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Key departmental publications, e.g. annual reports, budget papers and program guidelines are available in our online archive.

Much of the material listed on these archived web pages has been superseded, or served a particular purpose at a particular time. It may contain references to activities or policies that have no current application. Many archived documents may link to web pages that have moved or no longer exist, or may refer to other documents that are no longer available.

Environmental Incentives:
Australian Experience with Economic Instruments for Environmental Management

Environmental Economics Research Paper No.5
Consultancy report prepared by: Dr David James, Ecoservices Pty Ltd
Commissioned by Environment Australia
Commonwealth of Australia, 1997
ISBN 0 642 26850 9

15. Use of economic instruments by local government

15.1 Environmental initiatives at the local scale

Local governments are becoming increasingly involved in environmental protection and management. In some instances their involvement is quite specific, but there are now some notable cases where councils are playing an important role on a larger scale, by facilitating the formulation and implementation of comprehensive environmental management plans for catchments, farmlands, residential areas and public open spaces. Protection of natural vegetation and land resources, including attributes of ecological, scenic and heritage value, is often an important objective. Various economic and financial incentive are being used to support these initiatives.

In Melton Shire, Victoria, economic incentives are being used as part of an Environmental Enhancement Policy which focuses on sustainable land management. Bendigo City Council has introduced incentives to support management objectives that have close association with the Loddon and Campaspe Dryland Catchment Salinity Management Plans.

Cooloola Shire Council, Queensland, has introduced a comprehensive package of measures for environmental improvement and beautification of the local area, in which economic incentives play a major role. The mayor strongly believes in meeting environmental objectives by means of education, financial assistance and community conservation projects and is quoted in a recent media release as saying: 'We've opted for the big carrot, rather than the big stick.' Initiatives undertaken by Cooloola Shire Council include rate relief, an environmental levy, environmental awards, co-funding arrangements, design bonuses and a comprehensive, community-based conservation strategy.

15.2 Environment levies and special charges

Environment Levies

Environment levies are charged by many local governments in Australia. Brisbane City Council has an environment levy that is used to purchase bushland remnants. It was $20 per year in 1990-91 and has now been increased to $30. Cooloola Shire has an environment levy of $10 per year. Ratepayers can complete a survey questionnaire to indicate their priority order for the expenditure of the funds raised by the levy. Redland Shire has an environment levy for ratepayers in the Koala Coast Planning Area.

Other examples of environment levies and special environmental charges include:

Eurobodalla (NSW) Environment Levy
Caloundra (Qld) Environment Levy
Logan (Qld) Environmental Initiatives Charge
Johnstone Shire Council (Qld) Green Levy (under consideration)
Toowoomba (Qld) Parkland Charge
Albert (Qld) Open Space Preservation Levy.

Catchment Levies

Catchment levies are applied to landowners in a catchment to fund works and land management practices to deliver environmental benefits. Mobbs (1996) gives several examples of such levies. New South Wales provides for its catchment management trusts to raise funds via a catchment levy. The Hunter Catchment Management Trust has established an annual levy which is collected by the Hunter Water Corporation.

Hornsby Shire Council, New South Wales, applies a 'stormwater connection fee' to new subdivisions to protect river waters from pollution and sediment run-off. The fee is calculated on the basis of estimated pollution loads, with an allowance for pollution control measures installed by the developer. Funds raised from the levy are used for nutrient and sediment control works.

Murray Council, New South Wales, applies a levy to farmers to fund farm works such as tree planting, drainage infrastructure and watertable works. The Water Supply Authority Act confers power on the council to apply the levy. Co-funding is expected from the New South Wales Government and the Commonwealth Government.

15.3 Rate relief

Local governments commonly use various kinds of rate concessions to encourage ratepayers to adopt environmental protection measures. The most common form of concession is 'rate rebates'.

The legislative provisions enabling councils to use this power vary between States. In Victoria, powers for variations in rates are conferred under the Local Government Act 1989. Examples of rate rebates in Victoria include the following.

The City of Greater Bendigo has introduced a rate rebate scheme to fund the revegetation of groundwater recharge areas, to combat salination in the region. The scheme applies only to farmland properties and operates in the context of the Loddon and Campaspe Catchment Salinity Management Plans. Rate rebates are payable for 10 years where trees are planted and for one year to offset the cost of perennial pasture.

Melton Shire Council has introduced a rate rebate scheme applicable to non-urban properties larger than 2 hectares. The rebates are given for completed works designed to discourage land degradation, such as for the control of noxious weeds, pest animals and soil erosion. The rebate is up to 38 per cent of normal rates where the landowner is resident, and up to 78 per cent where the landowner is an absentee. Failure to undertake an approved program of works attracts a substantial financial penalty.

In Queensland, local governments face special problems in implementing conservation policies as there are no provisions for covenants in land titles. Economic incentives are thus an important mechanism for achieving environmental protection. Incentives for nature conservation activities on rateable land are available under the Local Government Act 1993. Landowners can obtain rate relief as an exemption under a regulation; under a differential rating scheme; or as a remission of rates. A remission in rates may be made for the preservation, restoration or maintenance of structures or places of cultural, environmental, historic, heritage or scientific significance to the local government area. Some examples of rate relief in Queensland include the following.

Cooloola Shire gives rate relief to landowners who undertake conservation and sustainable farm management practices. The rebate scheme aims to encourage the conservation of high value vegetation and wildlife habitat on private land, as well as to promote the establishment of farm forestry plots in the shire.

Johnstone Shire Council has prepared a draft document for proposed rate rebates to be applied in perpetuity for landowners entering into conservation agreements. The rebates are targeted at floodplain and habitat management (especially cassowary habitat), scenic resources, soil erosion, slope stability and water quality. The shire may apply for some reimbursement from the State Government and the Commonwealth Government, and may also apply a Green Levy to cover the loss in revenue.

Logan City Council offers a rate rebate for landowners who rezone their land as Residential Conservation Zone. The rate rebate varies from 25 per cent to 50 per cent, depending on the conservation value of the land.

Brisbane City Council pays a 'cash grant' to landholders who enter into a Voluntary Conservation Agreement and have their land reclassified as a conservation zone. The grant is paid as a cheque at the end of each financial year. The council considers that this has a stronger incentive effect than a reduction in rates payable under a rebate scheme.

Brisbane City Council also has provisions for exemption of its environment levy under its Vegetation Protection Ordinance. The exemption applies to vegetation on private land.

15.4 In-kind incentives for environmental improvement

Free Tree Programs

Many councils have programs for providing free trees to local residents. The Cooloola Shire gives each resident two free trees and also gives trees to randomly selected respondents to the council survey on how they would like their environment levy spent.

Environmental Monitoring Programs

Local councils frequently support environmental monitoring programs, either by undertaking monitoring themselves or by supporting local schools and other interest groups. Cooloola Shire Council supplies Landcare groups with water quality testing equipment to participate in the Waterwatch scheme and be involved in the shire's ambient water monitoring program.

15.5 Other incentive schemes

Design Bonuses

Cooloola Shire Council will consider providing bonuses for development proposals that include design features which are of general benefit to the community. Such features may comprise retention of significant bushland in open space areas; implementation of local traffic management schemes; provision of on-site treatment or reticulated sewerage; and implementation of innovative stormwater systems.

Co-Funding Arrangements

Local governments are increasingly becoming involved in co-funding arrangements for environmental protection purposes. This is particularly evident in catchment management programs, which are commonly funded from local, State and Commonwealth sources, as well as by local landowners. An important example is the Cost Sharing for On-ground Works Program by the Murray-Darling Basin Commission, which encourages joint funding and participation by relevant stakeholders.

Cooloola Shire is a partner, together with the Mary River Catchment Coordinating Committee, in the Voluntary Riverbank Restoration Grant Scheme, designed to protect rivers in the locality by tree planting, streamside fencing, weed eradication and erosion control. Cooloola Shire contributed $50,000 to the fund and an additional $140,000 was received from Landcare.

15.6 Initiatives for public participation and awareness

Environment Awards

Cooloola Shire Council has introduced an innovative scheme of environmental awards, co-sponsored with Gympie-Cooloola Rotary and Gympie and District Landcare. The awards recognise and reward people, community groups and businesses who have made significant contributions to improve the local environment through their actions at home, at work, on the land or in the community.

Community and School Workshops

Cooloola Shire Council conducts community and school workshops to facilitate the implementation of its conservation strategy. As an incentive for people to participate, the council offers to pay $10 towards an environmental project in the local area for every adult who attends the meetings. The project is to be chosen, organised and implemented by the group in association with the council. Each school wishing to be involved will be offered $300 for a similar project on public land.

State of the Environment Reports

State of the environment reports are used widely by councils to inform ratepayers of environmental conditions in their locale and measures taken by councils to protect and improve the local environment. Such reports are an important component of the shire conservation strategy.

Reports and Media Coverage

Brisbane City Council issues a statement on its environmental programs in its annual budget report and issues brochures intermittently. The council obtains frequent publicity for its environmental programs on television and in the printed media.


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