Proposed Native Vegetation Regulation 2012 Regulatory ... · Proposed Native Vegetation Regulation...

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PROPOSED NATIVE VEGETATION REGULATION 2012

REGULATORY IMPACT STATEMENT

FINAL REPORT

Prepared For:

Office of Environment and Heritage

PREPARED BY

May 2012

Proposed Native Vegetation Regulation 2012 – Regulatory Impact Statement Page i

PROPOSED NATIVE VEGETATION REGULATION 2012

FINAL REPORT

Company: Arche Consulting Pty Ltd ABN 35 131 934 337

Contact Person: John Madden

Address: GPO Box 1320 Sydney NSW 2001

Telephone Number: 0421 274076

E-mail address: [email protected]

Web www.arche.com.au

Disclaimer

This report was prepared by Arche Consulting Pty Ltd in good faith exercising all due care and attention, but no representation or warranty, express or implied, is made as to the relevance, accuracy, completeness or fitness for purpose of this document in respect of any particular user’s circumstances. Users of this document should satisfy themselves concerning its application to, and where necessary seek expert advice in respect of, their situation.

The views expressed within are not necessarily the views of the Office of Environment and Heritage (OEH) and may not represent OEH policy.

© Copyright State of NSW and the Office of Environment and Heritage.

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Proposed Native Vegetation Regulation 2012 – Regulatory Impact Statement Page ii

TABLE OF CONTENTS

Executive Summary..................................................................................... vi

1 Introduction ......................................................................................... 1

1.1 Purpose of this Document ................................................................... 1

1.2 Better Regulation Principles ................................................................ 1

2 Native Vegetation in NSW ......................................................................... 2

2.1 The Need for Government Action .......................................................... 2

2.2 Economic Valuation of Native Vegetation ................................................ 3

2.2.1 The Value of Native Vegetation in NSW ............................................. 4

3 Native Vegetation Management in NSW......................................................... 6

3.1 Legislative Background....................................................................... 6

3.2 Administration of Act ........................................................................ 7

3.3 The Native Vegetation Regulation 2005................................................... 7

3.4 Outcomes under the Existing Regulation.................................................. 8

3.5 The Proposed Native Vegetation Regulation 2012....................................... 9

4 Discussions of Proposed Changes under the Proposed Native Vegetation Regulation 2012..................................................................................................11

4.1 Introduction...................................................................................11

4.2 Routine Agricultural Management Activities (RAMAs)..................................11

4.2.1 Summary of Changes...................................................................12

4.2.2 Inclusion of RAMA FOR THE MANAGEMENT OF INVASIVE NATIVE PLanT SPECIES 13

4.2.3 Inclusion of RAMA FOR Thinning......................................................14

4.3 Streamlined assessment pathway for the EOAM ........................................15

4.3.1 Streamlined Assessment...............................................................16

4.3.2 Water Quality and Aquatic Biodiversity.............................................17

4.3.3 Prevention of Salinity..................................................................17

4.3.4 Biodiversity – Integration, Consistency .............................................18

4.3.5 Consultation on Amendments ........................................................18

4.3.6 Summary of Changes – EOAM and Other Assessments ............................20

4.4 Strengthening Private Native Forestry Management ...................................20

4.4.1 Summary of Changes – Strengthening PNF Management .........................23

4.5 Implications - Costs and Benefits..........................................................24

Proposed Native Vegetation Regulation 2012 – Regulatory Impact Statement Page iii

5 Alternative Options ...............................................................................25

5.1 Options Evaluated ...........................................................................25

6 Assessing The Impacts of Options ...............................................................26

6.1 Option 1: (Base case - no regulation in place) .........................................26

6.1.1 Assessing the cost and benefits of Option 1 – the Base Case ....................26

6.2 Option 2: Make the Native Vegetation Regulation 2012 (Proposed Regulation) ..30

6.2.1 Assessing the cost and benefits of Option 2........................................30

6.3 Option 3: Remake the Existing Native vegetation Regulation 2005.................34

7 Costs and Benefits.................................................................................35

7.1 The Cost and Benefits of Options .........................................................35

7.2 Red tape Reduction..........................................................................36

8 Assessment and Conclusions .....................................................................37

9 References..........................................................................................38

Appendix 1 – Option 2 Benefit Costs Analysis ......................................................39

Appendix 2 – Outline of Changes Under the Proposed Regulation ..............................40

Proposed Native Vegetation Regulation 2012 – Regulatory Impact Statement Page iv

TABLES

Table 1 Non-market valuation studies for native vegetation conservation................. 4

Table 2 Area of native vegetation conserved, restored, managed or approved for clearing between 2006 and 2010........................................................ 8

Table 3 Summary of the changes in the Proposed Regulation - RAMAs.....................12

Table 4 Analysis of INS PVPs.......................................................................14

Table 5 NRC reports in EOAM......................................................................19

Table 6 Summary of the changes in the Proposed Regulation – EOAM & other assessments................................................................................20

Table 7 PNF PVPs approved since 1 August 2007...............................................22

Table 8 Summary of the changes in the Proposed Regulation - PNF........................23

Table 9 Annual returns from agricultural activities ...........................................27

Table 10 Estimates of increases in agency costs ................................................28

Table 11 Estimated costs of a reduction in environmental PVPs .............................29

Table 12 Costs that relate directly to Option 1 - no regulation in place ....................29

Table 13 Estimates of PVP applications over the next 5 years avoided by RAMAs .........31

Table 14 Annual Time Savings from Streamlined EOAM ........................................32

Table 15 Estimates of changes over the next 5 years ..........................................32

Table 16 Costs and benefits that relate directly to Option 2 .................................33

Table 17 Summary of cost and benefits against the base case ($ million) ..................35

Table 18 Key elements of proposed changes – Selected RAMAs...............................40

Table 19 Key elements of proposed change - Broadscale clearing, EOAM ..................42

Table 20 Key elements of proposed changes - PNF .............................................43

Table 21 Summary of the main proposed changes in the PNF Code..........................44

FIGURES

Figure 1 Area in NSW with HGL analysis available..............................................18

Proposed Native Vegetation Regulation 2012 – Regulatory Impact Statement Page v

ACRONYMS AND ABBREVIATIONS

BCA Benefit Cost Analysis - a comparison of economic benefits and costs to society of a policy, program, or project.

BCR Benefit Cost Ratio

Choice modelling

Choice modelling (CM) is a revealed preference technique. CM involves asking respondents to choose between more than two alternatives, with each alternative being described by multiple attributes. This approach forces a respondent to consider trade-offs between attributes.

Contingent valuation

Contingent valuation (CV) involves surveying people to ascertain how much they would be willing to pay for specific environmental or social services. It is called “contingent” valuation, because people are asked to state their willingness to pay, contingent on a specific hypothetical scenario and description of the environmental service. It is a “stated preference” technique as it asks people to directly state their values, rather than inferring values from actual choices, as the “revealed preference” methods do. CV is based on open-ended questions which distinguishes it from choice modelling.

CMA Catchment Management Authority

DA Development Application

DECCW Department of Environment Climate Change and Water

FTE Full Time Equivalent (in relation to employment)

ha Hectares

HGL Hydro-geological Landscapes

Landholder Used generically to describe the freehold owner or leaseholder of land

LGA Local Government Area

Market failure

The inability of markets to reflect the full social costs or benefits of a good, service, or state, leading to a situation where markets will not result in the most efficient or beneficial allocation of resources.

Non-use values

Also referred to as “passive use” values. These values are not associated with actual use of a good or service. For example ‘Bequest Value’, is the value that people place on knowing that future generations will have the opportunity to experience something.

NPV Net Present Value - the current value of net benefits (benefits minus costs) that occur over time. A discount rate is used to transform future benefits and costs to their present time equivalent.

NRC Natural Resources Commission

The Act Native Vegetation Act 2003

r The Discount Rate

PV Present Value – the current value of expected future cash flows

PVP Property Vegetation Plan

PNF Private Native Forestry

RAMA Routine Agricultural management Activity

RIS Regulatory Impact Statement

Use value Value derived from actual use of a good or service.

WTP Willingness to Pay

Proposed Native Vegetation Regulation 2012 – Regulatory Impact Statement Page vi

EXECUTIVE SUMMARY

Introduction

The Native Vegetation Regulation 2005 is due to be repealed under the Subordinate Legislation Act 1989 unless remade by 1 September 2012, or a postponement to the repeal is granted by the Premier. The Subordinate Legislation Act 1989 requires a Regulatory Impact Statement (RIS) to be prepared for all new regulation (including the remake of an existing regulation). The RIS must assess the costs and benefits of the proposed statutory rule and alternative options, and determine which option involves the greatest net benefit or the least net cost to the community.

The Native Vegetation Regulation 2005 (the Existing Regulation) underpins the Native Vegetation Act 2003 (the Act). The Existing Regulation assists in implementing certain provisions of the Act by, amongst other things:

prescribing the form and content of Property Vegetation Plans;

extending and limiting routine agricultural management activities;

prescribing requirements for the assessment of broadscale clearing, including adopting an Environmental Outcomes Assessment Methodology (EOAM) for the purpose of assessing and determining whether proposed broadscale clearing (other than clearing of native vegetation for the purposes of private native forestry) will improve or maintain environmental outcomes;

prescribing requirements for clearing for the purposes of private native forestry, including adopting a Private Native Forestry (PNF) Code of Practice; and

providing for penalty notice offences.

To meet the staged repeal requirements of the Subordinate Legislation Act and improve the operation and efficiency of the Regulation it is proposed to remake those provisions of the Existing Regulation that remain relevant to the management of native vegetation, and modify a number of provisions, as the Native Vegetation Regulation 2012.

Proposed Changes

When compared to the Existing Regulation, the Proposed Regulation seeks to clarify a number of the provisions and streamline some of the routine elements and assessments.

In this RIS, four significant areas of change in the Proposed Regulation are examined:

1. Improvement and extension of routine agricultural management activities (RAMAs);

2. Streamlined assessment pathway for the EOAM; and

3. Strengthening Private Native Forestry management.

Options

This RIS canvasses three options for management of native vegetation to replace the existing regulation after 1 September 2012.

Proposed Native Vegetation Regulation 2012 – Regulatory Impact Statement Page vii

These are:

Option 1 (Base case) – No regulation would exist - this situation would create procedural and administrative problems with many sections of the Act. Government would be unable to achieve the objectives outlined in the Act.

Option 2 (Instate the proposed Native Vegetation Regulation 2012) – The proposed Native Vegetation Regulation 2012 would be based on the existing Native Vegetation Regulation 2005, but contain a number of amendments to the current Regulation. This Regulation would enable government to achieve the objectives as outlined in the Act with more streamlined assessment processes and establishment of new exemptions for routine agricultural management activities.

Option 3 (Remake the Native Vegetation Regulation 2005) – The Native Vegetation Regulation 2005 would be remade in its current form. This Regulation would enable Government to achieve the objectives as outlined in the Act.

Assessment

The relative costs and benefits of each option have been assessed against the Base Case of no regulation (Option 1). The costs and benefits of the options depend on their relative ability to achieve the objects of the Act.

The cost benefit assessment indicates that the expected benefits of the proposed Native Vegetation Regulation 2012 will outweigh the anticipated costs, and that the Proposed Regulation (Option 2) will provide the greatest net benefit compared to other available alternatives. The Net Present Value (NPV) of Option 2 is $19.96 million compared to the Base Case.

The Proposed Regulation was assessed as the most practical means of achieving the objects of the Native Vegetation Act 2003 compared with the alternatives of having no Regulation (the Base Case) or the existing Regulation (Option 3).

Improvements

Compared with the Existing Regulation, the Proposed Regulation (Option 2) is likely to result in a number of environmental and administrative improvements, including:

increased flexibility for landholders to manage invasive native plant species and thin native vegetation

a reduction in assessment times for certain categories of clearing assessed under the new streamlined assessment process in the EOAM

a reduction in administrative costs for EOAM implementation;

an increase in the environmental protection of regrowth following Private Native Forestry (PNF); and

an improved treatment of threats of clearing in riparian areas.

The Proposed Regulation is expected to have a minimal impact on individuals and communities, businesses and government compared with the Existing Regulation. A net benefit of $2.63 million compared with the Existing Regulation over 5 years is estimated.

The majority of the benefit of the Proposed Regulation is driven by maintaining the flexibility and administrative savings engendered by the Existing Regulation over the past 5 years.

Proposed Native Vegetation Regulation 2012 – Regulatory Impact Statement Page 1

1 INTRODUCTION

1.1 PURPOSE OF THIS DOCUMENT

The Native Vegetation Regulation 2005 is due for staged repeal on 1 September 2012, unless remade or a postponement to the repeal is granted by the Premier. Section 5 of the Subordinate Legislation Act 1989 requires that a Regulatory Impact Statement (RIS) be prepared when making a new Regulation or remaking an existing Regulation. The RIS must include:

a) a statement of the objectives sought to be achieved and the reasons for them;

b) identification of the alternative options by which those objectives can be achieved (whether wholly or substantially);

c) an assessment of the costs and benefits of the proposed statutory rule, including the costs and benefits relating to resource allocation, administration and compliance;

d) an assessment of the costs and benefits of each alternative option to the making of the statutory rule (including the option of not proceeding with any action), including the costs and benefits relating to resource allocation, administration and compliance;

e) an assessment as to which of the alternative options involves the greatest net benefit or the least net cost to the community; and

f) a statement of the consultation program to be undertaken.

This RIS sets out the analysis of the impact of the proposed Native Vegetation Regulation 2012 and other alternative native vegetation management approaches, compared to a base case option of no regulation.

1.2 BETTER REGULATION PRINCIPLES

In accordance with the Better Regulation Office’s Guide to Better Regulation, this RIS also addresses the seven better regulation principles. These principles are:

Principle 1: The need for government action should be established;

Principle 2: The objective of government action should be clear;

Principle 3: The impact of government action should be properly understood by considering the costs and benefits of a range of options, including non-regulatory options;

Principle 4: Government action should be effective and proportional;

Principle 5: Consultation with business and the community should inform regulatory development;

Principle 6: The simplification, repeal, reform or consolidation of existing regulation should be considered; and

Principle 7: Regulation should be periodically reviewed and, if necessary, reformed to ensure its continued efficiency and effectiveness.


2 NATIVE VEGETATION IN NSW

2.1 THE NEED FOR GOVERNMENT ACTION

The total land area of NSW is some 80 million hectares of which about 50 percent is freehold land, around 38% is leasehold (including lands in the Western Division) and the remainder is Crown Lands (including road and other infrastructure reserves, State Forests and National Parks). Native vegetation covers approximately 65% of the State. When conservation reserves and the Sydney Basin are excluded the area of native vegetation subject to the Native Vegetation Act 2003 is approximately 44.3 million hectares, representing about 55.3% of the State1.

The forests, woodlands, grasslands and other vegetated landscapes of NSW provide a range of socio-economic and cultural values to communities. Native vegetation assists in the control of erosion, land degradation and discharge of salinity into rivers, and provides habitat for a wealth of unique flora and fauna. In addition, native vegetation in NSW stores a significant amount of carbon2.

There have been significant achievements made in the conservation and rehabilitation of native vegetation following the commencement of the Act in 2005. In 2010 alone, some 1,025,000 hectares of native vegetation were conserved or improved across the State. In contrast, only 3,600 hectares were approved to be legally cleared where environmental values were improved or maintained through mechanisms such as the use of offsets2.

Despite these improvements, maintaining or improving native vegetation remains a challenge, with only 9% of native vegetation cover in NSW considered to be in its original condition, 39% has either been completely removed or is severely degraded and the remaining 52% exists in a modified condition3.

The loss and decline of native vegetation can lead to a substantial reduction in terrestrial habitats critical to maintaining agriculturally productive landscapes and remains a major threat to biodiversity.

Various methods have been considered (and some implemented) for native vegetation management, over the past decade in Australia. The Productivity Commission (2004) found that regulation has been implemented by governments Australia-wide to address the problem of insufficient native vegetation and biodiversity conservation on private land. The high value placed on native vegetation by society and the irreversibility of potential negative externalities resulting from the removal of native vegetation (e.g. impacts on biodiversity and water quality) mean that reliance on non-regulatory approaches poses too high a risk to be the main instrument of native vegetation management.

1 DIPNR (2004). 2 NSW Annual Report on Native Vegetation (2010). 3 www.parliament.nsw.gov.au/prod/parlment/hansart.nsf/V3Key/LA20110909002


2.2 ECONOMIC VALUATION OF NATIVE VEGETATION

The economic benefits of native vegetation conservation comprise both use and non-use values. Use values involve people physically using or experiencing the native vegetation and the attributes it provides and deriving value from this use. These use values comprise both direct use and indirect use values.

Direct use values include shelter benefits for adjoining crops and pasture growth, shelter benefits for stock, increased farm productivity, timber for firewood, fencing and brushwood, honey and bees wax production, seed collection, aesthetic benefits, habitat for animals to help control pests, medicinal and perfume resources, improved riverine recreation experiences etc. Direct use values may accrue to the landholder and/or some members of the wider community. For instance, the salinity use values from revegetation may accrue to the landholder undertaking the plantings/management action as well as neighbouring or downstream landholders.

Indirect use values include functional benefits derived from a reliance on natural ecosystems, through the provision of clean air, water and other resources. These values mainly accrue to the wider community.

Non-use values comprise option values, vicarious use values, bequest values and existence values. Option values relate to the benefit of maintaining the right to use resources without necessarily doing so. It may include future use by existing individuals or by future generations. Vicarious use values are gained by people from the knowledge that others may be enjoying the use of a natural environment, for instance, for recreational activities such as bushwalking. Bequest values refer to the maintenance of environmental attributes for the benefit of future generations. Existence value is the satisfaction that the community derives from simply knowing that certain things exist, for example, rare species or special ecosystems4.

Many of these benefits are non-excludable (i.e. nobody can be excluded from consuming the good) and non-rival (i.e. one person’s consumption of the good does not reduce the availability of the good to others). These attributes mean that markets do not appropriately price these goods and services. This market failure is the fundamental rationale for government intervention in native vegetation management.

Where the benefits of native vegetation conservation accrue more widely and cannot be charged for, landholders are unlikely to provide the optimal level of native vegetation from a whole-of-society perspective.

On a landholding at some point, the provision of native vegetation and the production of commodities for profit compete. Past this point, native vegetation conserved for other ‘public good’ purposes mean that landholders lose income because the land could be put to more profitable uses from a private perspective.

As the economic values placed by the community on native vegetation are not traded in a market these values cannot be easily quantified using observed market prices. The most

4 Gillespie Economics (2011).


appropriate methodologies for valuing the community value of native vegetation are stated preference techniques such as contingent valuation and choice modelling.

The following section outlines the values associated with the native vegetation in NSW as defined under the Act and the Proposed Regulation.

2.2.1 THE VALUE OF NATIVE VEGETATION IN NSW

A number of studies examining the direct benefits of native vegetation on farm performance have been conducted across NSW. Studies that have assessed the impacts of windbreaks on wool production in the NSW tablelands and salinity in southern NSW have quantified these benefits.

There have also been studies that attempt to quantify the non-use value of native vegetation in NSW. These are generally willingness to pay (WTP) studies that rely on survey approaches to estimate the value placed on specific environmental assets.

There have been studies conducted in Australia aiming to estimate the value of native vegetation conservation. For example, a study by Lockwood and Carberry (1998) found a WTP of $3.80 per household for every 10,000 ha of native vegetation conserved with an extra WTP of $1.69 per household for every extra native plant and animal species conserved in the region. Table 1 provides a description of WTP studies carried out in eastern Australia.

Table 1 Non-market valuation studies for native vegetation conservation

Item Valued Valued Unit of Value Reference

Per 10,000 hectares of native vegetation conserved

$3.80 Per household - once-off payment

Lockwood & Carberry 1998

Per 1% reduction in area of a unique ecosystem

$3.68 Per household - once-off payment

Rolfe et. al. 1997

Per 1,000 hectares as of healthy river red gums

$1.45 Per household per year URS 2007

Per 1,000 hectares of significant rainforest protected


Per 1,000 hectares of old growth forest protected


Per 10,000 hectares of farmland repaired or bush protected

$0.07 Per household per year for 20 years

Van Bueren & Bennett 2000

Per km2 of native vegetation in good condition

$0.02 Annual payment per household over 5 years in Sydney

Mazur & Bennett 2010

Source: Great Lakes Council (2009) Great Lakes Water Quality Improvement Plan: Wallis, Smiths and Myall Lakes, Forster, NSW. Note: Mazur & Bennett figures have been added to this table by Arche Consulting.


The estimates considered the most relevant for valuing the conservation of remnant vegetation and associated biodiversity in NSW are:

$3.80 per NSW household per 10,000 ha of native vegetation conserved (i.e. $1,094 per ha)5;

$0.02 per respondent in Sydney and $0.01 per respondent in regional NSW for a km2 of native vegetation in good condition (i.e. $1,746 per ha)6.

In this RIS a value of $1,420 per ha is used as an estimate of the WTP for the conservation of a hectare of native vegetation. This value is an average of the two estimates above.

There will be instances where this value is greater or lower depending on the type of vegetation, the values it generates, and the surrounding landscape. However, the figures outlined are indicative of the value placed on native vegetation conservation across the State.

In applying any valuation to assess a policy or action it is necessary to make some judgement of the contribution of the policy or action to the protection of native vegetation. In this RIS it is important to estimate the effect of the Options on the level of improvement of native vegetation in NSW.

5 Based on 2.5 million households in NSW and expressed in 2011 dollars. 6 Based on 63% of the 2.5 million households in NSW located in Sydney. Based on a derived WTP value of $426 per hectare in expressed in 2011 dollars.


3 NATIVE VEGETATION MANAGEMENT IN NSW

3.1 LEGISLATIVE BACKGROUND

The Native Vegetation Act 2003 (the Act) is the primary legislation providing for the sustainable management and conservation of native vegetation in NSW. The Act came into force on December 2005 and regulates the clearing of native vegetation on all land in NSW, except national parks and other conservation areas, state forests and reserves, urban areas and biodiversity certified land.

The objects of the Act are to:

(a) provide for, encourage and promote the management of native vegetation on a regional basis in the social, economic and environmental interests of the State;

(b) prevent broadscale clearing unless it improves or maintains environmental outcomes;

(c) protect native vegetation of high conservation value having regard to its contribution to such matters as water quality, biodiversity, or the prevention of salinity or land degradation;

(d) improve the condition of existing native vegetation, particularly where it has high conservation value; and

(e) encourage the revegetation of land, and the rehabilitation of land, with appropriate native vegetation, in accordance with the principles of ecologically sustainable development.

In order to achieve these objects, the Act sets out a framework which, among other things:

requires approval (i.e. property vegetation plan or development consent) for the broadscale clearing of native vegetation (unless an exemption applies); and

ensures that broadscale clearing of native vegetation cannot be approved unless it improves or maintains environmental outcomes.

The Act creates the following categories of native vegetation:

(a) remnant native vegetation - any native vegetation other than regrowth;

(b) regrowth - any native vegetation that has regrown since 1 January 1983 in the case of land in the Western Division and 1 January 1990 in the case of other land; and

(c) protected regrowth - regrowth that is identified as protected regrowth in an instrument (property vegetation plan, environmental planning instrument, natural resource management plan or an interim protection order) or that has been grown/preserved with the with the assistance of public funds.


The Act also sets out a number of activities that are permitted without development consent or a property vegetation plan. Activities include:

clearing of non-protected regrowth;

routine agricultural management activities;

farming activities such as cultivation, grazing or rotational farming practices, which were being carried out as at 1 December 2005; and

sustainable grazing.

The Native Vegetation Regulation 2005 prescribes details of certain provisions in the Act, enabling these provisions to be implemented effectively.

3.2 ADMINISTRATION OF ACT

The Minister for the Environment is Minister responsible for the Act and associated Regulation.

The Office of Environment and Heritage (OEH) develops native vegetation policy and assessment methodologies. It is also responsible for compliance assurance, monitoring and reporting on the status of native vegetation in NSW.

The recently established Environment Protection Authority (EPA) ensures compliance with the provisions of the Act as they relate to private native forestry and undertakes regulatory work in accordance with its enforcement and compliance strategy. The EPA is also responsible for the approval of Private Native Forestry Property Vegetation Plans (PNF PVP) and/or development consent in relation to clearing for the purposes of PNF.

Catchment Management Authorities (CMAs) play a key role in the implementation of the Act. As the approval authorities (delegated by the Minister for the Environment) for vegetation clearing proposals across the state, CMAs are responsible for assessing and approving clearing proposals through a property vegetation plan (PVP) or a development consent. The Catchment Management Authorities Act 2003 provides the legislative authority for CMAs and covers their operations.

3.3 THE NATIVE VEGETATION REGULATION 2005

The Native Vegetation Regulation 2005 (the ‘Existing Regulation’) commenced on 1 December 2005. The Existing Regulation provides a clear direction for landholders to manage their farming operations while meeting requirements of the Act. The Existing Regulation assists in implementing certain provisions of the Act by:

Part 1: providing definitions of terms used in the Regulation (clauses 1-3);

Part 2: excluding matters for consideration when determining a development application for consent under Part 4 of the Environmental Planning and Assessment Act 1979; providing for the imposition of conditions of development consent; allowing for the clearing of native vegetation for the erection of a single dwelling in certain circumstances; limiting the granting of development consent if the land is subject to a private native forestry PVP (clauses 4-6A);

Part 3: prescribing the form and content of PVPs; prescribing requirements for PVPs that change regrowth date; prescribing requirements for the variation and termination of PVPs; prescribing requirements for the provision of information about PVPs and development consents; prescribing limitation on the approval of


PVPs on land subject to a private native forestry PVP; and prescribing requirements for the consent for submission of draft PVPs (clauses 7-12B);

Part 4: extending and limiting routine agricultural management activities (clauses 13-23B);

Part 5: prescribing requirements for the assessment of broadscale clearing, including adopting an EOAM for the purpose of assessing and determining whether proposed broadscale clearing (other than clearing of native vegetation for the purposes of private native forestry) will improve or maintain environmental outcomes (clauses 24A-29);

Part 5A: prescribing requirements for clearing for the purposes of private native forestry, including approving a Private Native Forestry Code of Practice to be adopted by private native forestry PVPs (clauses 29A-29D);

Part 6: prescribing special provisions for vulnerable lands (clauses 30-33);

Part 7: prescribing savings and transitional provisions (clauses 34-41A); and

Part 8: prescribing requirements for the calculation of percentage groundcover; and providing for penalty notice offences (clauses 42-44 and Schedule 1).

3.4 OUTCOMES UNDER THE EXISTING REGULATION

A review of the Native Vegetation Act 2003 found that the Act has resulted in significant positive outcomes for native vegetation management in NSW (DECCW 2009). It has achieved this by better regulating the level of clearing of native vegetation, providing better tools to facilitate restoration investment and improving knowledge about change in cover of woody vegetation. The area of native vegetation that has been conserved, restored, managed or approved for clearing managed under a PVP instrument is provided in Table 2.

Table 2 Area of native vegetation conserved, restored, managed or approved for clearing between 2006 and 2010

Area (hectares) Year

2006 2007 2008 2009 2010 Total

New conservation areas

Private conservation areas – PVPs in perpetuity

n/a 1,230 2,010 6,480 110 9,830

New restoration/revegetation of native vegetation

Incentive PVPs not in perpetuity 33,790 35,240 83,440 126,370 143,050 388,100

PVP offsets 3,870 9,350 5,000 7,390 20,410 42,150

New management of native vegetation

Invasive native scrub PVPs 148,150 790,370 390,980 544,070 565,380 2,290,800

Thinning to benchmark PVPs 590 510 410 910 350 2,180

Private native forestry PVPs n/a 31,300 124,900 108,870 68,600 333,670

New clearing of native vegetation

Clearing PVPs approved where environmental outcomes maintained or improved

370 2,630 1,613 1,840 3,600 9,683

Total 186,770 870,630 608,353 795,930 801,500 3,076,413

Source: OEH (2011).


As a direct result of the Act and Existing Regulation, approximately 3 million hectares of native vegetation across the state were conserved or rehabilitated through revegetation or restoration between 2006 and 2010.

In the period between 2006 and 2010 approximately 2.6 million hectares of native vegetation have been cleared under an invasive native scrub PVP, thinning to benchmark PVP or PNF PVP. A further 9,680 hectares of native vegetation have been cleared under PVPs. For this clearing, environmental values were improved or maintained.

As a result of the Act, between 2006 and 2010 approximately 430,250 hectares of native vegetation across the state was restored or rehabilitated. This land included:

land incorporated into incentives PVPs (143,050 hectares); and

land incorporated into PVP offsets (20,410 hectares).

The key reforms delivered by the Act include:

the end to broadscale clearing unless it improves or maintains environmental outcomes;

voluntary vegetation management agreements (property vegetation plans);

greater autonomy for farms to manage vegetation through clearly identified regrowth dates and routine agricultural practices;

a streamlined system for the management of invasive native scrub;

flexibility for farmers to manage native vegetation sustainably; and

an improvement in the management of natural resources on private land in NSW.

3.5 THE PROPOSED NATIVE VEGETATION REGULATION 2012

Proposed Regulation: Proposed Native Vegetation Regulation 2012

Principal Act: Native Vegetation Act 2003

Responsibility: Minister for Environment

The main purpose of the proposed Native Vegetation Regulation 2012 (the Proposed Regulation) is to ensure the effective and efficient implementation of the objects of the Native Vegetation Act 2003.

Overall the Proposed Regulation seeks to improve the regulations under the Act by:

increasing flexibility for landholders;

encouraging conservation efforts;

cutting red tape and removing dual consent with other Acts;

increasing the efficiency (streamlining) of some common processes such as some routine agricultural management activities and elements of the EOAM; and

increasing the clarity of some provisions for all parties.


In this RIS, there are three categories of changes to the Existing Regulation. These are relevant to different parts of the Existing Regulation. For the sake of structure and analysis these four categories are referred to by the names in italics in the list below.

1. Part 4 - Routine agricultural management activities (Improvements and extension of RAMAs);

2. Part 5 - Assessment of broadscale clearing — environmental outcomes assessment methodology (Streamlined Assessment Pathway of the EOAM);

3. Part 5A - Clearing under PVP for purposes of private native forestry (Strengthening Private Native Forestry Management); and

These changes have the potential to affect environmental outcomes, private landholders and associated industry and government costs.

It should be noted that many of the changes in the Proposed Regulation are carried over from the existing Regulation without significant amendment. Minor restructuring of the Regulation is also proposed and the numbering system has been updated to reflect the new structure. Some proposed amendments involve policy changes or seek to clarify and remove legal ambiguity.

There are some proposed changes that will have minor impacts on the outcomes achieved under the Act by extending the coverage of the Act where it was ambiguous or increasing the effectiveness over that of the Existing Regulation.

Under these proposed changes the objects of the Act would continue to be achieved.

A background and discussion of the specific changes and their implications are outlined for the four significant categories of the Proposed Regulation in Section 4.


4 DISCUSSIONS OF PROPOSED CHANGES UNDER THE PROPOSED NATIVE VEGETATION REGULATION 2012

4.1 INTRODUCTION

This section provides background and some relevant information on each of the Parts of the Existing Regulation that are proposed to be changed. This description of key changes allows the assessment of costs and benefits to those affected by the proposed Regulation. The four key areas of changes are:

1. Improvement and extension of RAMAs;

2. Streamlined assessment pathway for the EOAM;

3. Strengthening Private Native Forestry Management; and

4.2 ROUTINE AGRICULTURAL MANAGEMENT ACTIVITIES (RAMAs)

Routine agricultural management activities (RAMAs) are farming, safety and other activities where clearing of native vegetation does not require approval under the Native Vegetation Act 2003.

All clearing associated with RAMAs must only be undertaken to the minimum extent necessary. While clearing approval for RAMAs is not required under the Act, approval may be required under other legislation such as the Environmental Planning and Assessment Act 1979. Where land is classed as protected riparian land, the range of RAMAs available is limited. RAMAs identified in the Act include:

construction operation and maintenance of rural infrastructure;

removal of noxious weeds under the Noxious Weeds Act 1993;

control of noxious animals under the Rural Lands Protection Act 1998;

collection of firewood (except for commercial purposes);

harvesting or other clearing of native vegetation planted for commercial purposes;

lopping of native vegetation for stock fodder;

traditional Aboriginal cultural activities (except commercial activities);

maintenance of public utilities; and

activity reasonably considered necessary to remove or reduce an imminent risk of serious personal injury or damage to property.

Section 11(2) of the Native Vegetation Act 2003, allows for the Regulation to extend, limit or vary the activities that are RAMAs.

It is difficult to determine the number of times that clearing is undertaken under a RAMA. The Native Vegetation Report Card does not report on activities exempted or excluded from the Act. In 2010, the Environment Line received 471 reports of clearing which underwent a risk assessment to determine the appropriate regulatory response. Following assessment of the clearing reports, many were incidences of clearing identified as lawful activities such as routine agricultural management or clearing of regrowth7.

7 OEH (2011) NSW Annual Report on native vegetation 2010.

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4.2.1 SUMMARY OF CHANGES

The Proposed Regulation has varying application depending on the element of the Regulation. Table 3 provides a description of the changes and likely impacts on those directly affected by the Proposed Regulation on RAMAs.

Table 3 Summary of the changes in the Proposed Regulation - RAMAs

Element Change - Description Effect

RAMAs

1.1 Telecommunications infrastructure on Crown land

Extend current RAMA to include the construction, operation and maintenance on private land of telecommunications infrastructure.

Reduces assessment costs

1.2 Obtaining construction timber

Remove the timeframes in which timber must be used and delete requirement for landholder to prepare a restoration program.

Removes legal ambiguity and improves clarity

1.3 Clearing of feral native plant species

Replaces requirement for the Minister to consult with the Natural Resources Commission (“NRC”) before listing a species as a feral native plan species with a public exhibition requirement

Provides for broader community involvement

1.4 Infrastructure works by a Council

Existing RAMAs providing for the construction, operation or maintenance infrastructure works by a council: e.g. sewerage treatment works, waste disposal landfill operations, waste management facilities, gravel pits, outdoor playgrounds are removed.

Assess under streamlined assessment processes under the EOAM

1.5 Infrastructure buffer distances

Minor amendment to terminology Improves clarity, no change in policy intent

1.6 Clearing for certain types of dwellings

A new RAMA permitting the clearing native vegetation for the erection of dual occupancy; dwelling house; secondary dwelling; and semi-detached dwelling (to replace the current cl 6 single dwelling exemption).

Reduces assessment costs and increases fairness

1.7 Clearing for conservation purposes

A new RAMA for the clearing native vegetation that is undertaken in accordance with a conservation agreement (or similar statutory agreement).

Reduces assessment costs and encourages conservation efforts

1.8 Clearing planted vegetation

New RAMA for clearing of native vegetation planted for any purpose.

Increases clarity and operational efficiency

1.9 Environmental works – ministerial order

A new RAMA for the clearing of native vegetation for the purpose of environmental works

Reduces assessment costs and encourages conservation efforts

1.10 Clearing of invasive native plant species – ministerial orders

The Minister may by order declare a species of native vegetation as an invasive species for specified land and place conditions of an order.

Reduces assessment costs and improved timing

1.11 Thinning of native vegetation – ministerial orders

The Minister may by order specify the conditions under which the thinning of native vegetation is a routine agricultural management activity.


1.12 Boundary fences New RAMA for the construction, operation and maintenance of any permanent boundary fence.


1.13 Sheds New RAMA for the construction, operation and maintenance of shed.


1.14 Scientific Licences New RAMA for clearing native vegetation in accordance with a scientific licence issued under the National Parks and Wildlife Act 1974.



4.2.2 INCLUSION OF RAMA FOR THE MANAGEMENT OF INVASIVE NATIVE PLANT SPECIES

It is proposed that the clearing of invasive native plant species (INS) will be authorised under a new RAMA. The proposed Regulation allows the Minister to make an order declaring native species to be invasive and may require the clearing of such species to be carried out in accordance with any conditions specified in the order (INS Code).

Clearing permitted under the new RAMA will be for the purpose of re-establishing native vegetation and/or allowing natural regeneration of native vegetation species in order to maintain or create a mosaic of native vegetation states across the landscape.

Currently clearing to controlling invasive native scrub to improve or maintain environmental outcomes, is divided into the following clearing types:

a) burning;

b) clearing of individual plants with no disturbance to groundcover (for example, chemical spot treatment or ringbarking);

c) clearing of individual plants with minimal disturbance to groundcover (for example, grubbing);

d) clearing of plants at paddock scale with nil to minimal disturbance to soil and groundcover (for example, chaining, slashing or roping);

e) clearing of plants at paddock scale with temporary disturbance to soil and groundcover (for example, bladeploughing); and

f) clearing of plants at paddock scale with longer-term disturbance to soil and groundcover (for example, short-term cropping).

The following clearing types may be used to manage INS subject to the provisions of the INS code:

1. Burning; and

2. Clearing of individual plants with nil to minimal disturbance to soil and native groundcover. This clearing method includes but is not limited to clearing by spot spraying, ringbarking and grubbing.

It is proposed that the INS Code will specify a number of conditions on clearing including the area of treatment, the size of trees cleared and restrictions on locations. For example, it is proposed that in the Western Division no more than 2,500 ha may be burnt per property in any two year period; on the western plains (but not in the Western Division) no more than 1,000 ha per property may be burnt in any two year period; and in all other areas no more than 250 ha per property may be burnt in any two year period.

There have been 392 INS PVPs approved under the Act since 2005 – an average of 61 per annum for all types of INS clearing. An analysis of the type of clearing included in each PVP highlights that essentially all INS PVP have approved clearing by methods ‘a to c’ (Table 4).


Table 4 Analysis of INS PVPs

Type of Clearing % Total PVPs (since 2005)

clearing type f 39.0% 153

clearing type e 64.9% 255

clearing type d 81.8% 321

clearing type c 99.6% 390

clearing type b 100.0% 392

clearing type a 100.0% 392

The number of PVPs that only have clearing types ‘a to c’ is estimated to be in the order of 20 per annum.

4.2.3 INCLUSION OF RAMA FOR THINNING

It is proposed that the thinning of native vegetation will be authorised under a new RAMA. The proposed Regulation allows the Minister to make an order requiring the thinning of native vegetation to be carried out in accordance with any conditions specified in the order (Thinning code).

The purpose of thinning to benchmark is to reduce competition between the trees or shrubs to allow growth and maturation of the remaining trees and shrubs; regeneration of trees, shrubs and groundcover; and growth of groundcover; thus improving or maintaining vegetation composition and structure.

Subject to the provisions of this code vegetation may be thinned by the following clearing methods:

1. Clearing of individual plants with nil disturbance to soil and native groundcover. This includes but is not limited to thinning by spot spraying and ringbarking; and

2. Clearing of individual plants with minimal disturbance to soil and native groundcover. This includes but is not limited to thinning by grubbing.

There are a number of conditions on the clearing including area of treatment. For example, it is proposed that in the Western Division no more than 250 ha may be thinned per property in any two year period; on the western plains (but not in the Western Division) no more than 100 ha per property may be thinned in any two year period; and in all other areas no more than 50 ha per property may be thinned in any two year period.

There have been 32 thinning PVPs approved since the Act commenced, an average of around 6 PVPs per annum.


4.3 STREAMLINED ASSESSMENT PATHWAY FOR THE EOAM

Under the Act, a proposal for broadscale clearing that requires a PVP or development consent cannot be approved unless it can be shown that the clearing will improve or maintain environmental outcomes.

Part 4 of the proposed of the Native Vegetation Regulation 2012 adopts the Environmental Outcomes Assessment Methodology (EOAM) for the purpose of providing a methodology for assessing and determining whether proposed broadscale clearing (not being clearing for the purposes of private native forestry) will improve or maintain environmental outcomes.

The EOAM weighs up the positive and negative benefits of different management actions, helping assessment officers to make practical decisions based on the best scientific information available. The EOAM has evolved as a result of extensive field trials, public submissions and review by panels of independent scientists, farming and environmental interests.

The impact of clearing is measured against four environmental values: water quality; soils; salinity; and biodiversity (including threatened species). The methodology is supported by a decision support tool known as the Native Vegetation Assessment Tool (NVAT) and associated databases.

The CMAs uses the EOAM and NVAT to make consistent and repeatable decisions when assessing clearing proposals

Where clearing requires approval, landholders may apply to their local CMA either to prepare a Property Vegetation Plan (PVP) or for Development Consent. As the EOAM only allows for the approval of clearing under a development consent in very limited circumstances, the vast majority of applications are for the preparation of a PVP.

If the clearing proposals form part of a PVP, and the clearing itself does not ‘improve or maintain’ environmental outcomes, applicants may be able to offset their proposal with positive management actions to help meet the ‘improve or maintain’ test.

An assessment can provide three possible outcomes for a clearing proposal:

“red-light”, where a clearing proposal will not improve or maintain environmental outcomes;

“orange-light”, where a clearing proposal will improve and maintain environmental outcomes if the impacts of the clearing can be offset with prescribed management actions; and

“green-light”, where a clearing proposal will improve and maintain environmental outcomes8.

Proposed amendments to the EOAM to simplify and streamline assessment for native vegetation. The changes include structural improvements to increase readability. Changes that are addressed in this RIS occur in the following areas:

8 Natural Resources Commission (2011).


Assessment of broadscale clearing proposals (Chapter 2 of EOAM) - processes for amendment and consultation;

Streamlined Assessment (Chapter 6 of EOAM);

Water Quality and Aquatic Biodiversity (Chapter 7 of EOAM);

Prevention of Salinity (Chapter 9 of EOAM); and

Biodiversity Values (Chapter 10 of EOAM).

4.3.1 STREAMLINED ASSESSMENT

There is a new streamlined approach proposed that includes changes to the assessment of:

paddock trees in cultivation assessment process;

small clumps in cultivation areas in inland CMA regions; and

very small areas of clearing.

‘Scattered paddock trees in cultivation areas’ relates only to paddock trees in poor condition that are not located in the riparian zone. Changes to the treatment of scattered paddock trees include amendment of water quality assessment outside riparian areas and no salinity or land degradation assessment. Biodiversity assessment is also streamlined and threatened species aspects require the CMA to only assess for specific red light habitat features. A consistent offset requirement is also established.

The changes to treatment for small clumps in cultivation relate to areas less than 2 ha and isolated (>100m from other remnants) i.e. clump is completely surrounded by cultivation. This new approach would not apply to a vegetation type that is greater than 90% cleared. As with scattered paddock trees it is proposed that there be normal water quality assessment outside riparian areas, modified salinity assessment (unless hydro-geological landscapes (HGL) are available), no assessment of land degradation, a streamlined biodiversity assessment, no landscape value assessment and a consistently applied offset requirement.

Small area clearing is defined as areas less than 1 ha if the vegetation type is greater than 70% cleared in the CMA, or less than 2 ha if the vegetation type is between 30% to 70% cleared in the CMA or less that 5 ha if vegetation type is under 30% cleared in CMA area. If the vegetation is in low condition, the small area is doubled for each of the categories. It is proposed that there be no salinity assessment unless hydro-geological landscapes (HGL) are available, a streamlined biodiversity assessment and no assessment of landscape value. Normal threatened species assessment applies, water quality and land degradation.

Since the introduction of the Native Vegetation Regulation in 2005 there has been:

almost 2,200 approved PVP assessments;

almost 300 PVPs covering more than 46,000 hectares have been used to offset almost 11,000 ha of clearing;

1,400 incentive PVPs covering more than 170,000 hectares;

nearly 150 PVPs approved to verify regrowth or confirm continuing use covering more than 90,000 hectares; and

over 350 PVPs approved for managing Invasive Native Scrub covering almost 2.7 million hectares.


Analysis of the PVPs in place has shown that:

88% of Paddock Trees approvals have an offset requirement of 10 times or less;

in the Central West and Western CMAs when considering broadscale clearing, 42% of approvals are for areas < 2 hectares; and

in coastal CMA’s when considering broadscale clearing, 67% of approvals are less than 2 hectares, 50% are less than 1 hectare (representing 5.9% of total approved clearing coastal CMA’s)9.

The analysis highlights the possibility of streamlining common PVP assessments.

4.3.2 WATER QUALITY AND AQUATIC BIODIVERSITY

There are some gaps that exist in the EOAM concerning the treatment of aquatic biodiversity. Changes to the assessment of water quality impacts of any clearing under a PVP are proposed for:

defining buffers using stream orders;

exclusion of clearing in new riparian zones;

management of buffers if clearing nearby riparian zones; and

offsetting of impacts of clearing is located within the riparian zone.

The effect of these changes is to increase the transparency of decisions and codify buffer zones and management actions. The protection of riparian vegetation is increased. Where clearing is approved in riparian zone it will be adequately offset with improvements in the riparian zone.

4.3.3 PREVENTION OF SALINITY

When assessing salinity under the EOAM, a salinity benefits index is currently used. The index is an adaptation of a catchment salinity modelling approach.

A new method using Hydro Geological Landscape (HGL) data has been developed. This is the best available science for salinity (called Method 1 in the EOAM). HGL data are only available at this stage for a limited part of the state (mainly the south east and central west - Figure 1).

Method 2 is used where HGLs are not available. This method also uses a risk based approach to target salinity assessment effort to areas of highest salinity risk hazard.

HGL analysis will be adopted where available HGL data identifies salinity hazard and ‘no clearing’ areas.

9 Source: Provided to Arche by OEH December 2011.


Figure 1 Area in NSW with HGL analysis available

4.3.4 BIODIVERSITY – INTEGRATION, CONSISTENCY

The major proposed change is to integrate threatened species and biometric assessment to align biodiversity assessments across different methodologies as far as possible. Ecosystem credits and species credits will be introduced to measure the impacts on biodiversity from clearing and the improvement in biodiversity from management

This will provide a consistent approach to assessing and measuring biodiversity across all OEH methodologies making the EOAM consistent and equitable with the approach used to assess the impacts of development on native vegetation and threatened species in urban areas.

The integrated approach streamlines the assessment of the most frequently occurring threatened species by directly allowing compensatory habitat for a suite of species to be provided as part of the offset. This will reduce the time it takes to assess a Property Vegetation Plan as currently each of these species are individually assessed.

The use of credits will provide greater flexibility for landholders to offset impacts of clearing by ultimately allowing access to biodiversity credits created under the NSW Biobanking Offset Scheme. The credit approach also makes it easier for landholders to work together on a joint PVP as credits can be exchanged or traded between landholders.

4.3.5 CONSULTATION ON AMENDMENTS

The Existing Regulation specifies that for any amendment of EOAM the Minister is to seek the advice of the Natural Resources Commission (NRC) about a proposed amendment before making a decision. The Minister must allow the NRC not less than 30 days in which


to give its advice and the advice of the NRC is to be made public within a reasonable time after it is provided to the Minister.

The NRC has provided reports on proposed changes to the EOAM since the Existing Regulation came into force. Table 5 outlines the reports provided.

Table 5 NRC reports in EOAM

Report Title Year Outline of Recommendations and Number of Submissions

Advice on proposed amendments to Chapter 8—Streamlined assessment

2010-11 Recommends a pause on changes. (6 submissions)

Advice on proposed amendments to Chapter 7—Invasive Native Scrub Assessment

2009-10 Recommends adopt all the proposed amendments with one provision. (5 submissions)

Advice on proposed amendments to Chapters 2 and 5—Biodiversity Assessment

2008-09 Implement the proposed amendments. (13 submissions)

Advice on proposed general amendments 2006-07 Recommends that all of the proposed amendments are adopted. (3 submissions)

Advice on proposed amendments to Chapter 6—Soil Assessment

2006-07 Revised management actions should be published as supplementary guidance material and should not be included as changes to the Assessment Methodology itself. (3 submissions)

Advice on proposed amendments to Chapter 7—Invasive Native Scrub (INS) Assessment

2006-07 The majority of the INS Review Group’s amendments be adopted. Did not support stem diameter threshold of Poplar Box. (9 submissions)

Advice on proposed amendments to Chapter 4—Salinity Assessment

2005-06 Recommend amendments (no submissions)

In general the NRC has taken a workshop approach or commissioned specific expert reviews of amendments. Submission processes have generally drawn response from CMAs, the NSW Farmers’ Association and some environmental organisations.

Under the Proposed Regulation there will be a requirement to consult the public and for the Director General to prepare a report to the Minister summarising submissions and making recommendations in relation to those submissions prior to amending the EOAM. The specific role of the NRC has been amended such that the Minister may refer the Director-General’s report and recommendations to the NRC for advice. This amendment does not place any restraint on the ability of the NRC to provide comment on proposed amendment to the EOAM.


4.3.6 SUMMARY OF CHANGES – EOAM AND OTHER ASSESSMENTS

Table 6 provides a description of the changes and likely impacts on those directly affected by the changes to the EOAM in the Proposed Regulation.

Table 6 Summary of the changes in the Proposed Regulation – EOAM & other assessments


2. Broadscale clearing

2.1 Special provision Restructuring of Regulation provision to clarify matters that must be set out in a policy relating to long term environmental benefits.

Streamlines and clarifies process

2.2 EOAM

a. Streamlined assessment

Streamlining common PVP assessments. Paddock trees in cultivation, small clumps in cultivation, very small areas.

Note: Pasture cropping is currently assessed via a separate streamlined clause 28 policy developed under the Native Vegetation Regulation 2005. It proposed to add it to the EOAM for practical reasons and simplicity.

Reduces assessment costs.

For pasture cropping, no change in assessment costs.

b. Water Quality Provisions will encourage most landholders to keep clearing away from the riparian zone

Increased protection of environment

c. Salinity Risk based approach results in minimal assessment effort where salinity risk is low and greater assessment effort where salinity risk is high.


Increased protection of environment

c. Biodiversity Values Provide equity and consistency with other biodiversity assessment methodologies used in NSW

Streamlined method for the most frequently assessed threatened species.

Greater flexibility for landholders to offset impacts


d. Consultation Replace existing Regulation requirement with public exhibition process on proposed amendments to the EOAM and a requirement to prepare a summary of submissions report. The Minister may refer the Director General’s report and proposed amendment to the NRC for advice.

Provides for broader community involvement improving transparency & minor reduction in operational costs

4.4 STRENGTHENING PRIVATE NATIVE FORESTRY MANAGEMENT

Private native forestry (PNF) is the management of native vegetation on privately owned land for the purpose of obtaining, on a sustainable basis, forest products including sawlogs, veneer logs, poles, girders, piles and pulp logs.

In NSW the private native forestry industry employs approximately 1,800 people and is valued at between $160 million and $250 million per year. Private native forestry provides over 50% of the State’s hardwood. This hardwood is used extensively in the building and housing industries, and by tradespeople, including furniture manufacturers and arts and craft suppliers (PNF Fact Sheet).


Following changes to the Native Vegetation Act 2003, commencing in stages from 1 August 2007, harvesting of timber for the purposes of PNF requires approval through a private native forestry property vegetation plan (PNF PVP) that ensures environmental outcomes are improved or maintained. A PNF PVP is a legally binding agreement between a landholder and the Minister’s Delegate (EPA or OEH).

The NSW Government has implemented a PNF Code of Practice (PNF Code) that sets minimum operating standards for harvesting in private native forests. The PNF Code establishes a regulatory framework for the sustainable management of such forests by ensuring that operations improve or maintain environmental outcomes.

The PNF Code is in four parts. Each part applies to a particular geographic area or forestry type within the state: Northern NSW; Southern NSW; River Red Gum Forests (those dominated by Eucalyptus camaldulensis); and Cypress and Western Hardwood Forests.

The PNF Code guides operators on private lands to ensure that practices are consistent with ecologically sustainable forest management. For example, the PNF Code:

specifies effective silvicultural practices in different forest ecosystems;

establishes minimum basal area thresholds and retention rates;

sets targets for regenerating or re-establishing forests;

requires forward planning and documentation of harvesting operations;

identifies and protects important landscape features which may provide habitat for threatened species;

limits harvesting operations in areas that may affect soil stability, erosion or water quality, including the establishment of exclusion zones along watercourses; and

requires due diligence in identifying Aboriginal objects, such as scarred or carved trees and bora rings, that require protection under the National Parks and Wildlife Act 1974.

The PNF Code has been reviewed as a separate process to this RIS as part of the wider examination of Existing Regulation.

Between the amendment of the Existing Regulation on 1 August 2007 and 31 December 2011, 2,057 PNF PVPs were approved. The Private Native Forestry Report Card shows that 425 PNF PVPs were approved during 2010.

Table 7 provides a summary of PNF PVPs since July 2007. Using this data the average area covered by a PNF PVP is approximately 140 hectares. The median area across NSW is approximately 70 hectares.


Table 7 PNF PVPs approved since 1 August 2007

RAMA PVPs agreed

Area of PVPs (ha) agreed

PVPs now expired

Northern NSW 1,766 311,859 34

Southern NSW 98 20,439 5

Cypress & Western Hardwood 55 23,197 1

River Red Gum 138 73,135 1

Total 2,057 428,630 41

Source: OEH (2011) Draft PNF Situation Report 31 Dec 2011.

To date, there have been no applications submitted for a Minor Variation of a PNF PVP under Clause 29C of the Existing Regulation.

To date, no landowner has sought minor variation due to the complexity in measuring the 10% rule. A number of landowners have discussed with PNF staff the potential of minor variation which are not triggered by the current rule set. In a number of these cases preliminary examination showed that there could be a ‘maintain or improve environmental outcome’, but the current rules prevents examination and any variation.

The main changes proposed to strengthen PNF management include:

amending the definition of PNF to include native forestry on Crown land; and

providing for a natural resource management plan to be made to identify regrowth following clearing under a PNF PVP as protected.

There are some changes proposed to the PNF Code to improve the guidance for operators on private lands. These changes are made to:

due diligence in relation to Aboriginal objects;

protection of landscape features;

protection of retained trees; and

drainage feature protection.

These actions involve ensuring that the practices are consistent with ecologically sustainable forest management. More detail is provided in Appendix 2. The changes are considered to have relatively minor positive impacts on environmental outcomes by improving forest structure and also the enhanced protection of cultural heritage.


4.4.1 SUMMARY OF CHANGES – STRENGTHENING PNF MANAGEMENT

The Proposed Regulation has varying application depending on the element of the Regulation. Table 8 provides a description of the changes and likely impacts on those directly affected by the Proposed Regulation on PNF.

Table 8 Summary of the changes in the Proposed Regulation - PNF


3. Private Native Forestry

3.1 Definition Amend definition of PNF to include native forestry on certain Crown land.

Reduces assessment costs*

Improves environmental outcomes by regulating PNF on Crown land that is not regulated under the Forestry Act 1916

3.2 Natural Resource Management Plan

Provide for a natural resource management plan to be made so as to identify as protected regrowth, regrowth following clearing under a PNF PVP.

Improves environmental outcomes by protecting regrowth

May reduce landholder income in medium term

3.3 RAMAs Insert new provision requiring minimum standards for tree retention.

Improves environmental outcomes Reduces assessment costs

3.4 Minor variation Delete clause 29C(1) limiting circumstances in which a minor variation of the PNF code of practice in its application to a private native forestry PVP can be made.

Reduces assessments costs

Increased flexibility

* Based on a reduced cost of removing the requirement of a harvesting plan.


4.5 IMPLICATIONS - COSTS AND BENEFITS

The potential effects on the well-being of the community that result from the proposed changes with regards to RAMAs include:

a minor decrease in the amount of offsets involved with telecommunications RAMA;

conservation efforts are encouraged;

reduced agency management and compliance costs;

reduced costs of landholder operations; and

a reduction in the assessment costs of INS and thinning clearing application.

The potential effects on the well-being of the community that result from the proposed changes to the EOAM include:

better protection of native vegetation through the improvement in methods to assess water quality, salinity and biodiversity to determine the impact of broadscale clearing; and

a reduction in time required for the assessment process for clearing applications, helping to overcome a backlog of applications and long processing times in some regions.

The potential effects on the well-being of the community that result from the proposed changes to PNF management include:

protection of native vegetation, through: o protection of regrowth; and o enhanced protection of habitat and feed trees for native wildlife;

an increase in environmental outcomes achieved after a PNF PVP expires; and

reduced costs of managing minor variations.


5 ALTERNATIVE OPTIONS

5.1 OPTIONS EVALUATED

As noted previously, under the principles set out in Section 5 of the Subordinate Legislation Act 1989, the current Native Vegetation Regulation 2005 will lapse on September 1 2012, unless it is remade as a new regulation or a postponement is granted. Instead of remaking an existing regulation as is, there may be alternative options for achieving the same outcomes in a more efficient or effective way.

Schedule 2 of the Subordinate Legislation Act 1989 requires the consideration of a number of alternative options for achieving the desired objectives and an assessment of the costs and benefits of each alternative option. In order to assess such alternative options and specifically, the costs and benefits of a proposed regulatory option, it is necessary to compare options to a common base case. In this RIS, the base case is a situation where no regulation is in place.

The three options considered are:

Option 1 (Base case - no regulation in place) - this would create procedural and administrative problems with many sections of the Act. Government would be unable to achieve the objectives outlined in the Act.

Option 2 (Make the Native Vegetation Regulation 2012) – The Regulation with proposed amendments would be instated. The Regulation would enable government to achieve the objectives as outlined, with a more streamlined assessment process and expanded RAMAs.

Option 3 (Remake the Existing Regulation) – Native Vegetation Regulation 2005 would be reinstated. The Regulation would enable Government to achieve the objectives as outlined.

The following section provides a description of the Options together with an outline of the anticipated costs and benefits of each over the next 5 years.


6 ASSESSING THE IMPACTS OF OPTIONS

6.1 OPTION 1: (BASE CASE - NO REGULATION IN PLACE)

Under Option 1, the Native Vegetation Act 2003 would stand however there would be no regulation to support the implementation of the Act. This is likely to result in:

procedural and administrative problems with many sections of the Act;

no formalised specification of the circumstances in which broadscale clearing is to be regarded as improving or maintaining environmental outcomes for development consent or for the purposes of a PVP;

the absence of a regulation, some proposals for clearing remnant vegetation would have to be assessed as Development Applications requiring consent as provided for in S14(3) of the Act;

the provision of no formal guidance to those that prepare a PVP to clear native vegetation. Such guidance provides some certainty that they would meet the test of improving or maintaining environmental outcomes;

no standardised and transparent method of applying for approval to clear native vegetation;

RAMAs being limited to those set out in the Act — some are too restrictive, some are too flexible; and

no penalty notice offences and related penalties.

6.1.1 ASSESSING THE COST AND BENEFITS OF OPTION 1 – THE BASE CASE

LANDHOLDERS

The current regulatory framework provides landholders with certainty about their rights and obligations regarding clearing and undertaking PNF activities and RAMAs.

Under the Existing Regulation the procedural activities defined in regulations under PVP preparation and assessment services are provided by agencies such as CMAs. In effect this means that the broader community bears the majority of the costs of applications.

Over the past 5 years the number of PVPs for Invasive Native Scrub (INS), PNF and new clearing have averaged approximately 380 per year. It is difficult to estimate the impact of a less transparent and more costly process on landholder participation, however a more complex and uncertain process will mean a reduction in the number of PVPs under a situation with no regulation.

The cost to landholder for each application is estimated to increase from a currently negligible cost to $2,500 per application. This would increase overall costs to landholders by $850,000 per year10.

Potential economic costs associated with a reduction in PVPs relate to opportunity costs. Opportunity costs are a function of potential uses that the land could be put to if a PVP was approved. Agricultural opportunity costs can be measured by estimating the present

10 Based on an estimated 340 assessments at $2,500 per year. This is a 10% decrease in the number of this type of proposals per year and a higher cost than under the arrangements than under a regulation.


value of the potential future stream of net revenue minus initial clearing and capital costs. It is difficult to estimate an opportunity cost across the State. If we assume that INS PVPs generally result in grazing in low rainfall areas, PNF applications are focused on private native forestry operations in high rainfall areas and broadscale clearing is carried out for cropping operations in the slopes of NSW, opportunity costs may be estimated.

The opportunity cost of conserving timber resources rather than using them for private forestry can be calculated as the willingness-to-pay of mills for standing timber i.e. royalty payment, less forest management costs.

The calculation will depend on growth of timber, growth response to forest management such as thinning, forest densities, stocking rate improvements associated with any thinning, access to thinning markets, whether landholders are able to saw timber themselves etc. Based on a simple model with average royalty costs of $50/m3, initial yield of 20m3/ha and a rotation of every 10 years, opportunity costs associated with a reduction in private native forestry have been estimated at in the order of $88/ha.

Table 9 shows the estimate of annual opportunity costs after clearing costs are accounted.

Table 9 Annual returns from agricultural activities

PVP Type Estimate (annualised $/ha)

Note Reduction in area under PVP (ha/yr)

INS 7.50 Grazing value after clearing 23,000

PNF 88.00 Assumes a royalty paid and 10 year cycle 3,340

Clearing 180.00 Additional net revenue from cropping accounting for development costs and opportunity costs of grazing

100

Source: Based on Arche Consulting estimates and DPI gross margin information for goat production and cereal cropping. Annualised returns account for development costs where applicable.

A decrease in applications through PVPs will result in landholder opportunity costs income in the order of $1.14 million per year based on the assumptions in Table 9. This loss represents a value of $19.80 per hectare per year from a reduction in agricultural production under a less flexible approach to native vegetation management.

The cost to landholders is sensitive to the area of INS PVPs and estimated returns. The area covered by INS PVPs is 2.3 million hectares is a key improvement made possible under the Existing Regulations. If the treatment of this area involves light clearing and a small increase in returns estimated at $5/ha then the annual agricultural benefit is significantly reduced.

It is reasonable to assume that the Existing Regulation has allowed legal clearing (in particular INS treatment and PNF operations) that would be more difficult to pursue under a no regulation scenario.


GOVERNMENT AGENCIES

The current regulatory framework provides landholders with certainty about their rights and obligations. Under a less formalised and transparent system it is likely that breaches of the Act requiring compliance action would increase. Many instances of illegal clearing activity arise from the misinterpretation of the exemptions under the Act. Compliance activity would be expected to increase significantly without any Regulation. These activities include warning letters, stop work orders, requirements for remediation and prosecution.

RAMAs would be assessed under the Act leading to an increased reliance on ad hoc interpretation and potential for increased cost in investigation and compliance costs. It is assumed that the costs associated with assessments and compliance will increase. Additionally, a move away from the regulations would also generate a costs associated with management of current PVPs and new internal processes as the current PVP regime under the Regulation is redesigned and implemented within the agencies.

It should be noted that in the short term the body of knowledge and practice that has existed under the Regulation to date would be used in a co-ordinated fashion by the Government agencies. It is assumed that then short run impact on clearing under an ‘improve or maintain test’ would be possible though more resource intensive.

Table 10 Estimates of increases in agency costs

Activity Estimate Note

Assessments $600,000 Annual increase in costs

Compliance $790,000 Annual cost – a doubling of current costs

Transition $250,000 A one-off cost incurred in Year 1 to account for new processes and legal clarifications

Source: Based on additional estimates of current costs and estimates by Arche Consulting.

ENVIRONMENT

The overall impact of a situation of Option 1 no regulation would be an overall decrease in the area cleared legally for legitimate purposes that meet the ‘maintain or improve’ test. This will have an impact on the quality of native vegetation and associated environmental outcomes.

A reduction in PVPs which have a strong environmental intent will reduce the potential for environmental improvement. These include private conservation areas in perpetuity and PVP offsets. It is assumed that any diminution of PVPs will have a relatively small impact on environmental attributes of native vegetation or place some of this vegetation at risk. If 10% of current PVPs with an environmental focus are not pursued, it is assumed that over time this will have a detrimental impact on the condition of native vegetation. Therefore a 5% reduction in the value of this native vegetation is assumed, that is a value of approximately $70 per hectare (Table 11).


Table 11 Estimated costs of a reduction in environmental PVPs

PVP Type Reduction in Value ($/ha)

Reduction in area under environmental PVP

(ha/yr)

Estimate ($/yr)

New conservation areas 71 196 $14,000

New restoration/revegetation of native vegetation

71 9,358 $664,000

It should be noted that there are many issues with applying WTP studies to different contexts. However, the values provide a useful guide for estimating the value of environmental improvements under the options that provide for and effective regime for implementing conservation and incentive PVPs.

SUMMARY

A series of costs would be incurred if there were no regulation in place (i.e. under Option 1) when compared to the situation where a regulation is in place (Options 2 and 3). These costs include:

increase in landholder costs of preparing and assessing clearing applications;

agency assessment costs would increase per application associated with a decrease in the regional flexibility that is documented in the regulation and associated EOAM;

compliance costs would increase, in particular activities currently described in the regulation as RAMAs;

private landholder benefits that are derived from the flexibility enabled by a regulation would be reduced; and

environmental benefits would decrease.

Table 12 provide a summary of the costs that relate directly to Option 1 – no regulation.

Table 12 Costs that relate directly to Option 1 - no regulation in place

Year Annualised cost

($ million)

Note

Policy development and response to no regulation

0.05 Policy development and response incurred in Year 1 – $250,000

Additional landholder costs 0.85 Application costs

Additional ongoing agency costs 1.52 Assessment and compliance costs

Environmental benefits from offsets and improved landscape function

0.67 Benefits lost though less rigorous environmental protection

Agricultural benefits from reduced INS area treated, clearing and PNF

1.14 Lost income from less INS and PNF operations

Total 4.23 Costs of no regulation – benefit of regulation under Option 2 and 3.

These costs are benefits of both the Existing and Proposed Regulations. For the purposes of reporting the outcomes of the BCA the Base Case is assumed to have a NPV of zero and the outcomes Option 2 and 3 are the net benefit when compared to the situation of no regulation.


6.2 OPTION 2: MAKE THE NATIVE VEGETATION REGULATION 2012 (PROPOSED REGULATION)

The Proposed Regulation would be made, based on the current Native Vegetation Regulation 2005 with changes to RAMAs, PNF and the EOAM.

The likely costs as compared to the base case:

some costs associated with development of EOAM and PVP Developer and training are incurred;

a minor reduction in offset area (as a result of new RAMAs eg. telecommunication RAMA);

a cost associated with preparing natural resource management plans to identify regrowth as protected regrowth for example, forest regeneration regrowth; and

a small reduction in grazing income potential on PNF land under a natural resource management plan;

Likely benefits:

all the benefits of the Existing Regulation that are outlined under the Base Case (costs avoided);

a reduction in the amount of clearing of regrowth under a natural resource management plan;

reduction in PVP costs associated with some extended and new RAMAs;

income for a minor increase in area covered by PNF PVPs;

efficiency gain from a decrease in PNF PVP minor variations; and

savings in agency costs as the number of PVPs reduce by streamlining the EOAM.

6.2.1 ASSESSING THE COST AND BENEFITS OF OPTION 2

LANDHOLDERS

The Proposed Regulation would include a number of changes to the Existing Regulation involving RAMAs. Table 13 provides an estimate of the number of PVPs that would be required if the Existing Regulation was not amended.


Table 13 Estimates of PVP applications over the next 5 years avoided by RAMAs

RAMA Number of PVP assessment

Change in outcome

1. Telecoms 75 A small reduction in offset areas associated with PVPs

2. Construction timber - No change to outcomes

3. Council 10 Potential increase in offsets

4. Dwellings 20 No change to outcomes

5. Planted 10 Minor changes to outcomes

6. Environmental benefit 5 Improvement to environmental outcomes

7. INS 100 No change to environmental outcomes

8. Thinning 25 No change to environmental outcomes

9. Boundary fences & sheds 50 No change to environmental outcomes

Total PVPs 295

Assuming the number of total PVPs agreed per year over the next 5 years is approximately 450 per year, the estimates in Table 13 represents a reduction of PVPs of approximately 15% over the next 5 years which has savings for agencies and businesses.

These savings are driven in the main by the reduction in assessments and PVPs for telecommunications infrastructure and INS. For the other RAMAs it is assumed that change in number of applications and PVPs will be minor given the current incidence or the conditions placed within the Existing Regulation.

The additional cost on landholders of PNF management plans assumes that 15 management plans are implemented annually over the next 5 years. The annual reduction in grazing benefits are assumed to be $4.20/ha annually11. This is offset by the environmental benefit that is obtained and in the longer run (though not quantified) by an increased potential for PNF income.

GOVERNMENT AGENCIES

The RAMAs allow a small reduction in agency costs as some activities no longer require assessment. This saving is estimated at approximately $110,000 annually12.

For the streamlining of the EOAM, the agency cost savings are a function of the number of clearing applications that are anticipated over time within each vegetation category, the current time requirement for CMAs and landholders in the preparation of PVPs and the reduced time requirement for CMAs and landholders under the streamlined EOAM.

A survey was undertaken of the 10 CMAs in rural NSW that assess clearing applications13. This survey found that CMAs predict in the order of 218 clearing applications per year

11 Based on a review of grazing value estimates for Cypress and Western Hardwood Forests; Northern NSW Forests; River Red Gum Forests and Southern NSW Forests. 12 Based on an estimated 5 days per application for telecommunications and other RAMAs - $2,167 based on a daily cost of $433 for agency staff. 13 Gillespie Economics (2011).


across the categories of vegetation that are the subject of the proposed streamlined EOAM.

CMAs processed 1,252 applications in 2010 (1,490 in 2009), meaning that the streamlined EOAM would likely apply to less than one in five applications. CMA staff estimated that the time savings in processing applications was estimated by between 0.5 and 25 days, with the average savings was estimated at approximately 4 days. Only modest time savings for landholders were identified (i.e. 0.5 days).

Table 14 Annual Time Savings from Streamlined EOAM

Application Type Annual Application Numbers

CMA time saving (days)

Landholder time

savings (days)

Total agency savings1

Total landholder

savings

Paddock trees in inland CMA regions

65 390 33 $169,000 $14,083

Small clumps in cultivation in inland CMA regions

52 312 26 $135,200 $11,267

Not viable or low viability

33 50 17 $21,450 $7,150

Very small areas of clearing

68 102 34 $44,200 $14,733

Totals 218 854 110 $369,850 $47,233 1 Based on daily cost of $433 for agency staff.

Table 15 provide a summary of the likely effect of the proposed changes that affect PNF over the next 5 years.

Table 15 Estimates of changes over the next 5 years

RAMA Number over 5 years

Change in outcome

1. Definition 2 PNFs 280 hectares of PNF or 84 additional hectares per year.

2. Management Plans 75 plans Increase regrowth on areas subject to PNF of 15,750 ha

3. RAMAs 50 instances 50 hectares where clearing for rural infrastructure restricted

4. Minor variation 30 variations Some minor changes in PNF forestry under the Code of Practice

The proposed changes are assumed to lead to a minor increase in PNF activity and development of management plans, which will be offset by a decrease in PNF PVPs for RAMAs and minor variations.

ENVIRONMENT

There are changes to environmental outcomes under the Proposed Regulations.

The move to a RAMA for telecommunications infrastructure on private land may result in the loss of some areas of native vegetation offsets. Using a ratio of 10:1, the offset per


year that is lost is estimated at 75 hectares. A value of $150,000 per year is estimated as the costs of obtaining this equivalent offset.

These will also be an increased protection as a result of management plans after PNF PVPs and which is estimated at approximately $225,000 per year.

SUMMARY

Table 16 provides a summary of the costs and benefits that relate directly to the Proposed Regulation.

Table 16 Costs and benefits that relate directly to Option 2

Year Annualised cost

($ million)

Note

Costs

Loss of offsets with telecommunications 0.15 Quantified using the an estimate of the costs of obtaining offsets

Costs associated with INS and Thinning changes

0.04 Costs of agency internal training, production of materials and awareness campaign and minor landholder costs

Development costs of EOAM 0.04 Development and training costs of new approaches under EOAM

Increase in agency and landholder planning and assessment costs associated with PNF changes including management plans

0.07 Assumed to result from a slight increase in PVPs and management plan development

Total 0.30 Annualised

Benefits

Avoided costs of no regulation 4.23 Costs of no regulation as outlined under Option 1. This costs is avoided by adopting Option 2 & 3

Reduction in agency costs associated with reduction in assessments

0.49 Benefits from changes to telecommunications INS and other RAMAs, EOAM and changes to consultation requirements

Reduction in landholder costs associated with reduction in assessments

0.13 Benefits from changes to telecommunications and other RAMAs and EOAM pathways. This is a red tape saving for landholders, as compared to the existing regulation.

Landholder net revenue from more timely INS and thinning clearing under INS and thinning RAMA

0.01 A small increase in grazing income due to ability to respond limited by conditions. This is a red tape saving for landholders, as compared to the existing regulation.

Landholder net revenue from additional PNF

0.04 A small increase due to flexibility on Crown lands

Environmental benefits 0.26 Benefit from improved environmental protection of riparian areas under the revised EOAM and PNF management plans

Total benefits 5.17 Annualised

There will also be a slight improvement in environmental outcomes under Option 2 over Option 3 as there are improvements in the EOAM that consider water quality and salinity.


6.3 OPTION 3: REMAKE THE EXISTING NATIVE VEGETATION REGULATION 2005

The Act and Existing Regulation would stand.

Likely costs as compared to the base case:

Minor communication costs on the remake of the regulation are assumed to be in the order of $50,000.

Likely benefits as compared to the base case:

a decrease in the applicant costs;

agency assessment costs are reduced per application;

compliance costs are less;

overall applications under the Regulation would be higher as the PVP process provides transparency and certainty; and

environmental benefits from offsets and improved landscape function would be maintained.

No summary table of costs and benefits is provided as Option 3 will result in the avoiding the costs of no regulation. That is, the benefit of Option 3 is the costs described in Options 1 – no regulation.


7 COSTS AND BENEFITS

The costs and benefits of the ‘Base Case’ scenario (Option 1) and each alternative option are estimated in the previous Chapter are assessed in a costs benefit framework. These costs and benefits are discounted to their present values (PV).

The incremental present value of the costs and benefits compared to Option 1 - ‘Base Case’ consistent with the NSW Guidelines for Economic Appraisal, a discount rate of 7% is to be applied in the cost-benefit analysis. Sensitivity testing is to be undertaken by varying the discount rate in the cost-benefit analysis to 4% and 10% (see Appendix One).

The main output of the cost benefit analysis examined in this RIS is the net present value (NPV). The NPV is the sum of the discounted benefits less the discounted costs compared to ‘Base Case’ for each Option. From an economic perspective, the preferred option should have a higher NPV than the alternative options.

The cost-benefit analysis is conducted over a 5-year period, consistent with the life of the Regulation. However, the effects of any impacts are expected to continue past this timeframe.

7.1 THE COST AND BENEFITS OF OPTIONS

This RIS examined the costs and benefits of three options:

Option 1 (No regulation);

Option 2 (Proposed Regulation 2012); and

Option 3 (Remake the Existing Regulation).

Table 17 provides an overview of the costs and benefits under each Option that was quantified using cost benefit analysis.

Option 2 (Proposed Regulation 2012) is favoured on economic grounds (Table 17). It provides greater net benefits than the next best option (Option 3).

Table 17 Summary of cost and benefits against the base case ($ million)

Option Option 1: No Regulation

Option 2: Proposed

Regulation 2012

Option 3: Remake Existing

Regulation

PV of costs Economic Base Case 1.25 0.05

PV of benefits Economic Base Case 20.33 17.38

Net Present Value14 Economic Base Case 19.96 17.33

Option 2 provides the largest net benefit to society with a NPV of $19.96 million. The ratio of benefits to costs for Option 2 is 16.9. Approximately 35% of the benefits are associated with the retention of a Regulation allowing increased production and clearing that has an environmental benefit.

14 Consistent with the NSW Guidelines for Economic Appraisal, a discount rate of 7% is to be applied in the cost-benefit analysis. Sensitivity testing is to be undertaken by varying the discount rate in the cost-benefit analysis to 4% and 10%.


Option 2 is preferred to Option 3. The additional costs of the Proposed Regulation of $1.25 million result in additional benefit of approximately $3.8 million over the Existing Regulation.

The benefits of the Proposed Regulation outweigh the cost of change and are driven by the costs savings to agencies and landholders.

These results are not sensitive to the discount rate used in the cost benefit analysis (see Appendix 1).

Option 2 results in a potential gain in overall welfare of $19.96 million. That is, the Proposed Regulation increases welfare in the order of $20 million over 5 years when compared to the base case.

7.2 RED TAPE REDUCTION

Under the Proposed Regulation there are red tape savings for business of approximately $185,000 per annum, when compared to the Current Regulation.

These savings are consistent with the guidelines and result from administrative cost savings for businesses and also some delay costs15.

The main driver of red tape savings is reductions in administrative costs. These savings are ongoing and are estimated at $130,000 per year for reduced costs associated with seeking PVP assessments under the Existing Regulation which are now not necessary.

There is also a minor reduction in delay costs. There may be significant delay cost avoided from the improvement of RAMAs in particular clearing INS, thinning native vegetation and telecommunications. A conservative estimate of the cost associated with removing the waiting times for approvals of PVPs for the clearing INS and thinning under the Existing Regulation is estimated and some additional PNF operations is estimated at $57,000 per year in additional net revenue.

15 NSW Government (2012) Guidelines for estimating savings under the red tape reduction target. Office of Better Regulation.


8 ASSESSMENT AND CONCLUSIONS

The costs and benefits of the options depend on their relative ability to achieve the objects of the Native Vegetation Act 2003. The costs and benefits to individuals and the community, landholders and government were examined for each option.

Compared to the Base Case of no regulation (Option 1), Option 2 is expected to provide net economic benefits to the community, with a net present value of $19.96 million.

Further, Option 2 provides an additional net economic benefit of $2.6 million more than Option 3 over the next 5 years16.

Therefore, Option 2, the Proposed Native Vegetation Regulation 2012, is the preferred option.

Note that Option 2 provides red tape savings to businesses of approximately $185,000 per annum.

The assessment of the costs and benefits of the Proposed Regulation highlights a number of points.

First, the costs associated with the Proposed Regulation to Government and to the wider community are low. The most significant cost of the Proposed Regulation is associated with the changes to the EOAM and associated processes and awareness of new RAMAs. There are some costs associated with the reduction in offset areas under the telecommunications RAMA.

When examined in isolation the benefits of the proposed changes to the Regulation are higher than the costs incurred. The most significant benefits are the efficiency gains based on the maintenance of a regulation. The Proposed Regulation also increases efficiency through cost savings to agencies and landholders from the proposed changes in EOAM and extension of RAMAs.

16 The difference in NPV for each option (that is $19.96 million minus $17.33 million)


9 REFERENCES

Department of Environment, Climate Change and Water (2009) Review of the Native Vegetation Act 2003.

Department of Finance, Resource Assessment Commission (1995) Techniques to Value Environmental Resources, AGPS, Canberra.

DIPNR (2004) Draft Native Vegetation Regulation 2004 Regulatory Impact Statement.

Gillespie R (2000) ‘Economic Values of the Native Vegetation of NSW.’ Department of Land and Water Conservation, Background paper No 4, NSW.

Gillespie Economics (2011) Benefit Cost Analysis of Proposed Amendments to the Environmental Outcomes Assessment Methodology.

Great Lakes Council (2009) Great Lakes Water Quality Improvement Plan: Wallis, Smiths and Myall Lakes, Forster, NSW.

Lockwood, M. and Carberry, D. (1998) State Preference Surveys of Remnant Vegetation Conservation. Johnstone Centre Report No. 102, CSU Albury.

Natural Resources Commission (2011) Review of proposed amendments to the Environmental Outcomes Assessment Methodology Chapter 8.

NSW Treasury (2007) NSW Government guidelines for economic appraisal, Office of Financial Management, Policy and Guidelines Paper, 07–5.

NSW Government (2012) Guidelines for estimating savings under the red tape reduction target. Office of Better Regulation.

Mazur, K., & Bennett, J. (2008) How much is the environment worth? Catchment management decisions in the Lachlan Environmental Economics Research Hub Research Reports No 2, Crawford School of Economics and Government, The Australian National University.

OEH (2011) NSW Annual Report on Native Vegetation 2010.

Productivity Commission (2004) Impacts of Native Vegetation and Biodiversity Regulations. Productivity Commission Inquiry Report No 29. April 2004.

Rolfe, J., Blamey, R. and Bennett, J. (1997) Remnant Vegetation and Broad Scale Tree Clearing in the Desert Uplands Region of Queensland. Choice Modelling Research Report No. 3. University of NSW.

Van Bueren, M & Bennett J (2000) Estimating Community Values for Land and Water Degradation Impacts: Draft Report to the National Land and Water Resource Audit, Unisearch Pty Ltd, Canberra.

Stone, A 1991, Valuing Wetlands: A Contingent Valuation Approach. Paper presented to the 35th Annual Conference of the Australian Agricultural Economics Society. University of New England. URS (2007) Non-Use Values of Victorian Public Lands: Case Studies of River Red Gum and East Gippsland Forests, prepared for the Victorian Environmental Assessment Council.

Schirmer, J. & Field, J. (2000) The Cost of Revegetation. ANU Forestry and Greening Australia.


APPENDIX 1 – OPTION 2 BENEFIT COSTS ANALYSIS

COSTS Year 1 Year 2 Year 3 Year 4 Year 5

1. RAMAs

1.1 Telecommunications

Society ‐ Annual offset lost $150,000 $150,000 $150,000 $150,000 $150,000

1.2. INS & Thinnings

Development $20,000

Training and awareness $50,000 $15,000 $15,000 $15,000 $15,000

Agency assistance and compliance $10,681 $10,681 $10,681 $10,681 $10,681

Landholder administration costs $4,000 $4,000 $4,000 $4,000 $4,000

2. EOAM

2.2 Development Costs ‐ Agencies

Streamlined Assessment $50,000 $25,000 $0 $0 $0

Water Quality and Aquatic Biodiversity $20,000 $10,000 $0 $0 $0

Prevention of Salinity $5,000 $25,000 $0 $0 $0

Biodiversity Values $25,000 $25,000 $0 $0 $0


3.1 Definition

Agency costs $0 $1,733 $0 $1,733 $0

3.2 Management Plans

Agency costs $19,500 $19,500 $19,500 $19,500 $19,500

Landholder costs $15,000 $15,000 $15,000 $15,000 $15,000

Area (grazing reduction) $13,230 $26,460 $39,690 $52,920 $66,150

Total additional costs $382,411 $325,641 $253,871 $267,101 $280,331

Benefits

Avoided Costs ‐ of no regulation

Agency Costs

Policy and awareness costs $250,000 $0 $0 $0 $0

Assessment $739,050 $739,050 $739,050 $739,050 $739,050

Compliance $784,700 $784,700 $784,700 $784,700 $784,700

Applicant Costs

Applications $852,750 $852,750 $852,750 $852,750 $852,750

Clearing benefits

Environmental $668,836 $668,836 $668,836 $668,836 $668,836

Agricultural $1,136,107 $1,136,107 $1,136,107 $1,136,107 $1,136,107

Direct Benefits

1. RAMAs

1.1 Telecommunications

Agency cost reductions $32,500 $32,500 $32,500 $32,500 $32,500

Applicant cost reductions $75,000 $75,000 $75,000 $75,000 $75,000

1.2 Other RAMAs

Agency costs reduction $24,267 $24,267 $24,267 $24,267 $24,267

1.2 INS and Thinnings RAMAs

Agency costs reduction $51,700 $51,700 $51,700 $51,700 $51,700

Applicant cost reductions $6,659 $6,659 $6,659 $6,659 $6,659

Agricultural $14,488 $14,488 $14,488 $14,488 $14,488

2. EOAM

2.2 Agencies cost reductions

Streamlined Assessment $417,083 $417,083 $417,083 $417,083 $417,083

Consultation savings $15,000 $15,000 $15,000 $15,000 $15,000

Riparian benefit $35,500 $35,500 $35,500 $35,500 $35,500


3.1 Definition ‐ landholder income $0 $35,200 $35,200 $70,400 $70,400

3.2 Management Plans

Environmental Protection $223,650 $223,650 $223,650 $223,650 $223,650

Total Benefits $5,327,290 $5,112,490 $5,112,490 $5,147,690 $5,147,690

Net Benefits $4,944,880 $4,786,850 $4,858,620 $4,880,590 $4,867,360

Net Present Value @4% $21,672,262

Net Present Value @7% $19,962,222

Net Present Value @10 $18,457,528

BCR @7% 16.94


APPENDIX 2 – OUTLINE OF CHANGES UNDER THE PROPOSED REGULATION

This Appendix provides some detail regarding the changes under the Proposed Regulation.

Table 18 provides an overview of seven changes under RAMAs. The changes aim to remove requirements where they are redundant or it is problematic to assess the conditions as specified. Additionally, some routine management activities are added and some such as 1.3 are covered by alternative processes under Environmental Planning & Assessment Act 1979.

Table 18 Key elements of proposed changes – Selected RAMAs

RAMAs Change Notes

1.1 Telecommunications infrastructure on Crown land

To also include construction, operation and maintenance of telecommunications infrastructure on any land, so that private land is also included within the scope of this RAMA.

Proposed Approach: The activities that comprise RAMAs are extended to include the construction, operation and maintenance on private land of telecommunications infrastructure.

1.2 Obtaining construction timber Remove requirement for use in the construction or maintenance of rural infrastructure on the land within 12 or 18 months depending on region and to require a restoration program to be carried out.

Proposed Approach: Construction timber must be used (or be intended for use) on the same property from which it was cleared, in order for the clearing of construction timber to be a RAMA.

1.4 Infrastructure works by Council Remove from the list of RAMAs in the Regulation the construction, operation or maintenance infrastructure works by a council: e.g. sewerage treatment works, waste disposal landfill operations, waste management facilities, gravel pits, outdoor playgrounds.

Proposed Approach: Clearing for infrastructure works by Councils would be assessed under Part 5 of the Environmental Planning and Assessment Act 1979, or, fall into one of the new “Streamlined Assessment Matrix” categories proposed in the revised EOAM and so will be more easily assessed and dealt with by a broadscale clearing PVP with offsets

1.6 Clearing for certain types of dwellings The RAMAs under s 11 of the Act be extended to include clearing for the carrying out of the following types of development:

dual occupancy; dwelling house;

secondary dwelling; and semi-detached dwelling.

Proposed Approach: Clearing under this clause only is a RAMA where the development is carried out in accordance with any development consent that is granted under the Environmental Planning & Assessment Act 1979. This is to replace the current single dwelling exemption in cl 6 of the current Regulation.

1.8 Extension of RAMA relating to clearing of planted native vegetation

RAMA extended to include clearing of native vegetation planted for any purpose rather than commercial purposes as currently specified.


RAMAs Change Notes

Proposed Approach: RAMA will not permit the clearing of native vegetation that was planted with the assistance of funding granted for the purpose of:

conserving biodiversity conservation; improving water quality;

addressing soil salinity; preventing land degradation; or

carbon sequestration.

1.9 RAMA allowing clearing for works that have an environmental benefit

To remove regulatory barriers to landholders carrying out environmental works, RAMAs be extended to include clearing for works that have an environmental benefit

Proposed Approach: The provision will provide for the following process:

The Director-General or a CMA(s) recommends to the Minister that a particular work be listed as a work for an environmental benefit.

The Minister may then decide to list the work (by order) if satisfied that the overall result of carrying out the work is positive for the environment. The listing may apply to works on specified land or all land in a specified area.

The Minister may decide to list the work subject to conditions.

Prior to listing a work, the Minister must: place the proposed listing on public exhibition for a reasonable period and give notice of the public exhibition of the proposed listing, and invite public submissions.

CMAs and OEH must publish on their website an up-to-date list of the works that are listed for the time being under this clause as a work on specified land in its area of operations.

1.10 RAMA allowing clearing of INS To cut red tape landholders will be able to clear INS without a PVP


The Minister may by order declare a species of native vegetation as an invasive species for specified land (or all land in a specified area), or extend the area for which a species is declared as an invasive species, if:

(a) the Minister is satisfied that:

(i) the species is within its natural range on the land or in the area specified, and

(ii) the species is densely regenerating or is invading plant communities in which the species does not generally occur, which is causing decline in the structure or composition of the vegetation community, and

(b) the Director General or the catchment management authority in whose area of operations the land or area is located has recommended the making of an order declaring the species as an invasive species for that land or area.

The order may be subject to conditions including limiting the methods of clearing INS to, for example, burning, chemical spot treatment and grubbing)


1.11 RAMA allowing thinning of native vegetation To cut red tape landholders will be able to thin native vegetation without a PVP


Minister may by order specify the conditions under which thinning of native vegetation is a RAMA.

The order may be subject to conditions including specifying benchmark stem densities.



RAMAs Change Notes

1.12 RAMA allowing construction, operation and maintenance of permanent boundary fences

To cut red tape landholders will be able clear native vegetation to construct, operate and maintain permanent boundary fences

Proposed Approach: The provision will provide for the following:

Clearing must be carried out within 6 metres on either side of the fence.

1.13 RAMA allowing construction, operation and maintenance of sheds

To cut red tape landholders will be able clear native vegetation to construct, operate and maintain a shed

Proposed Approach: The provision will provide for the following:

shed has an area of no more than 100 square metres

Clearing of native vegetation in the asset protection zone around any such shed (as determined in accordance with the document entitled Planning for Bush Fire Protection published by the Rural Fire Service in 2006) is also a routine agricultural management activity

Table 19 outlines the key proposed changes to the EOAM and processes around amendments to the methodology.

Table 19 Key elements of proposed changes to assessment of broadscale

Change Notes

2.1 Special provisions for long term environmental benefits

Streamline the ability of the Minister to approve a PVP clearing relating to long term environmental benefits.

Proposed Approach: Provided that clearing, which the Minister is satisfied is minor clearing, and which is proposed to be undertaken in accordance with a policy relating to long term environmental benefits.

2.2 Amend consultation requirements and insert new provision relating to minor changes to the EOAM

Replace the statutory consultation requirements with the Natural Resources Commission (“NRC”) with a broader public exhibition process and include a discretionary power to refer the Director General’s report and amendment to the NRC for advice.

Proposed Approach: Include public consultation requirement that involves publishing in a newspaper circulating generally throughout the State and on the website of the Department inviting the public to make written submissions on proposed amendments to the EOAM.

After the closing date for submissions, the Director-General is to provide a report to the Minister on the public consultation that summarises the main issues, and makes recommendations in relation to those submissions.

Minister may refer the Director General’s report and proposed amendments to the NRC for advice.

The new public consultation requirements not applicable in circumstances where the changes to the EOAM are of a minor nature.

2.3 Changes to the EOAM Changes to less significant assessment criteria such as salinity, water quality and biodiversity.

Proposed Approach: Changes to streamline current processes.


Table 20 outlines the key proposed changes to the PNF.

Table 20 Key elements of proposed changes - PNF

Change Notes

3.1 Definition of private native forestry Amend definition of PNF to include native forestry on Crown land that is not Crown-timber land under the Forestry Act 1916.

Proposed Approach: A PNF property vegetation plan (“PVP”) can be issued for native forestry on Crown land that is not regulated under the Forestry Act 1916 (e.g. native forestry on homestead farms.

3.2 Prescription of natural resource management plan under s 10(1)(c) of the NV Act

Once a logging operation has been carried out under a PNF PVP, the trees that are regenerating may be non-protected regrowth within the meaning of the Native Vegetation Act 2003.

Proposed Approach: that the regulations prescribe a kind of natural resource management plan to allow regrowth following clearing under a PNF PVP to be declared protected regrowth once the PNF PVP has ended.

3.3 Restrictions on RAMAs—land to which a private native forestry PVP applies (excluding critical environmental areas) - Clause 23A

Insert new provision requiring minimum standards for tree retention

Proposed Approach: Ensures section 4.2 of the PNF Codes outlines certain minimum standards for tree retention that must be complied with when clearing for PNF. These minimum standards in section 4.2 also apply to clearing for rural infrastructure RAMAs in an area covered by a PNF PVP. The minimum standards will affect RAMAs carried out on non-critical environmental areas. That is, the rural infrastructure RAMA in cl 23A cannot permit a landholder to harvest trees below the minimum standards in section 4.2 of the PNF Code on land where a PNF PVP applies.

3.4 Special provisions for minor variation

Clause 29C(1)

This clause currently sets out the 10% rule to allow such a minor variation to be made; the rule is restrictive.

Proposed Approach: Accredited experts are able to make minor variations to the PNF Code as it applies to a particular PNF PVP in any case, so long as:

(a) the variation is minor

(b) the variation does not apply to a critical environmental area;

(i) the variation does not apply to AWEEC or VEG; and

(ii) the variation does not apply to canopy openings

(c) any clearing will improve or maintain environmental outcomes.

(d) strict adherence to the PNF code

There are also some changes proposed for the PNF Code. Table 21 provide a summary of the main changes to the PNF Code.


Table 21 Summary of the main proposed changes in the PNF Code

Element Change – Description Effect

Notification and Reporting The landholder to notify OEH up to two weeks before or up to three days after a forestry operation is due to take place and again within two weeks after a forestry operation is completed. This replaces the current requirement to provide the EPA with an annual report on logging operations. This will provide OEH will additional information for monitoring and regulatory activities.

Improves environmental outcomes by providing additional information to assist compliance activities

Due diligence in relation to Aboriginal objects

Amends Clause 4.1 of the PNF Code to indicate that landholders must exercise “due diligence” in relation to Aboriginal objects, in accordance with the Due Diligence Code of Practice for the Protection of Aboriginal objects, published by OEH.

Consistency with other legislation.

Protection of landscape features

Amend requirements for protecting landscape features to allow forest operations in vulnerable ecological communities as an approved minor variation. The minor variation will need to be approved by an “accredited expert”.

Improves environmental outcomes

Protection of retained trees Include the protection of 5 mature female and 5 mature male forest oak trees per 2 hectares and those with crushed cones beneath them

Improves environmental outcomes by improving forest structure

Drainage feature protection Ensures that unmapped drainage lines are afforded the same buffer zone protection as mapped drainage lines

Specify the types of forest operations which can occur in drainage line buffer zones (i.e. machinery using walkover techniques, directional felling away from drainage lines, retaining groundcover and filling furrows)

Specify the conditions under which a tree accidentally felled into a riparian exclusion zone can be removed.

Improves environmental outcomes

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