Damning review of NSW biodiversity scheme

A review of the NSW Biodiversity Offsets Scheme has found it effectively allows developers to pay to destroy threatened species, along with a raft of other issues.

Introduced in 2016, the highly criticised scheme enabled developers to offset unavoidable biodiversity loss by increasing biodiversity elsewhere, theoretically resulting in "net zero losses".

In practice, the scheme doesn't guarantee any such balance is achieved and is vulnerable to being manipulated, the parliamentary report published on Thursday found.

"The scheme's design allows too much flexibility to trade off threatened species in exchange for cash, without guarantee that genuinely equivalent offsets will ever be found," Greens MP and committee chair Sue Higginson said.

After an exhaustive 18-month-long inquiry, the report by an Upper House committee also found the offset system lacked transparency, opening it up to manipulation.

"We have heard that this scheme's operation is so opaque and complex that no stakeholder group has full confidence in it," Ms Higginson said.

Allegations of insider trading and collusion with the scheme were not surprising considering the limited transparency regarding actual ecological outcomes, she said.

The report included recommendations for fixing the scheme including a significant overhaul to ensure it meets best practice principles for biodiversity offsetting.

NSW Environment Minister James Griffin welcomed the report and said his department was actively working to improve the scheme including addressing transparency and integrity.

The government will deliver a response to the report by February 24, 2023.

Nature Conservation Council chief executive Jacqui Mumford demanded the government adopt all of the recommended changes, starting with an independent review of the scheme's certification processes.

She called on the government to impose an immediate moratorium on all new offset trades and rule out allowing offsets to enable the destruction of high value conservation habitat.

"Once the scheme has undergone a thorough re-design, it must only ever be used as a last resort for genuinely essential and unavoidable development projects," Ms Mumford said.

"Only then, will public confidence be restored in the offsets scheme to achieve its original goal to protect precious biodiversity while allowing sustainable developments."

The report committee included members of the government, opposition and crossbench and received more than 100 submissions on top of holding four hearings into the scheme.