Desdan 1

Incentives for land users who adopt environmentally sound land use management and practices

Law Reform Paper

June 2006

Contents

Executive summary

1	Background	5

1.1	The Environmental Defender’s Office	5 1.2	PPT funding	5 1.3	Development of this law reform paper	6

2	Incentives for sustainable land use	6

2.1	Background	6 2.2	Current Disincentives	8 2.3	Current Incentives	9

3	Suggestions for Law Reform	10 3.1	Carbon Trading	10 3.2	Native vegetation clearing laws	12 3.3	Environmental offsets	14 3.4	Beyond compliance recognition – e.g. eco-labelling & green tick. 15 3.5	Subsidies and drought relief	16 3.6	‘One Stop Shop’	17 3.7	Pastoral leases	18 3.8	Improved enforcement of environmental laws	20 3.9	Incentives for environmental stewardship	21 3.10	Taxes and payments	23 3.11	Local Government incentives	24

Appendix 1 Executive summary The EDO was granted funding from the Law Society WA’s Public Purposes Trust for the 2005/06 year to research “Incentives for land users who adopt environmentally sound land use practices”. The purpose of this paper is to highlight the laws and programs that are currently acting as a disincentive to sustainable land use, identify current incentives that are valuable, and discuss ways in which current disincentives can be removed and new incentives can be implemented.

Carbon Trading Carbon trading schemes can include the use of biosequestration as credits to offset carbon emissions. These programs would encourage landholders to revegetate land or retain current vegetation. WA participation in a carbon trading system could be brought about in a number of ways, including ratification of the Kyoto protocol, establishing a national trading scheme and promoting WA offsets to overseas companies. Some legal structures would need to be set up to support these options.

Native vegetation clearing laws Clearing of native vegetation has led to significant environmental degradation and loss of productive farming land in WA. The native vegetation clearing regulations under the Environmental Protection Act 1986 (“EP Act”) contain a number of exemptions to the requirement to obtain permit before clearing native vegetation. A number of these exemptions are too broad and do not encourage the retention of native vegetation. The native vegetation clearing system should be changed in a number of ways as outlined in this paper. Monitoring and enforcement action should also be improved and increased.

Environmental offsets The EPA’s environmental offsets policy has the potential to be a useful tool provided it is managed and administered appropriately. An offset should be considered an additional obligation of a proponent whose project has been approved, where avoidance, mitigation and rehabilitation will still leave some residual harm to the environment. The EDO only supports the use of offsets where they are used in the manner discussed in this paper.

Beyond compliance recognition The establishment of a ‘beyond compliance’ recognition scheme such as an eco-labelling or ‘Green Tick’ program for sustainable farming within WA could provide farmers with an added incentive to adopt sustainable land practices. Such a program could be instituted by government, with the added reward of reduced regulatory monitoring or reduced licence fees etc for participants.

Subsidies and drought relief There are a number of perverse subsidies that discourage environmentally sustainable land management in WA, and a lack of effective subsidies that actually result in modified behaviour. Drought assistance in particular should assist landholders to prepare for drought conditions and develop risk management programs before drought occurs. The exceptional circumstances program administered by the Rural Business Development Corporation should be linked to ongoing standards for sustainable land management. Cross compliance programs could also be applied to landholders to encourage reduction of non-point source water pollution from agriculture.

‘One stop shop’ There is confusion amongst landholders as to which legal requirements apply to them and which agencies could provide assistance. Pastoralists, miners and growers could each have a central contact point that would advise on all the legal requirements imposed on a certain user across all departments and would coordinate all government approvals required by the landholder.

Pastoral leases A number of elements within pastoral leases have been identified as creating a disincentive to managing pastoral lands sustainably. A rolling lease term in line with the South Australian model is considered to be likely to produce better environmental outcomes for pastoral lands. Lease renewal should be made conditional upon the adoption by landholders of acceptable Environmental Management System (EMS), which should be developed using an Ecosystem Management Understanding (EMU) project process. The existence and maintenance of such an EMS should also facilitate access to stewardship and / or other incentive payments.

Improved enforcement of environmental laws Lack of enforcement of environmental laws has been an ongoing concern for the EDO, and was identified by workshop participants as a strong disincentive to adopting more sustainable land practices. The EP Act should allow third party prosecutions of environmental offences. The proposed increase to criminal penalties and introduction of civil penalties should assist with enforcement.

Incentives for environmental stewardship There is a growing recognition of the importance of ecosystem services - services created by the interactions of living organisms with their environment, which provide the conditions and processes that sustain human life. Support is needed for landholders who would like to manage their land in a more environmentally sustainable way. There are a number of incentives that could assist to achieve this aim including government funded revegetation programs, tax deductibility for expenses incurred in managing land for conservation purposes, and the re-funding and expansion of the Auction for Landscape Recovery project.

Taxes and payments The Heritage of Western Australia Act (1990) provides some useful approaches to managing taxes and payments imposed on heritage areas. A similar system should apply to conservation lands within pastoral leases or farmlands.

Local government incentives Incentives schemes at the local government level can be an effective tool to encourage private landholders to become partners in conserving biodiversity as part of sustainable land management and farm production. Local councils across rural WA should consider adopting differential rating schemes to encourage landholders to provide long term protection for areas of high conservation. Land tax exemptions should be available to landholders who support the rezoning of their land to conservation under local planning schemes. Rezoning of the covenanted land to a conservation zone should accompany the establishment of a conservation covenant. 1	Background 1.1	The Environmental Defender’s Office

The Environmental Defenders’ Office (WA) Inc. (“EDO”) is a not-for-profit community legal centre providing legal advice, legal education and law reform services on public interest legal environmental issues. The EDO has been operating since 1995. It offers legal assistance to individuals, groups and organisations concerned with public interest environmental legal matters where the individual, group or organisation is unable to afford private legal assistance. The EDO also participates in and promotes environmental law reform. 1.2	PPT funding

The EDO was granted funding from the Law Society WA’s Public Purposes Trust for the 2005/06 year to research “Incentives for land users who adopt environmentally sound land use practices”. The funding was granted to:

•	Identify and review laws and regulatory processes that act as disincentives for the adoption of environmentally sound land use management and practices; •	Research and report on the ways in which the law can be adapted to encourage land users to adopt best practices in environmentally sound land management; and •	Propose changes to identified legal impediments.

Actions undertaken as part of the project include:

•	Researching existing legal mechanisms promoting sound environmental land use management and practices; •	Providing legal advice and information to land users about these practices and incentives; •	Providing community legal education through workshops and fact sheets about these practices and incentives; •	Promote law reform proposals relating to environmentally sound land use management and practices; and •	Develop strong networks with land users and relevant government departments who are best placed to promote these practices and models

This law reform submission forms part of the PPT funded project. 1.3	Development of this law reform paper

The EDO has been involved in a study of incentives and disincentives of sustainable land use for a number of years. In 2004 the EDO produced a publication for the Rural Industries Research and Development Corporation (“RIRDC”) on EMS in Agriculture which discussed a number of agricultural incentives and disincentives. During the PPT project period the EDO conducted further research into the topic, including an analysis of incentive programs in other states and other countries that could be valuable to WA.

In April 2006 the EDO conducted workshops in Merredin and Kalgoorlie to inform landholders and the broader community on the current incentives available, and to seek comments on the incentives and disincentives that are currently in operation that impact on the way in which landholders manage their land. Ideas were also sought on possible incentives that could be developed for the future to encourage and support sustainable land use. Some strong themes emerged from those workshops, and the feedback and ideas generated have been significantly incorporated into this paper.

The EDO’s desktop research, along with discussions with landholders, has highlighted to us many opportunities for law reform in this area. The purpose of this paper is to highlight the laws and programs that are currently acting as a disincentive to sustainable land use, identify current incentives that are valuable, and discuss ways in which current disincentives can be removed and new incentives can be implemented.

2	Incentives for sustainable land use 2.1	Background

The 2006 State of the Environment draft report for WA identified the following as very high or high environmental priorities for WA: introduced animals, weeds, salinisation, clearing, soil erosion, loss of wetlands, and loss of stream vegetation. These problems are statewide issues and many can be addressed through more sustainable land use. The report also states that to address these problems in the agricultural sector, incentive packages and market-based schemes should be developed to drive land use changes where necessary.

An estimated 75% of Australia’s dryland salinity is in Western Australia. About 1.08 million hectares in the south-west agricultural region are already affected by salinity to some extent. Projections show that without rapid, large scale intervention, including significant changes to current land use practices, about three million hectares will be affected by 2010 to 2015-2020 and six million hectares, or 30 per cent of the region, will be affected before a new groundwater equilibrium is reached.

The impacts of salinity are not limited to production losses, but extend to damaging native ecosystems, public infrastructure and availability of potable water supplies for urban centres including Perth and Bunbury. For example, about 24,000 km of road, 1000 km of rail and up to 38 rural towns may be affected by damage to buildings, recreation facilities, and public utilities including water supplies and waste management systems. In terms of biodiversity loss, it estimated that salinity in the south west agricultural area poses a threat of extinction to 450 species of terrestrial plants.

Inappropriate land use practices have also led to increasing acidification of soils, soil structure decline and erosion. Soil erosion across the state varies enormously with 1 tonne per hectare per year in the Southern Rangelands (north of the Wheatbelt) to over 13–15 tonnes per hectare per year in the Kimberley, Pilbara and Gascoyne districts. Some areas of the South West recorded nearly 10 tonnes per hectare per year. In the rangelands, livestock stocking rates combined with the low vegetation cover has a significant impact on soil erosion.

Soil acidity affects two-thirds of Western Australia’s Wheatbelt and costs the farming community in excess of $70 million annually through lost production. Many soils in Western Australia’s agricultural regions are naturally acidic. However, agriculture accelerates acidification due to the leaching of nitrogen from the root zone, removal of produce and use of legumes in rotations. Additionally, waterlogging is a problem in many areas and engineering solutions such as deep drainage pose potential threats to receiving environments. Nutrient enrichment (through fertiliser run off) has also contributed to increased algal blooms in many south west waterways, including the Swan River in Perth. The main contributors to many of these problems include removal of native deep-rooted native vegetation, tillage practices and over application of fertilizers.

Overgrazing by domestic stock, introduced animals and native animals is currently a concern across the whole state. Overgrazing can cause deterioration in plant and soil cover, desertification, wind and water erosion, loss of soil fertility and structure, salinisation, degradation of wetlands and fragmentation of habitat. Most overstocking occurs in the Rangelands.

Introduced plants and animals contribute to a decline in biodiversity as well as a degradation of watercourses and soils across the whole state. Introduced plants push out native plants and do not provide adequate habitat for native animals. The Swan Coastal Plain, the northern agricultural area, the Gascoyne–Murchison, the Carnarvon basin and the Pilbara have high numbers of introduced mammals per bioregion. The Southwest, Goldfields and Kimberley bioregions have significant numbers of weeds, followed by the Murchison, Pilbara and Carnarvon bioregions.

One of the reasons proffered for the lack of uptake of sustainable land practices amongst landholders is the perceived and actual cost of managing land in a more sustainable way. As noted in the EDO’s RIRDC report, the existing regulatory system is characterised by a lack of incentives for environmental stewardship that look beyond short-term profit (or survival) toward a long-term ethic of custodianship of the land. Economic and non-economic incentives are needed to encourage and support landholders to manage their land in a way that is sustainable in the long term and produces positive environmental outcomes.

Within this context, this paper explores regulatory mechanisms available to address these problems, particularly those directed towards encouraging sustainable land management practices through incentives at the State and local government level in Western Australia.

2.2	Current Disincentives

EDO research and discussions with landholders and regional community members has identified a number of disincentives to sustainable land management currently operating in WA. Some of these disincentives are an incidental consequence of ineffective or inappropriate laws. In other cases they result from lack of financial and technical support or lack of education. Some of these disincentives are highlighted below.

As noted above, the overarching disincentive to adopting environmentally sound land management practices is the perceived and actual cost of managing land in a more sustainable way. Many of the law reform suggestions in the next section go towards addressing this perception or reality.

A recurring theme in our discussions with regional communities was the inability of the law to prevent environmental degradation. This stemmed from a number of factors including the lack of regulation of activities that cause environmental harm, the lack of enforcement of environmental laws generally and the native vegetation clearing laws in particular, and the perception that penalties for environmental harm do not outweigh the cost of environmental exploitation.

As noted by numerous commentators in this area, agricultural subsidies that are not tied to the use of sustainable land practices can, in some cases, act as a disincentive to sustainable land management. This issue was raised as a serious problem in the regional workshops. Participants noted that current agricultural subsidies can ‘reward’ landholders who do not manage their land well and ‘punish’ those who are attempting to farm sustainably and have accrued assets. It was felt that any excess income gained in high producing years may as well be spent, as an accumulation of non-farm assets rendered landholders ineligible for subsidies in drought years. In addition, drought subsidies that assist landholders to bring cattle back on to the land often require restocking to be done within a certain timeframe, regardless of the capacity of the land to cope with increased stock after a drought period.

Participants also stated that the legal requirements and responsibilities on land managers are not clearly defined which leads to confusion as to which laws apply to their particular circumstance. For example it was perceived that there is an overlap in different legislation making it very difficult for land managers to identify their responsibilities. The large number of government agencies that are potentially involved in land management also makes it difficult for landholders to know where to seek information or approvals.

2.3	Current Incentives

Participants in our workshops identified only one current type of incentive they found valuable in assisting landholders to adopt environmentally sound practices; namely grants for environmental work.

Other incentives that exist in Western Australia, but were not identified by workshop participants, are summarised at Appendix 1. These include rate reductions offered by some local governments for conservation zoned land and a land tax exemption that is available for land held under conservation covenants. It is understandable that these incentives were not identified in workshops. The use of rate reductions is not widespread, and the land tax exemption does not provide any additional benefit to landowners who already have an exemption because their land is used solely or principally for a rural business.

3	Suggestions for Law Reform

As a result of our research on this topic and our discussions with rural communities, a number of law reform options are presented below. The aim of this section is to address the disincentives highlighted above and to suggest new incentive programs that can be adopted. Not all options listed below will necessarily require legislative changes, however many would benefit from legislative support.

3.1	Carbon Trading

There has been much research and discussion at a State and Federal level over Australia’s participation in a carbon trading scheme. Carbon trading schemes can include the use of biosequestration as credits to offset carbon emissions. Participants at our rural workshops identified access to carbon markets as a highly desirable incentive.

A report considering the opportunities of WA’s land management sector in establishing terrestrial sinks found that “while growing trees purely for their carbon sequestering potential is not likely to be commercially viable under current and expected market conditions, the carbon value could still make a valuable additional contribution to forestry activities pursued for other reasons, in particular establishment of trees to help tackle dryland salinity”. It noted that large sinks could potentially be developed through the establishment of trees and saltbush adjacent to and on salinised land. Thus while carbon trading alone may not be profitable for landholders, it can still provide an incentive to revegetate land.

By establishing a carbon trading scheme that included credits for biosequestration, landowners could be given a financial incentive to maintain or establish native vegetation and retain it for a significant period. It would also reward those landholders who are planting vegetation for environmental reasons. By placing an economic value on living trees, tracts of native vegetation would no longer be considered by landholders as ‘unproductive land’. This would have obvious additional benefits for the local environment including riparian protection, fauna habitat, soil protection and salinity reduction.

In general, carbon trading schemes usually provide that carbon credits can only be granted for areas that were cleared before 1990 and replanted after 1990, to prevent land from being cleared and replanted specifically for the purpose of gaining carbon credits. Some schemes may allow trees to be harvested with requirements for recapturing the carbon, or may require that vegetation be retained for a certain period of time.

Proposals for change

WA participation in a carbon trading system could be brought about in a number of ways. The most obvious, but least probable option (for the near future at least) is to ratify the Kyoto protocol, so that overseas players in the international carbon trading market can gain carbon credits for investing in Australian carbon sinks. This is an option that the WA Government currently supports, but is obviously unable to bring about without the support of the Federal Government. Access to the international carbon market could provide enormous opportunities for Australia due to the large number of international companies and countries seeking large scale carbon credits.

In the absence of ratification of the Kyoto protocol, Australia could establish a domestic trading market. This is currently being developed by all State and Territory Governments in the absence of the Commonwealth Government, and should be strongly pursued by WA as a priority. Although legislation to establish carbon rights in trees has been enacted in WA, the adoption of a national trading scheme would obviously require additional legislative structures. The Carbon Rights Act 2003 allows people to purchase the carbon sequestration potential of an area of vegetation and register that right on the land title as an interest. In other words, the purchaser of a carbon credit is given certainty that the carbon rights they are purchasing are legally theirs and can be protected as such. However the Act is limited to questions of legal ownership. Further legislation is needed to provide additional support to a trading scheme.

For example, a carbon registry (as mentioned in the WA Greenhouse Strategy) would need to be developed to provide certification of the amount of carbon credits available in each parcel of land and to provide a central database of buyers and sellers of carbon credits. This would reduce or eliminate double selling of credits and would prevent emitters from falsely claiming that the same carbon credit purchase was offsetting a number of different projects. Most importantly, a driver is needed to create the demand for carbon credits, such as a requirement on electricity retailers to reduce emissions or purchase carbon credits. The Electricity Supply Amendment (Greenhouse Gas Reduction) Act 2002 (NSW) provides an example of how this can be done.

In the absence of either of the above formal trading schemes, there are still opportunities for WA landholders to gain financial benefits from carbon sinks and offsets. Many programs, both domestic and international, require or encourage companies to purchase carbon sinks to offset their greenhouse gas emissions. Many programs do not require the sink to be in their own state or country. A more immediate option than those above is for WA to set up a program to provide technical support to landholders who have or are willing to establish the appropriate areas of vegetation, and link potential buyers and sellers of carbon credits. The Department of Agriculture could promote WA as an attractive carbon investment option and provide a central point of contact for international and domestic buyers and WA sellers. To facilitate this, a carbon registry as mentioned above should be established as soon as possible to ensure that the WA carbon market is established as a reliable and legally certain carbon investment opportunity.

3.2	Native vegetation clearing laws

It is widely recognised that clearing of native vegetation has led to significant environmental degradation and loss of productive farming land in WA. The draft 2006 WA State of the Environment report states that land clearing is a major threatening process for biodiversity in WA and should be a high statewide environmental priority. It also states that broad scale native vegetation clearing (both direct and indirect) continues to cause a decline in biodiversity values.

The native vegetation clearing regulations under the EP Act contain a number of exemptions to the requirement to obtain permit before clearing native vegetation. A number of these exemptions are too broad and do not encourage the retention of native vegetation. For example, the regulations allow the re-clearing of land that was cleared within the previous 10 years if the land had been used for pasture, cultivation or forestry at any time in those 10 years. Native vegetation may have significantly regenerated within that time and landholders should be encouraged to maintain that vegetation where it is significant. By providing an automatic exemption, no assessment can be made of the value of that vegetation before it is cleared again. The nature of this exemption also makes it difficult to enforce.

Another example is that clearing for a fence line on Crown land is not subject to the 1ha annual clearing limit to which many of the other exemptions are subject, even though clearing could potentially be up to 6.5 metres wide for this purpose and a similar exemption exists that is subject to the 1ha annual cap.

Workshop participants identified lack of enforcement of the native vegetation clearing laws as one of the biggest disincentives to protecting native vegetation. It was felt that the clearing laws as they are currently implemented do not discourage landholders from clearing land illegally. Comprehensive statistics on enforcement of the clearing laws such as number of complaints, investigations, monitoring and charges are not publicly available from the Department of Environment and Conservation (“DEC”), although a media statement is released each time a successful prosecution occurs. Based on media statements, there has been just one prosecution for illegal clearing since the native vegetation clearing laws came into force in 2004 (plus one prosecution for illegal clearing in a catchment under the Country Areas Water Supply Act 1947).

Proposals for change

The native vegetation clearing system should be changed in the following ways and for the following reasons:

Part of Act or Regulation	Recommended change	Reason Schedule 6, Item 9 of the Act	Delete this exemption	It is unfair to give concessionary treatment to subdivision approvals, especially when subdivisions pursuant to assessed schemes are already the subject of another exemption in Item 2 Schedule 6, Items 10, 11 and 12 of the Act	Reduce the scope of these exemptions	Burning should not be conducted without regard to its ecological impacts unless it is required to avert imminent damage to life or property Regulation 5, Item 3	Delete this “fire management” temporary exemption	The requirement to burn “in such a way as to minimise long term damage to… environmental values” is beyond most landholders’ expertise Regulation 5, Item 11	Make this exemption for Crown land fence clearing subject to 1ha annual limit	As discussed in the main text above Regulation 5, Item 14	Remove this exemption for regrowth	As discussed in the main text above Regulation 5, Item 15	Delete fence line exemption	This issue is already covered by Items 10 and 11 Regulation 5, Items 16, 17 and 18	Delete exemption for various types of water-related works	Native vegetation principles are not adequately addressed in the relevant approvals process Regulation 5, Item 24	Delete petroleum-related temporary exemption	It is unfair to give these particular landholders concessionary treatment Regulation 5, Item 25	Delete mining-related temporary exemption	It is unfair to give these particular landholders concessionary treatment

The DEC should improve monitoring and increase enforcement action against landholders who clear land without a permit or otherwise than in accordance with their permit.

3.3	Environmental offsets

The EPA’s environmental offsets policy has the potential to be a useful tool provided it is managed and administered appropriately. The policy includes the following principles:

-	certain environmental assets must be fully protected and conserved and the Government should never allow their degradation in exchange for environmental offsets; -	environmental offsets should only be considered after all other attempts to mitigate impacts have been exhausted; -	offsets should be used with a goal of achieving a net environmental benefit; and -	offsets and impacts should ideally be ‘like for like or better’.

The use of an offset should not be considered as part of the initial assessment and decision making process to prop up a project that would otherwise be environmentally unacceptable. An offset should be considered an additional obligation of a proponent whose project has been approved, where avoidance, mitigation and rehabilitation will still leave some residual harm to the environment.

For example if a large mining project were being considered where rehabilitation was known to be unfeasible, a decision about its environmental acceptability should be made purely based on the project, without consideration of any offsets that may go with it. If it were decided that the project should go ahead notwithstanding the lack of rehabilitation, then at that stage, offset conditions should be considered and imposed, i.e. the company involved should be required to invest in and undertake significant environmental offset projects in the local area to achieve a net environmental benefit. The decision maker should not take the offset into account when deciding whether to approve the project.

If offsets are allowed, it is essential that the offset projects are appropriately monitored and conditions enforced to ensure that the offset is effective.

Proposal for change

The EDO only supports the use of offsets where they are used in the manner discussed above.

The offset policy, if used in the manner above, should be established as a state environment policy, and then adopted by whole-of-Government, so that Government agencies have a consistent approach when considering offsets. The use of offsets as a bargaining tool to make environmentally unacceptable projects acceptable should not be allowed by any agency.

Government agencies that are considering offsets as part of their approval processes should make the required statutory amendments, or at least issue a formal policy statement, to allow the EPA’s offset principles to direct their offset decisions.

3.4	Beyond compliance recognition – e.g. eco-labelling & green tick.

The establishment of a ‘beyond compliance’ recognition scheme such as an eco-labelling or ‘Green Tick’ program (see further below) for sustainable farming within WA could provide farmers with an added incentive to adopt sustainable land practices. Such a program would encourage consumers to consider the impacts of their consumption on the environment, and choose products that are farmed in a more environmentally friendly way as a result. This would not necessarily require produce to be farmed organically, rather it would require the landholder to actively engage in sustainable land practices. Eco-labelled or ‘Green Ticked’ products could be offered at a slightly increased price to cover the costs of maintaining the program.

An example of a government-run ‘beyond compliance’ recognition scheme (though directed at companies rather than primary producers) is the US EPA’s “National Environmental Performance Track” program which rewards facilities that exceed regulatory requirements and engage in environmental protection. The US EPA reports that since 2000, Performance Track members have “collectively reduced their water use by more than 1.3 billion gallons, cut their generation of solid waste by nearly 600,000 tons, and decreased their energy use by more than 8.4 trillion British Thermal Units (BTUs)-enough to power more than 80,600 homes for a year”. Rewards for participants include reduced regulatory monitoring and public recognition.

An example of a privately-run ‘beyond compliance’ recognition program is the Green Tick independent sustainability certification based in New Zealand. This program certifies products that are environmentally sustainable so that consumers can make informed choices about the products they are purchasing.

Proposals for change

Such a program could be instituted by government, with the added reward of reduced regulatory monitoring or reduced licence fees etc for participants.

3.5	Subsidies and drought relief

Research and discussions with landholders in WA has highlighted a number of perverse subsidies that discourage environmentally sustainable land management, and a lack of effective subsidies that actually result in modified behaviour.

Workshop participants felt that there is a lack of economic support for landholders that engage in environmental protection, for example wetland protection, and so land stewardship practices are not encouraged. Suggestions included government subsidies for cropping systems that reduce environmental degradation in salinity affected areas (for example lucerne hay and saltbush), and incentives (in the form of subsidies or possibly tax relief) for landholders who manage weeds and ferals in line with regional objectives.

The EDO notes that landowners have a level of responsibility to maintain the environment irrespective of the financial support provided by government, and situations where the activity should be a standard part of land management must be differentiated from those where added incentive is required.

Perverse agricultural subsidies were also identified, that is, subsidies that are aimed at alleviating short term hardship for landholders but have the effect of exacerbating long term problems such as land degradation. An example raised was a drought subsidy that assists landholders to restock cattle after a drought period. Often restocking must be done within a certain amount of time regardless of whether the land has recovered enough to carry that level of stock. There is no ability to delay restocking to allow the land to recover as the subsidy will only be paid if the landholder restocks quickly.

Another example of the way in which exceptional circumstances subsidies operate perversely is that landholders who have managed their land and their assets sustainably for the long term and who are less affected by the exceptional circumstance find it harder to qualify for government assistance under the means test, whereas landholders who have not managed their land and assets sustainably will qualify. This operates as a disincentive to long term sustainable management.

Proposals for change

To address these issues, drought assistance in particular should assist landholders to prepare for drought conditions and develop risk management programs before drought occurs. This would improve the viability of sustainable farm businesses by assisting them to factor in the risk of drought over time, and would remove support from inefficient operators.

As has been noted by a number of commentators, another way to address these issues is to attach environmental conditions to agricultural support policies. Cross-compliance mechanisms which tie minimum environmental standards to agricultural support programs are well established in the United Kingdom, the United States and Norway, and have been implemented more recently in Korea and Switzerland.

The exceptional circumstances program administered by the Rural Business Development Corporation should be linked to ongoing standards for sustainable land management. Regulation could require a record of compliance with a specific process standard (eg a code of practice or best management practices) before making this subsidy available to farmers. The rationale is that farmers know in advance that they would not be able to benefit from a government subsidy in an exceptional circumstance, unless they comply with the specific process standard all throughout the year. Consequently, this could act as an incentive for farmers not to rely solely on subsidies and to be more diligent in maintaining an environmentally sound behaviour.

Cross compliance programs could also be applied to landholders to encourage reduction of non-point source water pollution from agriculture. A number of programs have been suggested by commentators, such as a best management practice system under which a variable charge is imposed on polluters based on the level of pollution abatement they undertake such that polluters who improve their management practices will receive a lower or zero charge. Another option is to provide farmers with a financial incentive to adopt a best practice management standard through free advice and a financial subsidy to assist in the development and implementation of the standard.

3.6	 ‘One Stop Shop’

A strong outcome from the workshops was the desire amongst landholders to have access to a central entry point within government or ‘one stop shop’ for all approval and advice queries relating to a certain land use. It was stated that confusion amongst landholders as to which legal requirements applied and which agencies could provide assistance provided a barrier to better land management.

Proposals for change

Pastoralists, miners and growers could each have a central contact point that would advise on all the legal requirements imposed on a certain user across all departments and would coordinate all government approvals required by the landholder. The approvals themselves would still be administered by each department, but the entry point for the landholder would be centralised. The central contact point would also provide landholders with technical assistance and information on the economic and other incentives available to them.

We note that this has been one of the stated motivations behind the merger of CALM and DoE, but the creation of the DEC will not in itself provide the service being sought by some of our stakeholders due to the need for many landholders to work with the Department of Agriculture, or the Department of State Development, or other departments, as the case may be.

3.7	Pastoral leases

A number of elements within pastoral leases have been identified as creating a disincentive to managing pastoral lands sustainably.

Section 95 of the Land Administration Act requires the Pastoral Lands Board to ensure that pastoral leases are managed on an ecologically sustainable basis. However, since this legislation was passed in 1997, the Board has been unable to determine what constitutes ecologically sustainable management. This inaction on such an important issue has created uncertainty for all pastoral lessees, and has acted as a strong inhibitor in achieving sustainable management of pastoral leases.

The Land Administration Act limits the term of pastoral leases to 50 years. Renewal of leases is at the discretion of the Minister, on application by the lease holder. The Act indicates that leases can be passed on to heirs if the leaseholder dies during the term of the lease, on application to the Minister. The EDO’s RIRDC report states that “where farmers or graziers own a short term grazing or forestry lease (rather than owning land in fee simple), producers have indicated that they perceive a particular and inappropriate disincentive to long-term custodianship of the land, in that there is no financial incentive to do other than farm for short term profit.”  This concern was also raised at the workshops: the restricted tenure of pastoral leases limits the ability of lessees to obtain finance for investment in infrastructure and improved management of livestock. However, the EDO has access to information that the major lending institutions do not consider lease tenure when making decisions; rather, they consider the ability to repay any loan, which may include cash flow of the business as well as relevant business acumen.

There is an argument that longer term leases would increase the market value of pastoral leases. This would result in windfall profits to current owners and increase the purchase price for future owners. This increased purchase price would, in turn, require greater returns from the same resource base and thereby increase the potential for overstocking and consequent land degradation. Also of concern would be the prospect of State Government having a reduced capacity to intervene in lease management to deal with such issues.

Arrangements under the South Australian Pastoral Land Management and Conservation Act may provide a useful model for pastoral land management in Western Australia. Under that Act, leases can be granted for a term of 42 years; however, continuation of the lease within the 42 year period is subject to a successful assessment of the condition of the land every 14 years. The pastoral board can refuse to extend the lease every 14 years if there has been a breach of a lease condition which is likely to result in degradation of the land or the lessee has failed to discharge a duty, in which case the lease reverts to a 28 year lease until the lease conditions are satisfied.

Pastoral lease renewal could also be subject to the mandatory uptake of better environmental practices, with financial support from the Government to do so. The current renegotiation of pastoral leases, and proposed review of the Land Administration Act may provide opportunities to address these issues. For example, there is potential to require as a condition of renewal the development and implementation of an Environmental Management System (EMS) at an acceptable standard. The EMSs developed in association with the Ecosystem Management Understanding (EMU) project run across the southern rangelands would be a useful model.

Participants at the workshops also stated that pastoral leases did not effectively allow lease holders to diversify their use of the land to activities that were better suited to the conditions of individual properties. The “authorised stock” that are allowed to be run on pastoral leases is confined to sheep, cattle, horses, goats, and stock kept for domestic or household use. The Act does allow a pastoral leaseholder to apply to the Pastoral Lands Board for a permit to carry out activities outside the ambit of the standard pastoral lease; however, the fact that the traditional uses are enshrined in legislation and non-traditional uses require application and consideration by the board may discourage some leaseholders from pursuing this option. Notwithstanding these requirements, many pastoral lessees have applied for licences to diversity their activities on their leases; for example to run ecotourism and farm stays. The Outback Resource Atlas developed by the Department of Agriculture was designed specifically to facilitate diversification of pastoral enterprises.

Proposals for change

On balance, the adoption of a rolling lease term as occurs under the South Australian Pastoral Land Management and Conservation Act is considered likely to produce better environmental outcomes for pastoral lands in Western Australia. Lease renewal should be made conditional upon the adoption by leaseholders of acceptable EMS, preferably one developed based on the EMU project process. Similarly, an acceptable EMS could allow access to stewardship payments (we understand this is being considered as part of stage 3 of the Natural Heritage Trust) and / or incentives such as lease rental reductions.

A broader range of uses, including the farming of native animals where appropriate, could be provided for in the legislation to allow leaseholders to diversify into activities that are recognised as having environmental benefits. Similarly, pastoral lease holders (which in some cases include NGOs and mining companies) should be allowed to reduce stocking levels or even completely de-stock for conservation purposes.

A final point is that all Acts relating to conservation covenants should be amended to allow covenants by non-owners (obviously just for the duration of the lease). We recommend that this reform be achieved in the context of the proposed Biodiversity Conservation Act, which the conservation sector argues should consolidate all current conservation covenant programs.

3.8	Improved enforcement of environmental laws

Lack of enforcement of environmental laws has been an ongoing concern for the EDO, and was identified by workshop participants as a strong disincentive to adopting more sustainable land practices. Although CALM and DoE have put more focus on enforcement in recent years, it is felt that there is still a lack of monitoring of environmental offences generally, and of enforcement action once breaches occur. Workshop participants stated that the current lack of enforcement was creating “public apathy and disillusionment”.

The only statistics on enforcement activity available from the former DoE is a year to date graph (July 2005 – May 2006) showing the number of actions taken within each enforcement activity type (eg convictions, infringement notice, letter of warning etc). There is no information on the number of complaints received, the amount of monitoring done, the number of breaches that did not progress to enforcement level etc. Only finalised criminal prosecutions for each year are listed in the annual report.

As has been noted in other publications, one way of improving enforcement of environmental law is to allow third party prosecutions (or private prosecutions) of environmental offences. Until recently, third party prosecutions were allowed in WA unless specifically excluded by statute. This has now been reversed so that statues must specifically authorise third party prosecutions. In any event, the EP Act only provides for the CEO, or authorised officers in some cases, to commence actions.

The level of penalties for environmental damage was also raised as a concern. Penalties for environmental offences in WA are the lowest in Australia. The threat of enforcement of environmental offences is not particularly persuasive when the penalties imposed do not outweigh the economic benefit of the environmental exploitation. For example the penalty of $2000 under the Soil and Land Conservation Act for failing to seek approval to construct a deep drain is not seen to outweigh the benefit of constructing the drain.

Proposals for change

The EP Act should allow third party prosecutions of environmental offences. Third party rights would encourage compliant behaviour because it would allow the community to monitor and enforce breaches that degraded the environment. In effect, the community would be empowered to take action on behalf of the environment. The risk of spurious action would be very low, due to the cost and time involved in initiating a court action and the current provisions for frivolous or vexatious litigants.

The recently announced proposal to add civil penalty provisions to the EP Act may assist in increasing enforcement action as a ‘conviction’ will be easier to secure which will hopefully encourage the DEC and others to take action in a higher number of cases.

The recently announced increase in penalty rates under the EP Act may also go some way to addressing these issues. Penalties in other Acts containing environmental offences should also be increased.

It was also suggested in the workshops that fines for non-compliance with environmental laws should directly fund sustainable land use initiatives.

3.9	 Incentives for environmental stewardship

It is widely recognised that revegetation is required in many parts of WA, particularly in the Wheatbelt, to reduce environmental degradation and improve agricultural output. There is a growing recognition of the importance of ecosystem services. These are services created by the interactions of living organisms with their environment, which provide the conditions and processes that sustain human life, for example, purifying air and water, detoxifying and decomposing waste, renewing soil fertility, regulating climate, mitigating droughts and floods, controlling pests, and pollinating plants. These services are taken for granted by the wider community and destroyed through inappropriate land management.

Although the costs are often borne by the individual landholder, the benefits of maintaining ecosystem services often flow to surrounding landholders and the community in general. Mechanisms are required to assist and encourage environmental stewardship.

A national incentive program that has been successfully trialled in WA is the Auction for Landscape Recovery (ALR) project. It is one of 11 market-based instrument pilot projects conducted across Australia from 2003-2005, jointly funding by the Australian and State Governments. The ALR successfully created a competitive market in which landholders tendered to provide biodiversity conservation services. A total pool of $200,000 was available to private landholders submitting single, multiple or joint tenders for on-ground works focusing on biodiversity conservation measures. A review of the program suggested that the auction was two to three times more efficient, in economic terms, than a fixed price scheme.

Currently, expenses incurred to manage land used for conservation purposes are not tax deductible (unless the landowner is carrying out a business on that land), while expenses incurred in managing land used for primary production will be tax deductible. In addition, there are specific tax rebates for landcare operations for land used for primary production, but not for land used for conservation. This discourages landowners from converting land to conservation use, and from actively managing land that is used for conservation because of the loss of tax deductibility for expenses.

In Costa Rica, incentives are provided by the state to promote forestry renewal activities and reforestation. The incentive program recognises the benefits ‘provided by forests and cultivated forests which positively effect the protection and improvement of the environment.’ Payments are based on the premise of compensating private forest owners to preserve their forestry ecosystems for a given time period since these provide a series of environmental services for Costa Rican society. These environmental services are recognised as: reduction of greenhouse effect gases, protection of water for urban and rural use, biodiversity protection, and scenic beauty.

Support is needed for landholders who would like to revegetate part of their property but who are discouraged by the initial outlay and ongoing management costs. In conjunction with carbon trading discussed above, there are a number of incentives that could assist to achieve this aim.

Proposals for change

Government funded revegetation programs could be established for drainage basins and property boundaries, in cooperation with NRM groups. Seed collection and propagation projects could be partially resourced by re-skilling/education programs and volunteer programs. As in the Costa Rican example above, landholders could be provided with payments or tax relief calculated per hectare if they maintain vegetation or revegetate their land. A ‘consumer pays’ revegetation program could be established by imposing a levy on wheat sales and directing the excess into a fund to pay for revegetation in priority areas.

Expenses incurred in managing land for conservation purposes, whether by a conservation trust or private landowner, should be tax deductible and eligible for landcare rebates whether or not the expenses are incurred in the course of earning income.

The Auction for Landscape Recovery project should be provided with new, recurrent funding and be expanded to apply to other parts of WA that are experiencing serious environmental degradation.

Once rehabilitated areas have been established, they should be protected by a conservation covenant under the CALM (now DEC), National Trust or Soil and Land Conservation programs. This will ensure that the area will receive ongoing management and will prevent future owners of the property from clearing the area, leading to a reoccurrence of the original environmental problems.

3.10	 Taxes and payments

The Heritage of Western Australia Act (1990) provides some useful approaches to managing taxes and payments imposed on heritage areas. These provisions allow the ‘heritage use’ to be taken into account when determining taxes and payments that apply to areas under a heritage agreement (which is similar to a conservation covenant). A similar system could apply to conservation lands within pastoral leases or farmlands.

Section 33 of the Heritage Act provides for conservation assistance for owner/occupiers of Heritage listed properties. It states that the Council may provide or arrange for financial, technical or other assistance as an incentive for the conservation and presentation of a place of cultural significance. Assistance may include a recommendation for the remission of rates and taxes, and/or enter into an agreement to make grants, pay subsidies, lend moneys or otherwise provide or arrange for assistance or incentives to any person for any purpose that will facilitate the recording, conservation or presentation of that place.

Under section 35 the owner or occupier of any place that is the subject of a heritage agreement may apply to the Valuer-General for a revaluation to take into account the effect of a heritage agreement. Section 36 states that where it appears to the Heritage Council, in relation to any place that is subject to a heritage agreement, that the use or continued use of that place is not economically feasible; and its conservation is thereby endangered, the Council may make a report to the Minister recommending that:

•	all or part of the tax payable by the owner under the Land Tax Assessment Act 2002 that is attributable to that place is remitted; •	all or part of the Metropolitan Region Improvement Tax payable by the owner, under the Planning and Development Act 2005 is remitted; •	all or part of any relevant local government rates or charges in respect to the place are remitted; and / or •	all or part of any relevant rates or charges for water in respect to that place be remitted

The relevant Minister or local government must be consulted in each case.

A further discussion of possible options for local government rates is in part 3.11 below

Proposals for change

The provisions above should be adopted to apply to conservation covenants managed by the Soil and Land Commissioner, the National Trust and the former CALM (now DEC). They should also be included in the proposed scheme to allow for conservation covenants under the Environmental Protection Act 1986.

3.11	 Local Government incentives

Incentives schemes at the local government level can be an effective tool to encourage private landholders to become partners in conserving biodiversity, particularly remnant vegetation, as part of sustainable land management and farm production.

Under the Local Government Act 1995, differential rates may be imposed on the basis of the purpose for which the land is zoned; the predominant purpose for which the land is held or used, as determined by the local council, and any other characteristic or combination of characteristics prescribed. These differential rates are currently being used in the Shire of Serpentine-Jarrahdale and the Shire of Busselton to allow for differential rating of land of high conservation value.

The Serpentine-Jarrahdale Shire has adopted a differential rating system that provides owners of land within a “conservation zone” with reduced rates. Landholders who have retained native vegetation or a wetland on their land that is of high conservation value can request that the land be rezoned as “conservation”. The zoning can apply to all or part of the land. Areas zoned as conservation in the local planning scheme are rated at half the rate of rural zoned land where the original zoning of the land was rural. Where the original zoning is not rural, rate relief is assessed on a case-by-case basis. The landholder is required to manage the land in a sustainable way to ensure its values are protected. So for example, grazing or clearing would not be allowed. The landholder must develop an environmental management plan that is considered by the Shire before the land is rezoned to conservation.

Although this scheme does not guarantee protection of the land in perpetuity as the zoning could be changed at a later date by the council, it does bind future property owners to protect the area while it remains a conservation zone.

This type of differential rating scheme has only been adopted by two councils to date, despite the fact that legal mechanisms are already in place. No legislative amendment would be required to establish this scheme in other councils as it is already provided for in the Local Government Act, and therefore the main requirement would be an amendment to the relevant local planning scheme.

Proposals for change

Local councils across rural WA should consider adopting differential rating schemes to encourage landholders to provide long term protection for areas of high conservation. Alternatively, provisions to allow conservation zones in all local government areas could be included in the model scheme text to provide consistency across the state. The State Government should provide assistance to lower resourced councils that would suffer from a financial burden from this type of rate reduction.

While conservation zones attract reduced rates, they do not attract land tax exemptions. Land that is held under a conservation covenant issued by CALM (now DEC) or the National Trust is exempt from land tax. Conservation zone incentives could be further enhanced if land tax exemptions were available to landholders who allowed the rezoning of their land to conservation under local planning schemes.

In addition, conservation covenants, while providing protection in perpetuity, do not affect the zoning of land and can be extinguished or varied by planning schemes where there are legitimate planning grounds. To strengthen conservation covenants, rezoning of the covenanted land to a conservation zone should accompany the establishment of a conservation covenant. Provision to establish this link could be affected through amendments to the model scheme text so that all local councils provided their constituents with access to this incentive. However, the ability to establish conservation zones without the need for a conservation covenant should be retained. Appendix 1: Examples of grant programs providing support for sustainable land management

Program	Availability	Annual funding Auction for Landscape Recovery pilot project (Avon CC and others)	Avon NRM region	Up to $200,000 available to private landholders. Biodiversity Conservation Grants (City of Cockburn)	Swan NRM region	$15,000 annual funding, with a maximum of $1,500 for individual landowners and $3,000 for joint applications. Busselton Biodiversity Incentive strategy (Shire of Busselton)	South West NRM region	$78,500 annual funding, with a 50% rate rebate (if a conservation covenant is put in place); or a 30% rebate (signing a management agreement. Community Conservation Grants (Environment Minister)	Statewide	$50,000 annual funding.  Each grant ranges from $500- $5000. Threatened Species Network Grants Program (WWF)	Statewide	$500,000 nationally. Individual projects may receive up to $50,000 . Denmark Conservation Appeal 	South coast NRM region	No set amount - based on donations received  Envirofund grants (NHT)	Statewide	Up to $5, 000 Landcare Australia (Dept of Agriculture)	Statewide	Various corporate-sponsored grants available. Nature conservation covenant program (CALM/DEC)	Statewide	- Up to $500 for legal costs incurred to check the covenant. - In certain cases, up to $1500 per km of fencing. - Waives fees for voluntary covenants (save $2,500-$3,000) - Initial management costs to repair damaged land. Priority projects and devolved grants schemes (NRM regional groups)	Statewide	Significant grants for projects that meet NRM priorities. Wetlands Conservation program	Statewide	Grants are up to $15,000.