Biodiversity Stewardship Agreements, commonly called BSAs, can provide NSW landowners with an opportunity to generate income from conservation, while protecting and improving biodiversity on their land.
A BSA is a legally binding agreement between the landowner and the Minister responsible for the Biodiversity Conservation Act 2016 (NSW). It is used to establish a biodiversity stewardship site over eligible land. Once approved and registered on title, the agreement creates biodiversity credits, which may then be sold through the NSW biodiversity credits market.
Credits are commonly purchased by developers, infrastructure proponents, government agencies or other parties who need to offset the biodiversity impacts of development. They may also be purchased for conservation or policy reasons.
BSAs can be attractive for landowners who want to balance environmental conservation with commercial return. However, they also involve long-term obligations, restrictions on land use and succession planning issues. Careful legal, ecological, accounting and tax advice should be obtained before committing to a BSA.
How does a BSA work?
In general terms:
- the landowner engages an accredited assessor to assess the proposed stewardship site under the NSW Biodiversity Offsets Scheme;
- an application is made for a BSA, identifying the land, management actions, credits to be created and ongoing obligations;
- if approved, the BSA is registered on title;
- biodiversity credits are created and may be sold through the market; and
- the landowner must comply with the BSA and management plan.
Management obligations may include weed control, pest and feral animal control, fencing, fire management, habitat restoration, ecological monitoring and reporting.
Part of the proceeds from credit sales is used to fund the Total Fund Deposit, which supports long-term management payments for the stewardship site. These payments are intended to assist with the approved management actions over time.
Benefits of a BSA
A BSA may provide landowners with a new income stream through the creation and sale of biodiversity credits.
It can also support the protection and improvement of native vegetation, threatened species habitat, wetlands and other ecological features. For landowners already committed to conservation, this may align with family, environmental and succession planning goals.
A formal management plan can also provide structure and certainty around how the land will be managed into the future.
Risks and limitations
A BSA is not simply a passive income product. Once registered, it binds the current owner and future owners of the land. It is intended to operate in perpetuity, subject only to limited statutory rights of variation or termination.
This means the land may be restricted for farming, grazing, subdivision, development, clearing, infrastructure works or other future uses, depending on the terms of the BSA.
A BSA may also affect the value and marketability of the property. Some purchasers may see the BSA as attractive, particularly if it provides ongoing income. Others may see it as a burden if they want flexibility for farming, development or future land use changes.
Landowners should also consider whether third-party consent is required before entering into a BSA. This may include consent from mortgagees, chargees, lessees, tenants or other parties with interests in the land.
Tax, duty and succession issues
A BSA can have tax, GST, CGT, land tax, duty and succession planning consequences.
For farming properties, particular care is needed to assess whether the BSA affects the land’s use for primary production. This may be relevant to intergenerational rural transfer concessions under the Duties Act 1997 (NSW).
A BSA will not automatically prevent a family transfer concession from applying, but it may affect the analysis depending on the size of the stewardship site, the continuing use of the balance land, the nature of the farming enterprise and the terms of the agreement.
Key questions before entering into a BSA
Before committing to a BSA, landowners should consider:
- Does it align with the long-term plans for the property?
- Will the credit sales and management payments justify the restrictions and costs?
- How will it affect future farming, development or subdivision?
- How will it impact succession planning and future family transfers?
- Will it make the property more or less attractive to future purchasers?
- Are there mortgages, leases, licences, caveats or other interests that need to be addressed?
- Is the landowner willing and able to comply with the management obligations over time?
Conclusion
BSA can offer real opportunities for NSW landowners. They may allow landowners to generate income, fund conservation work and contribute to long-term environmental protection. However, BSAs are long-term legal commitments registered on title. They can affect land use, development potential, finance, succession planning, tax, duty and future sale.
Before entering into a BSA, landowners should obtain legal, ecological, accounting and tax advice so they understand both the commercial opportunity and the long-term consequences.
For tailored advice on biodiversity stewardship agreements and how they may affect your land use, development potential and succession planning, our Land, Home and Water team at Morgan + English can help. Contact Wayne: wayne@morganenglish.com.au
