Awareness of the economic benefit that can flow from protecting and restoring our natural capital is increasing, as over half of the world’s GDP depends on natural capital and its services. Natural capital is key to the success of many Australian industries including agriculture, fishing and forestry, tourism and resource sectors.
Despite our growing understanding of the contribution of natural capital to the economy, it is still undervalued and is not considered in financial and business decision making.
To increase private investment in Australia’s natural capital, the Government is:
- supporting the development of biodiversity markets
- improving the measurement of natural capital
- demonstrating the productivity and resilience links of our natural capital
- helping embed natural capital in commercial and financial decision-making
Read the Natural capital: unlocking private sector investment publication.
We are supporting the development of a range of market opportunities to landholders. These opportunities are improving their land management practices and delivering environmental outcomes. They include:
- The Agricultural Biodiversity Stewardship package, including the
- Investments in soil carbon under the National Soils Strategy, Emissions Reduction Fund, and the Clean Energy Finance Corporation
We are seeking to support increased private investment in Australia’s natural capital. We are doing this by improving the measurement and visibility of natural capital across the landscape.
- National Strategy for Environmental Economic Accounting, including the National Land Account, National Oceans Account, and pilot ecosystems accounts.
- Work is also being undertaken to support development of pilot blue carbon accounts
- National Soils Strategy, Pilot Soil Monitoring and Incentives Program
- Digital Environmental Assessments Program
We are working with ABARES and other experts to compile the evidence base, linking improved management of natural capital to improved productivity and reduced risk and identifying any gaps in information.
We are supporting a range of projects through the Smart Farms program, including La Trobe University’s Farm-scale Natural Capital Accounting.
We are also engaging with representatives from the finance and banking sector as well as peak bodies from natural resource management and agriculture sectors and indigenous organisations, to better understand:
- how to incorporate natural capital into investment and risk management decisions
- the types of information and the format that is needed
- how to develop potential approaches to trial the incorporation of natural capital tools and metrics into financial products and decision making.
A Natural Capital Working Group coordinates the advice of these stakeholders.
Successful natural capital approaches to inform financial solutions will help pave the way for increased private sector investment. This will help maintain and improve our natural capital across a broad range of economic sectors.
Agriculture and land management
In the 2021-22 Budget the Government committed $4.7 million over three years to develop approaches and tools. These approaches will measure and integrate natural capital in financial products and solutions.
We're working with interested financial institutions to trial these tools and metrics in new natural capital financial products and investment models. For example, the tools could trial:
- building natural capital risk in lending approaches
- measuring productivity improvements that result from rehabilitating degraded land.
In the 2021-22 Budget the Government committed $1.9 million over 4 years to establish a Blue Finance Unit. This unit will work with leaders in marine restoration and coastal infrastructure to catalyse private sector investment in restoration of coastal ecosystems to build resilience of coastal assets and communities and enhance blue carbon and biodiversity.
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