Biodiversity Conservation Fund Charge System

IMPORTANT UPDATE: The transitional price cap has expired in accordance with Rule 5. All BCF Charge Quotes and price estimates will now be provided with the uncapped credit price. BCT Charge Quotes that were previously issued with a capped price have now expired – please contact the BCF Payments mailbox. Quotes that identified an expiry date in three years remain valid. Learn more.

The Biodiversity Conservation Fund Charge System is used to determine the cost of meeting biodiversity offset obligations for proponents who choose to pay into the Biodiversity Conservation Fund. 

It is administered by the NSW Biodiversity Conservation Trust.

How a BCF charge is determined

The Biodiversity Conservation Fund (BCF) Charge System determines a charge by estimating the likely cost of acquitting an obligation for like-for-like credits from one or more of four tools.

  1. Cost-structure tool for ecosystem credits
  2. Cost-structure tool for species credits
  3. Econometric (or statistical) model for ecosystem credits
  4. Market soundings

Development proponents can request a quote for a charge after finalising a Biodiversity Development Assessment Report (BDAR) and seeking development consent. Development proponents with a current development consent can also seek a quote.

The BCF Charge System will only set credit prices for development proponents seeking to make a payment into the BCF. The BCT does not intend for the BCF Charge System to set broader market pricing.

The NSW Biodiversity Conservation Trust will provide a charge within 10 working days for small projects, and 30 working days for large projects, or longer by agreement. 

Small projects are those with an obligation of fewer than 50 credits in total.

Quotes will be valid for three years.

  • Development proponents will be able to pay a charge at any point in the three-year period, with indexation applied as outlined in the quote.
  • Development proponents can only pay a charge once development consent is granted. 
  • The NSW Biodiversity Conservation Trust will publish quotes.
  • The NSW Biodiversity Conservation Trust's implementation of the BCF Charge System will be subject to annual independent assurance reviews commissioned by the Department of Climate Change, Energy, the Environment and Water (DCCEEW).
  • The NSW Biodiversity Conservation Trust and Department of Climate Change, Energy, the Environment and Water (DCCEEW) will provide market information tools to enable landholders and developers to estimate credit prices. 

Seeking a quote to make a BCF payment

A proponent can seek a quote from the NSW Biodiversity Conservation Trust to make a payment into the Biodiversity Conservation Fund if they have: 

  • Development consent which includes a requirement to retire biodiversity credits.
  • Submitted a development application, including a completed biodiversity development assessment report which indicates a biodiversity credit requirement.
  • Approval under Part 5.1 of the Environmental Planning and Assessment Act 1979 which includes a requirement to retire biodiversity credits or have submitted a Review of Environmental Factors to the determining authority.
  • Approval under Part 5A of the Local Land Services Act 2013 which includes a requirement to retire biodiversity credits or have submitted an application for approval. 
  • Biodiversity certification which includes the retirement of biodiversity credits as an approved conservation measure or have submitted an application for certification. 

For other development proponents and landholders, the NSW Biodiversity Conservation Trust offers a biodiversity credit price estimation service for a small fee. 

Making a payment into the BCF

A proponent can make a payment into the Biodiversity Conservation Fund if they have: 

  • Development consent which includes a requirement to retire biodiversity credits.
  • Approval under Part 5 of the Environmental Planning and Assessment Act 1979 which includes a requirement to retire biodiversity credits.
  • Approval under Part 5A of the Local Land Services Act 2013 which includes a requirement to retire biodiversity credits. 
  • Biodiversity certification which includes the retirement of biodiversity credits as an approved conservation measure. 

The NSW Biodiversity Conservation Trust applies one or more of the following four tools to determine a credit charge for each credit type.

1. Cost-structure tool for ecosystem credits

The cost-structure tool for ecosystem credits has three main drivers to determine the charge:

  • Biodiversity Stewardship Agreement (BSA) management and entry costs.  
    These are estimated using a best available map to predict likely BSA size for an Offset Trading Group and applying typical management costs from existing similar sites.
  • Land value  
    This is estimated using a best available map overlay of an Offset Trading Group with typical land values from current sales evidence. Return on land value is estimated against typical returns from sales of credits from existing similar sites.
  • Credit yield  
    This is estimated from the typical credit yields from existing BSSAR (Biodiversity Stewardship Site Assessment Report) assessments for similar OTGs.

2. Cost-structure tool for species credits

The cost structure tool for species credits has three main drivers to determine the charge:

  • Predicted survey, management and monitoring costs for the species.
  • Difficulty of finding suitable offset sites for the species.
  • Credit yield, or the typical number of credits generated at a site. This is based on the method for generating credits under the Biodiversity Assessment Method, such as count or area-based species for flora or whether habitat is widely available or is restricted to specific breeding habitat.

Individual species are categorised on relative scales against the first two categories, weighting is applied using the third value and a charge is estimated for each combination of categories.

3. Statistical (or econometric) model

The NSW Biodiversity Conservation Trust engaged Marsden Jacob and Associates (MJA) to develop a new statistical model to determine charges for offset trading groups with sufficient trades to develop a robust charge. MJA (MJA 2022) recommended dynamic time-series model to establishes a charge.

Initially, the statistical model will only be used for the two most traded offset trading groups (Cumberland Plains Woodland in the Sydney Basin Bioregion and River-Flat Eucalypt Forest on Coastal Floodplains on the NSW North Coast, Sydney Basin and South East Corner Bioregions). There is the potential to add more OTGs to the statistical model in the future once sufficient trades occur. 

The model works from the evolution of average annual price for credits for the OTG, taking into account market participation and averaging of credit types. A forward forecasting component considers expected market tightness in the coming period.

4. Market soundings

The NSW Biodiversity Conservation Trust may also apply market soundings in establishing a charge in certain circumstances. 

To achieve this the NSW Biodiversity Conservation Trust will seek information from market participants that is not otherwise available, such as: 

  • Typical credit yield for an offset trading group when there is little or no relevant data from existing Biodiversity Stewardship Agreement sites 
  • The distribution of offset trading groups when the NSW Biodiversity Conservation Trust considers the state-wide offset trading group layer has limitations 
  • Forecast demand and supply over coming three years for a relevant offset trading group and geographic region

The NSW Biodiversity Conservation Trust will also use market pricing information obtained through our market activities where: 

  • there is strong evidence of a market price and ongoing credit supply from relevant sites;
  • a reverse auction process identifies a market price from multiple suppliers,
  • NSW Biodiversity Conservation Trust has entered an agreement or option to purchase relevant credits.

The NSW Biodiversity Conservation Trust can use these market soundings to help develop a credit charge. 

RULES

The Biodiversity Offsets Payment Calculator Order 2022 provides for the NSW Biodiversity Conservation Trust to publish four rules on its website, to be used when calculating a charge under the Biodiversity Conservation Fund Charge System. These are: 

INDEXATION

The NSW Biodiversity Conservation Trust applies indexation when determining a charge to forecast the likely cost of acquitting credits at a reasonable time of acquittal, being one year following the payment.

Quotes issued by the BCT are valid for a period of three years. These quotes can be activated by a proponent at any point in the three years, with indexation applied as outlined in the quote. 

RISK PREMIUM

The BCT will apply a risk premium of between 10-17% to the charge for most credit types. The risk premium aims to account for the risk to the BCT that we cannot deliver credits for the predicted charge. The econometric model calculates a specific risk premium for the few credit types priced with this tool.

DELIVERY FEE

The BCT applies a delivery fee of 5 per cent or $120 (whichever is higher) to help cover the BCT’s delivery costs.

CONTINUOUS IMPROVEMENT

The NSW Biodiversity Conservation Trust adopts a continuous improvement approach to implementing the BCF Charge System, through regular data updates and review. This will include an annual update of:

  • management cost estimates to incorporate new BSA sites, adjusted to account for inflation of the key costs associated with managing BSA sites;
  • land values to incorporate new sales evidence;
  • recalculation of statistical model to incorporate new credit trades;
  • species credit allocations to categories against latest available data.

The NSW Biodiversity Conservation Trust will also monitor the real costs of it purchasing the credits against the BCF Charge predicted price to inform annual updates.

Calculator ComponentValue Source and Data
Annual Index
(used in calculating predicted credit price and monthly indexation)
5.7%

Updated to June 2023

Management cost index = 3.3% (ABS Indices 10 years to June 2022)

Land Value Index = 8.0% (Rural Bank 20-year Rural Property values for NSW)

Best Available OTG Map
(BSA size estimation)
 SVTM V1.1.1
Published June 2021
Property Data
(BSA size estimation)
93,507 propertiesBalcom analysis
TFD DataSee below263 sites approved at August 2023, based on 3.2% discount rate
Land ValueLand valuation date, July 2023Balcom sales database to May 2023
Species Credit PricingCredit sales data to 10 October 2022M1D1 transactions 1 July 2021 – 6 May 2023
Species Credit Price CategorisationSpecies Credit Price Categorisation for the Biodiversity Offset Payment Calculator
 
330 species categorised using TBDC data up to 1 August 2023
Species Credit Weighting Species polygons available to March 2022
Econometric Model Sales data to May 2023
Risk Premium – Greater Sydney16.8% of predicted credit priceMonte-Carlo Simulation of TFD data to August 2023, based on 65th Percentile
Risk Premium – Non-Sydney and species credits9.8% of predicted credit price(as above)
Delivery FeesGreater of 5% of predicted credit price or $120/credit 

 

Biodiversity stewardship agreements (BSAs) are a key component of the New South Wales Biodiversity Offsets Scheme (BOS) and are administered by the NSW Biodiversity Conservation Trust (BCT). BSAs are in-perpetuity agreements registered on the land title. This means that current and future landholders are required to carry out management actions and other obligations in accordance with the BSA. Management of a BSA aims to achieve an improvement in biodiversity values of the land under the agreement. This improvement is the basis for generating biodiversity credits that can be sold and/or retired to offset the residual impacts of approved developments that trigger the BOS.

The amount that is set aside to manage the BSA in accordance with the management plan and in perpetuity, is called the total fund deposit (TFD). The TFD is calculated using the TFD calculator and is the total present value of all costs associated with managing the biodiversity stewardship site in-perpetuity. Each management action, the timing of the action and the cost of the action are to be outlined within the TFD calculator.

The TFD includes the costs for implementing required management actions and, if applicable, active restoration management actions as specified in the management plan. Proceeds of credit sales are used to fulfill the TFD. Once enough credits have been sold to fulfil 100% of the TFD (or in some cases, self-contributed in order to directly retire credits), the BCT will release annual payments as per the payment schedule in the BSA, to the landholder.
The annual payments are used by the landholder to fund the management actions and meet the relevant performance measures. Once the TFD is fulfilled, the proceeds of any future credit sales are retained by the credit owner.

Determining the amount of money associated with managing the BSA site in perpetuity is a critical step in planning the management of a biodiversity stewardship agreement. If the TFD does not adequately cover the cost of the management actions, current and future landholders are still required to implement all management actions and meet relevant performance measures.

The Total Fund Deposit amount at a BSA site is calculated for the management action required and planned at that particular site. TFDs between sites can vary substantially depending on a range of factors including the initial condition of vegetation at a site and the threats faced at the site. Analysis of existing data shows there is a strong relationship between TFD per hectare and BSA size, with smaller sites having much higher costs per hectare than larger sites. The analysis also shows that sites in Greater Sydney are, on average, more expensive per hectare to manage than sites outside of that area. This is not surprising as small sites, especially those close to the peri-urban interface often face substantially threats, have poor starting condition and require substantial actions to improve their condition.

Table 1 shows the average and typical range of TFDs for different size category BSAs in the Sydney and Non-Sydney regions. There is substantial variation around the average so it is important when assessing the suitability of a site to consider the site-specific factors when considering what an appropriate TFD amount might be.

Table 1. Average Total Fund Deposit per hectare and typical range for existing BSA sites in the Greater Sydney and Non-Sydney Regions. Values as of May 2023.

BSA Size Category
Geographic Region<30ha30-50ha50-100ha100-200ha200-500ha500+ha
Greater SydneyAverage$127,000$82,200$40,200$29,300NANA
 Typical range$63-190k$41-125k$20-60k$20-40k  
Non SydneyAverage$47,100$21,400$14,000$9,700$5,300$2,700
 Typical range$23-70k$10-32k$7-21k$6-13k$4-7k$2-4k

The values in Table 1 are calculated from 255 existing BSA sites established between 2010 and 2023. The TFD values at each site were adjusted to account for inflation, changes in the discount rate and the additional requirements of Ecological Monitoring that were introduced in 2021. These values reflect likely values for those sites under the current discount rate (3.2%) which applies from August 2022.

Credit yield per hectare at a stewardship site is quite variable and depends on the range of factors described above. Table 2 and 3 show typical credit yield per hectare from existing and proposed stewardship sites for different vegetation formations and vegetation classes that have had the yield identified from a BAM assessment at more than 10 vegetation zones.  The typical range is the standard deviation in credit yield across those vegetation zones.  In the first example in Table 2, the average yield is 5.5 credits per hectare and the typical range is 2.1 credits per hectare, this means most vegetation zones have between 3.4 and 7.6 credits per hectare. 

Table 2: Credit Yield per hectare by vegetation formation with more than 10 assessments.

Vegetation FormationCredits/HaTypical Range
Dry Sclerophyll Forests (Shrub/grass sub-formation)5.52.1
Dry Sclerophyll Forests (Shrubby sub-formation)6.12.0
Forested Wetlands5.31.9
Freshwater Wetlands5.12.9
Grassy Woodlands5.92.2
Rainforest6.11.1
Semi-arid Woodlands (Grassy sub-formation)4.71.8
Semi-arid Woodlands (Shrubby sub-formation)4.91.5
Wet Sclerophyll Forests (Grassy sub-formation)7.72.2
Wet Sclerophyll Forests (Shrubby sub-formation)5.91.3

Table 3: Credit Yield per hectare by vegetation class with more than 10 assessments.

Vegetation ClassCredits/HaTypical Range
Clarence Dry Sclerophyll Forests5.71.6
Coastal Floodplain Wetlands4.02.4
Coastal Swamp Forests5.31.6
Coastal Valley Grassy Woodlands5.82.4
Eastern Riverine Forests6.02.1
Floodplain Transition Woodlands6.02.4
Hunter-Macleay Dry Sclerophyll Forests6.02.1
Inland Riverine Forests6.22.1
New England Dry Sclerophyll Forests7.11.7
New England Grassy Woodlands5.91.2
North Coast Wet Sclerophyll Forests5.91.3
Northern Hinterland Wet Sclerophyll Forests8.01.9
North-west Slopes Dry Sclerophyll Woodlands4.92.1
Pilliga Outwash Dry Sclerophyll Forests4.91.9
Riverine Plain Woodlands4.61.9
Southern Tableland Dry Sclerophyll Forests4.71.9
Sydney Hinterland Dry Sclerophyll Forests6.52.1
Upper Riverina Dry Sclerophyll Forests4.92.1
Western Slopes Dry Sclerophyll Forests6.51.9
Western Slopes Grassy Woodlands5.92.1

Tables 2 and 3 show there is some differences in typical credit yield between different types of vegetation and regions at existing sites. Typical yield in some western vegetation communities is lower (on average) than those on the coast. Overall credit yield per hectare is typically between 4 and 8 credits per hectare, with average yield between 4.5 and 6.5 credits per hectare.

Changes to BCF Charge Quotes

The NSW Biodiversity Conservation Trust will provide updated Biodiversity Conservation Fund Charge Quotes for payments to the Biodiversity Conservation Fund (BCF) on 7 August, 2023. 

The Biodiversity Offsets Payment Calculator Order 2022 allows for updates to various components of the BCF Charge System. The NSW Biodiversity Conservation Trust has updated the Econometric Model and both the Ecosystem and Species Cost Structure Models (including the species categorisation) and applied these to BCF Charge Quotes.

All applications received before midnight on 6 August were issued with the 2022-2023 price and existing quotes will remain valid until the expiry date identified in the BCF Charge Quote Statement.

All applications received on or after Monday, 7 August will be issued with the updated 2023-2024 prices.

Proponents with a BCF Charge Quote issued since October 2022 may obtain an updated BCF Charge Quote Statement. This will replace the existing quote, and the amount to be paid to the BCF will be the amount in the new quote.

Frequently asked questions

Development proponents who have completed a biodiversity development assessment report and submitted a development application or have already received approval for their project can seek a quote. Payment can only be made to the BCF once development approval has been granted, but the quote can be provided earlier to give proponents time to consider the best option to meet their obligations.

Other applicants can access the BCT’s price estimation service for landholders and developers on a modest fee-for-service basis. This was made available from early 2023.

Both the DPE and the BCT will publish market information.

The DPE has released a range of market information tools, including a revised market sales dashboard, credit pricing guidance, and associated guidance on how existing tools can be used.

The BCT will publish quotes six months after they are provided in the BCF Charge Report. This is to reduce the impact of the BCF Charge System price as a price signal in the market.

The BCT will expand our existing quarterly acquittals reports to include all credit obligations paid into the BCF, whether or not they are acquitted. For credits that are acquitted, the report will show the price the BCT paid to purchase those credits.

The BCT offers a price estimation service for landholders and developers on a modest fee for service basis.

The BCT will also publish key data underpinning the BCF Charge System. This includes relevant, aggregated market information including typical BSA management costs, credit yields and allocation of species against the species credit model classification.

No. There is no option to review a BCF Charge issued by the BCT. A proponent will still be able to pursue other options to satisfy credit requirements including generating their own credits or directly negotiating with landholders to purchase their credits.

The BCT publishes the following information:

  • details of all BCF charge quotes issued (irrespective of whether the payment is made) after six months.
  • type and number of credits for obligations transferred to the BCT through payment to the BCF (without the charge) at the time of payment.
  • the BCT acquittals quarterly report, which shows the credits acquitted by the BCT, including the cost paid into the BCF and the cost paid by the BCT to purchase the credits. This will be expanded to include all credits paid into the BCF (not just those acquitted). For credits not yet acquitted where quotes were issued six months or more prior, the price of the credits paid into the BCF will be shown. 

The DPE will continue to publish the BCT’s credit transactions on the public registers. 

The BCT seeks credits to acquire in accordance with the offset rules set out in the Biodiversity Conservation Regulation.

The BCT identifies potential credit purchases through:

  • publishing a wanted credit list that shows what credits it is seeking
  • running periodic credit tenders (reverse auctions) and fixed price offers open to existing and prospective BSA holders
  • actively seeking landholders to generate credits for hard to source credit obligations via mapping, field validation and directly approaching relevant landholders to invite participation.

Yes. The BCT publishes a wanted credits list and can provide advice on what land may be suitable to establish a BSA to generate credits the BCT is seeking.

Landholders can also seek advice from an accredited assessor (accredited ecological consultant) or the Credit Supply Taskforce.

The Department has developed an assurance program to give scheme participants and the broader public confidence that the BCT is applying the BCF charge system efficiently, effectively, consistently and transparently.

The assurance program will include:

  1. An initial upfront check, undertaken by a third party within the first eight weeks of the BCF charge system commencing.
  2. An ongoing annual assurance review, undertaken by a third party within three months of the end of the financial year.
  3. Ongoing advice of Mr Mrdak AO, as independent monitor of the BOS Integrated Improvement and Assurance Program.

Assurance checks will be undertaken by third parties, external to both the BCT and the Department.

The Department intends to publish the outcomes of assurance checks. This will improve transparency and give stakeholders greater confidence in the charge system and the assurance program.

Biodiversity credits are generated when you establish a BSA. There are two types of biodiversity credits: species credits and ecosystem credits, with hundreds of different types within each category. Biodiversity credits represent the expected improvement (gain) in biodiversity values that will result from the protection and management of your biodiversity stewardship site. The number and type of biodiversity credits generated by a BSA varies depending on the type and condition of the vegetation, threatened species present, and how your land will be managed to improve the biodiversity. The relationship between the condition of your land and land management is demonstrated in Figure 1 below.

BCT Biodiversity Credits

Figure 1: Biodiversity credits are generated for the avoidance of potential loss to biodiversity (that would likely occur in the absence of management) and the expected improvement in biodiversity values with increasing management.

Determining which type and how many biodiversity credits could be generated on your biodiversity stewardship site is achieved using the Biodiversity Assessment Method (BAM). Ecological consultants who successfully complete BAM accredited assessor training and meet the accreditation criteria are accredited to apply the BAM. These consultants are referred to as accredited assessors. Accredited assessors use the BAM to assess the biodiversity values on your land. The outcomes of the assessment are used to calculate the number and type of biodiversity credits that can be generated by establishing a BSA.