ibid 42.

^[11] Ibid 44.

^[12] J H Holmes, ‘Adapting Leasehold Tenures to Meet Emerging Conservation Needs’ in Peter Hale and David Lamb (eds) Conservation Outside Nature Reserves (University of Queensland, 1997) 136, 136-42. J H Holmes and L D P Knight, ‘Pastoral Lease Tenure in Australia: Historical Relic or Useful Contemporary Tool?’ (1994) 16(1) The Rangeland Journal 106-121.

^[13] N G Graham, ‘Tensions Between Public Environmental Regulation and Private Property Interests: The Case of Land Clearing in New South Wales’ (2014) 29(9) Australian Environment Review 264-266; Holmes, above n 11, 137. See also Department of Natural Resources and Water, ‘State Rural Leasehold Land Strategy’ (Government of Queensland,

^[14] ); AgForce Queensland, Delbessie (2015)

<http://www.agforceqld.org.au/index.php?tgtPage= & page_id=310> . For some recent developments see Terry Redman, Statement from the WA Lands Minister (24 November

^[15] ) Australian Story, ABC Online

^[16] Concessional CGT treatment is available to landowners who enter into conservation covenants whether or not they received some capital proceeds for entering into the agreement.

^[17] Australian Taxation Office, Conservation Covenant Concessions (3 July 2014) <https://www.ato.gov.au/Non-profit/Gifts-and-fundraising/In-detail/Gifts-andfundraising/Conservation-covenants/Conservation-covenant-concessions/>. If the decrease in value of the land is less than $5,000, landowners may be eligible for a deduction if the land was acquired less than 12 months before entering into the covenant.

^[18] Natalie P Stoianoff and Andrew H Kelly, ‘Conserving Native Vegetation on Private Land: Subsidizing Sustainable Use of Biodiversity?’ in Kurt Deketelaere et al (eds) Critical Issues in Environmental Taxation (Oxford University Press, 2007) vol 4, 299, 314. ²³ Ibid 315.

^[19] R Thackway and K Olsson, ‘Public/Private Partnerships and Protected Areas: Selected Australian Case Studies’ (1999) 44(2) Landscape and Urban Planning 87-97; Katie Moon and Chris Cocklin, ‘Participation in Biodiversity Conservation: Motivations and Barriers of Australian Landholders’ (2011) 27(3) Journal of Rural Studies 331-42; J A Todd, ‘Victoria’s Conservation Covenant Program: How Effective has it been at Achieving Private Land Conservation?’ in Peter Hale and David Lamb (eds) Conservation Outside Nature Reserves (University of Queensland, 1997) 173, 173-5.

^[20] Thackway and Olsson, above n 24, 92.

^[21] Victorian Conservation Trust Act (Vic) 1972.

^[22] During its first twenty five years of operation, TFN purchased 93 properties covering more than 7,000 hectares. It retained 53, transferred 34 to the Crown for incorporation into national parks and sold 6 properties with conservation covenants attached: B R Whelan, ‘The Advantages of a Trust in Conservation for Private Landowners’ in Peter Hale and David Lamb (eds) Conservation Outside Nature Reserves (University of Queensland, 1997) 190, 193.

^[23] Victorian Conservation Trust Act (Vic) 1972 s 3.

^[24] Whelan, above n 27, 191.

^[25] Department of the Environment, above n 13.

^[26] NCA s 22.

^[27] The NCA only prohibits mining permits within national parks. Even within national parks, survey licences may be issued. See NCA s 27.

^[28] Vanessa M Adams and Katie Moon, ‘Security and Equity of Conservation Covenants: Contradictions of Private Protected Area Policies in Australia’ (2013) 30(1) Land Use Policy 114, 117.

^[29] NCA s 47(1)(b).

^[30] Bimblebox Nature Refuge, About Bimblebox <http://bimblebox.org/about/> .

^[31] The EDO (NSW) has commenced legal proceedings to challenge this decision. ³⁷ Bimblebox Nature Refuge, Mining the Galilee <http://bimblebox.org/mining - the galilee/> .

^[32] Ibid.

^[33] Moon and Cocklin, Participation in Biodiversity Conservation, above n 24, 336.

^[34] Todd, above n 24, 175.

^[35] The programs were the nature refuge program administered by the DERM, the Cassowary Coast Conservation Covenant Rate Reduction Scheme administered by local government, and the Desert Uplands Landscape program administered by an NGO, the Desert Uplands Build-up and Development Committee.

^[36] Moon and Cocklin, Participation in Biodiversity Conservation, above n 24, 337. ⁴³ Ibid 342; Katie Moon and Chris Cocklin, ‘A Landholder Approach to the Design of Private-Land Conservation Programs’ (2011) 25(3) Conservation Biology 493, 502.

^[37] Moon and Cocklin, Participation in Biodiversity Conservation, above n 24, 340.

^[38] Ibid 334.

^[39] Ibid 339.

^[40] Todd, above n 24, 174.

^[41] Participants in the Cassowary Coast Conservation Covenant Rate Reduction Scheme are offered an annual rate reduction ranging from 20% to 60% depending on the conservation significance of their land. Moon and Cocklin, Participation in Biodiversity Conservation, above n 24, 334.

^[42] Ibid 339.

^[43] Moon and Cocklin, Participation in Biodiversity Conservation, above n 24, 341, citing J R Brasden, Soil Conservation Legislation in Australia: Report for the National Soil Conservation Program (University of Adelaide, 1988) 3.

^[44] See the collection of authors’ contributions in Peter Hale and David Lamb (eds) Conservation Outside Nature Reserves (University of Queensland, 1997) 134.

^[45] Thackway and Olsson, above n 24, 96.

^[46] The Cassowary Coast Conservation Covenant Rate Reduction Scheme, described above, offers one such example.

^[47] Moon and Cocklin, Participation in Biodiversity Conservation, above n 24, 340.

^[48] Todd, above n 24, 175.

^[49] The TFN aims to conduct inspections at least once every three years. See Ibid 174.

^[50] James A Fitzimmons and C Ben Carr, ‘Conservation Covenants on Private Land: Issues with Measuring and Achieving Biodiversity Outcomes in Australia’ (2014) 54(3) Environmental Management 606-616.

^[51] Whelan, above n 27, 193.

^[52] Ken Sexton, Barbara Scott Murdock and Alfred A Marcus, ‘Co-operative Environmental

Solutions: Acquiring Competence for Multi-Stakeholder Partnerships’ in Patrick ten Brink (ed), Voluntary Environmental Agreements: Process, Practice and Future Use (Greenleaf, 2002) 64, 78.

^[53] Graham, above n 12, 264-266.

^[54] See the comments of Whelan, above, regarding the achievements of the TFN. Whelan, above n 27, 191.

^[55] Ibid 193.

^[56] Adams and Moon, above n 33, 115.

^[57] EPBC Act s 134.

^[58] Department of Sustainability, Environment, Water, Population and Communities, Environmental Protection and Biodiversity Conservation Act 1999 Environmental Offsets Policy (Commonwealth of Australia, 2012) 7.

^[59] Ibid 18.

^[60] Philip Gibbon and David Lindenmayer, ‘Offsets for Land Clearing: No Net Loss or the

Tail Wagging the Dog?’ (2007) 8(1) Ecological Management and Restoration 26, 26-31;

Martine Maron, ‘Faustian Bargains? Restoration Realities in the Context of Biodiversity Offset Policies’ (2012) 155 Biological Conservation 141, 141-8; Martin Fallding, ‘Biodiversity Offsets: Practice and Promise’ (2014) 31(1) Environmental and Planning Law Journal 11, 11-33; Peta Norris, ‘Seeking Balance: The Promise and Reality of Biodiversity Offsetting’ (2014) 31(1) Environmental and Planning Law Journal 137, 13747.

^[61] See, eg, Environmental Offsets Act 2012 (Qld) ss 83-86.

^[62] See especially the comments of Preston CJ in Bulga Milbrodale Progress Association

Inc v Minister for Planning and Infrastructure [2013] NSWLEC 48; (2013) 194 LGERA 347, 389-97 [202][251].

^[63] Clean Energy Regulator, ACCUs Issued in Q2 of 2014-14 (15 June 2015) <http://www.cleanenergyregulator.gov.au/ERF/Emissions - Reduction - Fund - project register/Historical - ACCU - data/ACCUs - issued - in - Q2 - of - 2014 - 15> . For an evaluation of how the original CFI could contribute to biodiversity outcomes, see Mick Power, ‘Climate Change, Forests and the Carbon Farming Initiative” (2011) 26(6) Australian Environment Review 151, 151-153.

^[64] Eric Tlozek, ‘Creating Private Nature Refuges Key to Battling Climate Change Effects, Queensland Government Says’, ABC News (Online) <http://www.abc.net.au/news/2015 06 - 02/nature - refuges - on - private - land - key - to - battling - climate - change/6505288> . ⁷⁸ Raymond Bunker, Urban Consolidation: the experience of Sydney, Melbourne and Adelaide (Australian Institute of Urban Studies, 1983).

^[65] Australia’s current Biodiversity Strategy sets a national target of doubling the value of complementary markets for ecosystem services by 2015. Australia’s Biodiversity Conservation Strategy, above n 1, 41.