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Lessons from the Vegetation Incentives Program

Lessons from the Vegetation Incentives Program. Moving from conceptual idea to practical reality. OUTLINE. Introduction Background theory The VIP Round 1 results Discussion Conclusion. INTRODUCTION. Competitive tenders very popular Still relatively new Much to be learnt

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Lessons from the Vegetation Incentives Program

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  1. Lessons from the Vegetation Incentives Program Moving from conceptual idea to practical reality

  2. OUTLINE • Introduction • Background theory • The VIP • Round 1 results • Discussion • Conclusion

  3. INTRODUCTION • Competitive tenders very popular • Still relatively new • Much to be learnt • The Vegetation Incentives Program (VIP) a chance to study a state-wide application of the tool

  4. BACKGROUND THEORY • Auction theory can help when purchasing environmental services off landholders • Procurement auction with government as buyer and landholders as sellers of environmental services • Targets information asymmetry in NRM • Landholders asked to submit a tender containing a management plan and a price for undertaking plan

  5. A bid will be comprised of costs of undertaking the management plan, opportunity cost and information rent • Competition should reduce information rent • Winners chosen based on ecological significance of property and price, and sometimes on management actions • Usually an index set up to include these elements and compare bids

  6. Heterogenous opportunity costs

  7. The VIP • Vegetation Management and Other Legislation Amendment Act 2004 will end broadscale clearing of remnant vegetation by end 2006 • $150 million financial assistance package accompanied the Vegetation Management Act • $12 million set aside to provide incentives for landholders to protect and improve the condition of high quality regrowth native vegetation

  8. Greening Australia delivering VIP • All of QLD (except for Cape York) in 6 regions that are based on their biophysical characteristics • 5 year management agreement and covenant • Sealed bid auction chosen as allocation method (AKA competitive tender)

  9. RESULTS ROUND ONE • 76 enquiries, 21 EoIs, 16 invited to continue, 8 full bids submitted • Very high bids • Far above commercial land value and estimated maximum opportunity cost • None selected for funding

  10. LESSONS • Allow adequate design time (design, implementation and security) • Have community consultation • Choose management tools carefully • Plan the process from the start and involve any delivery organisation in planning • Incorporate a tool to compare biodiversity value

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