INFFER (Investment Framework For Environmental Resources)

1. INFFER (Investment Framework For Environmental Resources) Background and Overview

2. Context • Budgets small compared to the problems • Environmental protection more expensive than we’ve often allowed for • Spatial heterogeneity • Prioritisation is essential but difficult

3. Institutional context • Concerns about outcomes from regional investment • Treasury, Australian National Audit Office concerns about value for public money from NRM investment • Greater focus on outcomes in Caring for our Country and by some state governments

4. What does INFFER help with? • How to get value for money from NRM budget? • What is realistic/feasible? • Appropriate delivery mechanisms? • Project design • Give confidence to funders

5. General emphases • Natural assets • Outcomes • Value for money • Multiple threats • Multiple asset types • Technical & socio-economic (equal emphasis) • Policy tools/delivery mechanisms • Transparency

6. South West (WA) Avon (WA) South Coast (WA) Northern Agric (WA) Rangelands (WA) Perth (WA) Lachlan (NSW) Central West (NSW) Border Rivers/Gwydir (NSW) Northern Rivers (NSW) Namoi (NSW) North East (Vic) North Central (Vic) Corangamite (Vic) West Gippsland (Vic) East Gippsland (Vic) Goulburn Broken (Vic) Port Phillip & Westernport (Vic) Regional testing and use

7. Based on experience • Builds on lessons from previous frameworks and from use by 15 regions • As simple as possible, but comprehensive • Highly structured and guided process • Template • Actively supported • Help desk • Workshops • Regular phone-hookup meetings • Fully documented • All documents freely available at www.inffer.org

8. River reach • Intact native veg • Cultural heritage • Woodland birds Asset types • Wetland • Listed on register • Last of its type • Threatened species • Flagship • Critically endangered • Native vegetation • Concentration of threatened species • Near pristine condition • Important location

9. What is the output? • An assessment for each asset • Background information about the asset • A specific, measurable, time-bound goal • On-ground works that will achieve that goal • Delivery actions that will result in those works • Information about asset value, threats/damage, technical feasibility, socio-economic feasibility, urgency, cost, risks • Benefit:Cost Ratio (comparable across projects)

10. What sorts of projects? • Ones that will deliver NRM outcomes for identifiable natural assets, which can be • large or small • degraded or pristine • localised or dispersed • any sort of natural asset • Not • Untargeted capacity building • M&E not linked to a specific project • R&D not linked to a specific asset

11. INFFER Pre-Assessment Checklist Asset focus 1. Can you clearly identify the environmental or natural resource asset? 2. Will it be possible to define a goal for the asset that is “SMART”? Cost-effectiveness 3. Is there evidence to indicate that management actions can make a real difference? 4. If the desired management actions are mainly on private land, is it likely that those actions would be reasonably attractive to fully informed land managers when adopted over the required scale? 5. If the project requires change by other institutions is there a good chance that this will occur?

12. North Central CMA

13. The INFFER Process

14. INFFER process • Can be applied to individual assets • Run small number of cherry-picked assets through the process • Helps with project development • Helps assess whether it is worth pursuing the project • Better to be a comprehensive process • Community consultation + other info sources • A more comprehensive look at the project options

15. Comprehensive process 1. Develop a list of significant natural assets in the relevant region(s) 2. Apply an initial filter to the asset list, using a simplified set of criteria 3. Define projects and conduct detailed assessments of them 4. Select priority projects 5. Develop investment plans or funding proposals 6. Implement funded projects 7. Monitor, evaluate and adaptively manage projects

16. Rationale for the process • Starts broad, with far too many assets • Reduce list somewhat with simplified criteria • No point in great sophistication at this stage • Few enough make it through to make a good assessment practical

17. How long does it take? • New user: around 5 person-days per asset to complete Project Assessment Form • Experienced user: 1-2 days per asset, if information and experts accessible • Could be extended to encompass detailed modelling if desired

18. What skills needed? • Ideally, good knowledge of asset(s) • Able to engage with experts • Understand NRM projects – some experience in implementation • Capture and interpret technical and socio-economic information • Make judgements based on partial information

19. INFFER and knowledge gaps • Makes the best of the available info • Captures key knowledge gaps • Ratings for quality of information • Possible outcomes • Project to fill knowledge gaps • Data collection/investigation within the project • Feasibility assessment as phase 1 of project • Captures risks of project failure

20. Project Assessment Form

21. Project Assessment Form • Completed for every project • Could be more than one alternative project for the same asset • Guided process to collect the required information • Detailed instruction manual

22. Project Assessment Form • Web-based • Instructions hidden until needed • Automate calculations • Easy navigation • FAQs • Example responses

23. 1. The asset • Spatial definition of the asset • Significance/importance of the asset • Key threats • Existing projects

24. 2. Goal, works • Setting a specific, measurable, time-bound goal • On-ground actions to achieve goal • Actions by other organisations • Time lags until benefits • Effectiveness of works • Risk of technical failure • Spin-offs (positive and negative)

25. 3. Socio-economics • Anticipated adoption of works by private land/water managers • Encompasses community capacity and knowledge • Risk of practice changes for the worse • Approvals • Socio-economic risks

26. 4. Budget • Delivery mechanisms • Private citizens • Other organisations • Works, investigation and management • Costs • Up front (3-5 years) • Long-term maintenance costs

27. 5. Project info • Project title • Project summary • Funder’s targets and outcomes • Outputs and intermediate outcomes

28. Public and private benefitsand choice of NRM policy instruments

29. Public: private benefits framework • Selects the most appropriate policy tool for a given circumstance • Relevant to change on private land

30. Public and private benefits • “Private benefits” relate to the landholder making the decisions • “Public benefits” relate to all others • neighbours, downstream water users, city dwellers interested in biodiversity

31. Lucerne Farm B Lucerne Farm A Current practice Forestry in water catchment Possible projects Each dot is a set of land-use changes on specific pieces of land = a project. • Which tool? • Incentives • Extension • Regulation • New technology • No action

32. Alternative policy mechanisms for seeking changes on private lands AIncludes polluter-pays mechanisms (command and control, pollution tax, tradable permits, offsets) and beneficiary-pays mechanisms (subsidies, conservation auctions and tenders).

33. Simple rulesfor allocating mechanisms to projects 1. No positive incentives for land-use change unless public net benefits of change are positive. 2. No positive incentives if landholders would adopt land-use changes without those incentives. 3. No positive incentives if overall costs outweigh benefits.

34. Simple public-private framework

35. How applied • Project Assessment Form collects info • Public net benefits • Asset significance • Threats, Effectiveness of works • Time lags, Risks • Private net benefits • Adoption of the required works • Does not dictate mechanisms: you choose

36. Benefit: Cost Ratio

37. The BCR An index of benefits from the project Total costs (project and ongoing)

38. BCR = ────────────────────────────────────────────────── Project cost V W V: asset value W: effectivenessof works A B A: adoptionB: compliance F P  GF: feasibilityP: socio-political G: long-term funding 1/(1 + r)L L: time lag to benefits r: discount rate C+ PV(M+E)  G C: project cost M: annual maintenance cost E: polluter-pays compliance costs PV: summed present value over 20 years G: long-term funding Potential project benefits Discountfactor fortime lags E(prop’n of required adoption) Risk of failure  (1    )

39. Flexible • Can compare large and small projects • Can compare short and long projects • Allows comparison of projects for different types of assets • Waterways • Wetlands • Vegetation • Threatened species • Agricultural land

40. Example BCR ranking If budget = $17m, preferred projects are 4, 2 & 5

41. Advantages of the BCR • Avoids common problems in metrics used for ranking environmental projects • Add when they should multiply variables • Fail to divide by project costs (e.g. subtract costs, or just leave it out!) • Omit key variables (common to ignore adoption and technical feasibility) • All three • Cost of poor metrics is huge • Benefits of investment roughly halved • BCR can easily double environmental benefits

42. Interpretation and use of results

43. Project assessment report • Title, summary, etc. • Benefit: Cost Ratio • Time lag until benefits delivered • Risks of project failure • Spin-offs • Quality of information • Key knowledge gaps

44. Principles • The info is an input to decision making • BCR is not to be used mechanistically • All-things-considered judgement • Other things may matter • Need a process of QA to give the decision makers confidence

45. Challenges

46. Challenges • For many environmental managers it’s a very different way to do business • Having to provide comprehensive info • Particular concepts new to people • Ideally, need an asset expert with comprehensive knowledge

47. Typical problems for new people • Difficulties with “asset” and goal • Poor link between threat and works/actions • Required land-use changes not quantified • Tend to stick with comfort zones • Unrealistic expectations of adoption • Not adequately costed • Insufficient detail to judge the project

48. Requirements to get through • Training • One-to-one support • INFFER team offers training and one-to-one support • Getting to resource limits • Vic govt planning to provide a training/support • Clear signals from government that there will be benefits to those managers who do it well

49. Project Examples

50. ExampleUpper Lachlan River