Condamine River

Biodiversity offset schemes - an area to watch for cotton growers

Biodiversity offset schemes aim to reward farmers for managing species and ecosystems through market-based mechanisms.

Along with soil and water, biodiversity makes up the natural capital that cotton farms rely on. Biodiversity can help with natural pest control and pollination, erosion control, carbon sequestration and storage and enhanced water retention. These can all deliver a direct financial benefit, as well as improving wellbeing from having more trees and biodiversity in the landscape.

An area to watch when it comes to biodiversity is the growing potential for biodiversity to provide non-core farm income. The market is in its infancy, but it is also one that is developing rapidly.

In 2019 the Australian Government announced funding for the implementation of an Australian Farm Biodiversity Scheme to be developed and led by the National Farmers' Federation. As part of the Agriculture Stewardship Package, the aim of the scheme is to reward all Australian farmers for managing biodiversity on farm through market-based mechanisms and to enable the continued provision of natural capital benefits to the wider community. In addition to strategic national initiatives on valuing ecosystems services, the NSW and QLD Governments have mandates on environmental offsets which compensate for unavoidable impacts on significant environmental matters (e.g. conservation of significant species and ecosystems) on one site, by securing land at another site (like-for-like). This land is managed to replace those significant environmental matters which were lost.

Queensland - Environmental offsets framework

The QLD Government is currently undertaking a review of that State’s Offsets Policy Framework. Following widespread consultation by the QLD Government, there is consensus across all stakeholder groups that reform is needed, and the framework requires better alignment with the Commonwealth Government’s offset framework. The outcome of the stakeholder engagement process indicate an interest from QLD parties in being able to register their interest in providing land for a land-based offset, prior to the declaration taking place, and also a preference for less complexity within the offset framework. This indicates the State may be moving towards more of an alignment with NSW processes and best practice.

A four-year plan to amend the current QLD legislation is in place, with the view to implementation of an overhauled policy, including establishing an offset market prior to the expiry of the current policy on 1 September 2024.

NSW - Biodiversity offsets scheme

Under the NSW Biodiversity Offset Scheme it is necessary for developers who clear native vegetation or fauna habitat to provide offsets to compensate the loss of biodiversity values from their development site once certain thresholds are achieved. The framework for the scheme was established under the NSW Biodiversity Conservation Act 2016 (BC Act). The result of this legislation is that there is a market for biodiversity “credits” under the scheme. These credits are created by establishing a Biodiversity Stewardship Site on private land, through a Biodiversity Stewardship (permanent) Agreement between the landowner and the NSW Minister for the Environment, which is administered by the Biodiversity Conservation Trust (BCT).

Cotton growers manage vast amounts of farmland and riparian zones encompassing valuable ecosystems and threatened flora and fauna. This fact sheet provides an introduction to environmental offsets and provides a NSW-based economic case study of how a cotton grower may participate in this new and emerging market.


While cotton growers in NSW may benefit from establishing a biodiversity site, close consideration needs to be given to the process and requirements. The market for offsets is immature and indicative credit values have traded on thin volumes since the introduction of the scheme.

Even outside of biodiversity schemes, there are significant benefits that can come with improving biodiversity on your farm. Below are some steps you can take to improve biodiversity:



Jargon Buster PVB