Financial Instruments for Managing Native Vegetation Offsets

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Cement, Concrete and Aggregates Australia (CCAA) members are fully committed to the conservation and responsible management of land and biodiversity under their control with the aim of achieving a net positive impact on the environment. This includes meeting their obligations in relation to native vegetation removal. However, the requirement to provide evidence that biodiversity offset credits have been secured prior to commencement of operations creates a significant upfront financial cost to the extractive industry, particularly where a quarry is proposed to be in operation over multiple decades and, in some cases, centuries.

AECOM was engaged to help CCAA investigate alternative financial approaches to meeting native vegetation offset obligations.


This engagement was undertaken using a combination of desktop review and stakeholder consultation with CCAA members, Department of Environment, Land, Water and Planning, and offset credit brokers.

From this, three options were developed to address the challenges associated with securing native vegetation offset credits prior to the commencement of operations, while allowing extractive businesses to meet obligations. These were:

  1. Staged payment with security deposit to third-party credit provider
  2. Staged payment with forward contract from third-party credit provider
  3. Industry-led strategic partnership with third-party credit provider

The implications of the options were assessed relative to business as usual (BAU) using environmental, social and financial criteria. Each of the options would allow extractive businesses to amortise the cost of offset credits over the life of its operations. This would have positive implications for extractive business balance sheets and potentially reducing pressure to increase product prices, which is good for the Victorian economy.

Given the underlying assumptions, each option would also result in lower total costs and cost per credit than the BAU case. However, each option has several disadvantages, which would influence the extent to which they will be acceptable to extractive businesses and the wider community.

Outcomes and Value

Based on the assessment of wider impacts, Option 3 may be considered preferable by the wider community as it has the potential to deliver less fragmented areas of native vegetation across the State, and hence, greater biodiversity outcomes. Option 1 involves limited change from BAU and could be implemented in the short term.

CCAA is now working with the Department of Economic Development, Jobs, Transport and Resources to further investigate Option 3.