Can environmental conservation mitigate recession in regional economies?
Governments and philanthropic groups have long been involved in the purchase of private land to achieve conservation outcomes. The challenge in any conservation activity is to balance economic impact and the expectations of diverse stakeholders interested in the natural resources of a place. The first half of 2020 has presented two transactions that highlight some of the pathways available to government – from traditional national parks to inclusive economic growth that binds together environmental, community and economic interests.
Note to Aboriginal and Torres Strait Islander peoples that this article may contain images of people who have since passed away.
Acquisition of landscape-scale properties for environmental conservation
There are many examples globally and across Australia of large-scale land acquisitions seeking environmental conservation outcomes, and a range of public and private models for funding. Ecotourists and bird watchers are attracted to philanthropic funded conservation sites and the Australian Wildlife Conservancy is the largest operator by land area, either owning or managing a total of 65,000 sq km across their estate. In contrast, the Heart Morass in Victoria is a large wetland located between two Ramsar listed sites, incorporating field and game hunting into its economy and involving a large community of off-season volunteers who maintain and restore the environmental assets and breeding sites.
National parks are the traditional public funded option. The benefits of protection that national parks bring to areas where natural environments are threatened by expanding urbanisation are without contest. National parks also generate economic opportunities through tourism when close to populations or accessible through transport. However, it is not uncommon for national parks to receive criticism in regional areas where the traditional benefits of the system are less clear. Feral animals, economic dead zones, reduced population and risk to critical mass of small towns, are some of the common complaints. National parks can also limit practice of cultural activities for Aboriginal peoples including access restrictions and limiting use of fires, hunting, gathering and ceremony – although today greater efforts are made to co-manage parks with Traditional Owners and title transfer with national park lease-back arrangements have been possible in some areas.
The NSW Government’s June 2020 announcement of the purchase of the Narriearra station to create a new 1,534 sq km national park area so close to the existing 3,253 sq km Sturt National Park may raise questions, or present opportunities. Narriearra is in a remote corner of NSW near to Tibooburra with a population of less than 200 people. It represents the largest area of private land ever purchased for a national park in the State’s history. The purchase is aligned with the NSW Government’s target to add an additional 200,000 hectares of land to the national park estate. The aim is to protect significant wetlands and at least 27 threatened species, including almost 90% of the endangered grey grasswren’s habitat and breeding areas. It will mean the future protection of a conservation area that is 10 times the size of the Royal National Park. However unlike the Royal National Park, with its proximity to Sydney’s population and the adjacent tourism industry benefits, Tibooburra’s small size will mean that the local community will need to work with government to generate new opportunities from the change in ownership and economic status.
The Narriearra acquisition draws significant parallels to the 2013 purchase of 11 properties on the Murrumbidgee River. This purchase created the Nimmie-Caira project area of 860 sq km under an agreement between the Australian and New South Wales (NSW) Governments. World Water Day on 22nd March 2020 marked the official announcement for completion of the Nimmie-Caira transaction, which returned the area to its traditional custodians outside of Native Title – demonstrating a new way of doing business for government. While the announcement was without fanfare, the result is nothing short of spectacular.
How is the Nimmie-Caira different?
In 2005 the NSW government acquired the Yanga Station to create a new national park and experienced community disquiet due to the loss of local timber and agricultural production capacity in the region, linked to a decline the Balranald economy. The Toorale acquisition in 2009 generated a similar community response with the loss of irrigation production and a decline in the Bourke economy. To mitigate this risk the Nimmie-Caira project used a different approach that has enabled a large-scale conservation area whilst maintaining a self-sustaining economic model.
The Nimmie-Caira properties were acquired by the NSW Government under a $180m Commonwealth funded environmental watering program. The $180 million cost included the purchase of the 11 farms along the Murrumbidgee River, together with their 137 gigalitres of water rights, which were subsequently transferred to the Commonwealth Environmental Water Holder — enough to fill a quarter of Sydney Harbour, and amounting to the largest water buyback under the $13 billion Murray-Darling Basin Plan. The new economy for Nimmie-Caira would need to develop without access to these entitlements.
An innovative market and community engagement process was pursued, with a divestment designed to ensure early market engagement with potential partners that had capabilities to deliver environmental outcomes in balance with ongoing economic activity. In 2017 a consortium led by The Nature Conservancy, a global environmental conservation fund, was successful in tendering for the future management of the 860 sq km site. The consortium included the Nari Nari Tribal Council, the Murray Darling Wetlands Working Group and the Centre for Ecosystem Science at the University of NSW. The consortium also received $2 million in funding from John Fairfax AO. Under the transaction arrangements the new operating model was required to demonstrate progress against a land and water management plan and success across key performance indicators before full transfer into private ownership which occurred in 2019.
Nimmie-Caira now supports a diversified range of commercial activities linked with the local economy and provides ongoing employment in the region around Hay and Balranald. Activities include sustainable low impact grazing and ecotourism, and carbon farming is planned on parts of the property previously used for agriculture. Under the new operating model, proceeds of commercial activities are reinvested into environmental works, protecting and enhancing extensive wetlands of Lignum, River Red Gum forests, lakes and floodplains. It gives economic ownership of the asset to Aboriginal peoples who play a central role in the management and restoration of the environment on the property. This brings opportunities for Indigenous employment, improved health and education, and reconnection to country following over 100 years of limited access.
The deal brings together and aligns interests of Aboriginal peoples, community groups, government, economic enterprises, and environmental and conservation groups. Rather than government taking a position, negotiating on all sides of the transaction and specifying the solution, this approach enabled government facilitation of a market process to design the model against a land and water management plan that sets forth the target outcomes. This represented an innovation in the public procurement process and model for protection and enhancement of a natural resource, one in which a market was built to operate land privately, rather than remaining state-owned.
How can an inclusive growth approach help future projects?
As the economic and social consequences of the COVID-19 pandemic become clear, government needs to identify new models to engage a wider set of economic actors in local places, and link to changes in economic aggregates such as Australia’s gross domestic product (GDP) and total factor productivity. Inclusive growth is economic growth that is distributed equitably across society. The definition implies direct links between the macroeconomic and microeconomic determinants of the economy and economic growth. Stimulus, including through regional investments in water, energy or transport infrastructure, can drive economic recovery that is inclusive and equitable across communities – when developed through an inclusive growth lens.
The Nimmie-Caira approach to public-private partnerships has demonstrated how governments can effectively partner with the private sector to address market failure and deliver large-scale non-commercial outcomes, including for Indigenous peoples and the environment. Six aspects of inclusive growth have been identified that can be applied to public infrastructure and land transactions in the context of recession. The three that are most prevalent in the Nimmie-Caira case are:
Transactions need to be structured around a recognition of non-financial measures that are incorporated into the transaction mechanics to enable effective “apples to oranges” comparisons across market opportunities. Nimmie-Caira illustrates how government can decide between one bidder’s approach that delivers strong Aboriginal cultural heritage outcomes, versus another bidder that delivers greater financial return and strong environmental potential – and should the two dimensions even be distinguished as separate?
Transactions need to be multi-party beyond bilateral government and supplier. These take longer to develop but have greater potential to deliver more diversity and better outcomes. Multi-party transactions should convene a range of actors around the deal – including mechanisms to enhance supply chain participation and engage the community. The approach needs to facilitate an alignment of all parties around the objectives of the transaction and long-term outcomes for a place. This is central to establishing the foundation for inclusive growth.
Investment needs to be made in jobs, skills and places, building on all locally available resources. For Nimmie-Caira this included the expertise of teams working on the ground in the area from the Murray Darling Wetlands Working Group and the University of New South Wales. John Fairfax’s recognition and award of a fellowship to a local Indigenous leader demonstrates an investment in people and skills. This aspect extends more broadly into the continued growth and capacity of the Indigenous leadership and management of the operation, and the wider community, through the management and commercial partnerships developed for the landscape.
A new opportunity for government
Today governments have a range of economic growth tools at their disposal and have the means to enable innovation in how transactions are convened. Projects such as the Nimmie-Caira demonstrate the potential for government to facilitate market activity towards non-commercial outcomes. Applying an inclusive growth lens to economic stimulus, including for land transactions and infrastructure projects, creates significant potential to deliver enhanced outcomes. The Nimmie-Caira is an exemplar that demonstrates a model for large-scale sustained landscape and wetland restoration, combined with economic activity. It illustrates the result of a bold approach taken by NSW Government to enable innovation in the traditional acquisition and asset divestment process, which could equally be applied to other major infrastructure projects or land transactions.
As the new owner of the Narriearra property, the NSW Government has an opportunity to unlock value in the landscape through different ways of collaborating with the diverse capacity in the surrounding community and in its conservation partners. As the government has demonstrated previously, engagement with the private sector has potential to deliver non-financial outcomes, while creating opportunities for inclusive economic growth.
About the author:
Cassian Drew is Managing Director of Inclusive Growthand advises on investments in economic and social infrastructure, considering values of human and natural capital.In his previous role with Palladium, Cassian served as the lead advisor to the NSW Government for the Nimmie-Caira transaction. He is a non-executive director of Natural Capital Economics.
Inclusive Growth Partners integrates expertise across a network of specialists to deliver advisory, data analytics and technology platform services. Our platform enables place-based investment, creation of alliances, and ESG reporting of sustainability project outcomes.