The magic of the market won’t help the environment unless government also takes responsibility | Megan Evans

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None of the suggestions in the long-awaited interim report from the independent review of Australia’s Environment Protection and Biodiversity Conservation (EPBC) Act released on Monday are particularly surprising or controversial, and many are entirely sensible.

The chair of the review, Graeme Samuel, was unequivocal in his assessment that the EPBC Act is ineffective, inefficient, and not fit for the purpose of protecting Australia’s natural and cultural heritage – echoing the recent damning Australian National Audit Office report (and its previous five reports). A major reason for the act’s failure has been successive government’s failure to provide resources it needs to function properly, a situation which is only getting worse.

The review’s interim report makes a series of recommendations, including the use of National Environmental Standards, bilateral approval agreements with states and territories, mechanisms to leverage private sector investment in habitat restoration, and independent compliance and enforcement. Encouragingly, Samuel also flagged the need for investment to enable a “complete overhaul” of the “antiquated” information systems currently used to inform environmental decisions, and coordinated national action to address key environmental challenges.

But as we’ve seen with the previous decadal review of the EPBC Act (which included many of the same suggestions), the government is free to adopt or reject recommendations as they choose.

Environment minister Sussan Ley has been swift to rule out an independent environmental regulator as an unnecessary “additional layer of bureaucracy”, a view which was confusingly echoed by Samuel on Monday despite the interim report emphasising the need for an “independent compliance and enforcement regulator”.

It is curious that an independent regulator for environmental matters covered by the act, such as threatened species, wetlands and world heritage, is so quickly dismissed, yet the independent regulator which oversees the federal government’s climate change policies is considered a highly regarded and essential institution. Indeed, the Clean Energy Regulator’s oversight is one of the key reasons why Australia’s carbon credit units are seen as high quality by businesses and investors.

Given Ley’s intention to pursue market-based solutions for habitat restoration and Samuel’s suggestion to “leverage” the existing carbon market, it makes sense to learn from experience. Governments worldwide have looked to the market to help protect the environment for four decades, so there are plenty of examples to draw from. While the language has changed over time (instead of ecosystem services and market-based instruments, it’s now natural capital and leveraging private investment), the problems with environmental markets are largely unchanged.

Time and time again, we’ve seen new “innovative” market-based policies appear, such as environmental offsets, stewardship programs, or the Threatened Species Prospectus, only for the program to end after a few years (usually the span of an election cycle), or for there to be a lack of government investment in things like compliance, enforcement and regulatory infrastructure (like publicly accessible registers) which markets need to function effectively.

Invoking the “magic of the market” has proven irresistible for governments eager to outsource responsibilities of public services like health, social security and environmental protection to someone – anyone – else. Having researched environmental markets for close to 10 years (including on the EPBC Act environmental offsets policy) as well as working within government to establish an environmental investment fund, I’m by no means ideologically opposed to markets. But governments routinely underestimate the time and resources required for markets to become established, and the crucial role of governments in providing leadership, de-risking investment, and setting the “rules” that provide businesses with certainty and confidence to participate.

Right now, there are businesses and investors around Australia wanting to fund environmentally beneficial projects either for “green” credentials, for profit, or both. But the government’s climate policy still isn’t ambitious enough for such “win-wins” to be financially attractive. Government environmental funding also continues to decline. If the government doesn’t see the environment as a serious investment, why should the private sector?

Ley has signalled a more broad-scale approach to habitat restoration, beyond the current “piecemeal” offset arrangements. Few would disagree with this aim – but we don’t necessarily need new policies to achieve it.

As part of my research, I’ve interviewed Australian government staff working on environmental assessments and approvals. Many staff recalled trying to deliver “landscape” outcomes, for example by encouraging proponents to secure an offset next to an existing protected area, but lacked the data to even see these areas on a map. One industry proponent I interviewed said the “nirvana” would be “strategic leadership” from government – such as clear information on where industry should invest in habitat protection or restoration. It was also suggested the government could take responsibility for such a “national reserve scheme”. A great idea – and yet federal government funding in the National Reserve System ceased in 2013.

The EPBC Act is in genuine need of reform, but many of its problems can be fixed with investment in basic regulatory infrastructure – think actual IT systems, not hard copy records – and on-ground action that science has demonstrated to be effective, but continue to go unfunded.

Stopping extinctions isn’t even that expensive. The latest science estimates 1,700 of Australia’s threatened species could be recovered with about $1.7bn annually. For comparison, Australians spend about $13bn a year on pet food.

And if the government genuinely wants to encourage private sector investment, it needs to get its own house in order before making another commitment to “innovative” environmental market solutions.

Australia’s remarkable and unique natural and cultural heritage urgently needs leadership, investment and accountability.

Now that would be innovation and a legacy to be proud of.

o Dr Megan Evans is a lecturer and Australian Research Council fellow at the University of New South Wales, Canberra

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