INFFER (Investment Framework For Environmental Resources) Background and Overview

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

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

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

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

Regional testing and use  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)

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

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

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)

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

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?

North Central CMA

The INFFER Process

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

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

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

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

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

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

Project Assessment Form

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

Project Assessment Form  Web-based  Instructions hidden until needed  Automate calculations  Easy navigation  FAQs  Example responses

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

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)

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

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

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

Public and private benefits and choice of NRM policy instruments

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

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

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

CategorySpecific policy mechanisms included Positive incentivesFinancial or regulatory instruments A to encourage change Negative incentivesFinancial or regulatory instruments A to inhibit change ExtensionTechnology transfer, education, communication, demonstrations, support for community network Technology changeDevelopment of improved land management options, e.g. through strategic R&D No actionInformed inaction A Includes polluter-pays mechanisms (command and control, pollution tax, tradable permits, offsets) and beneficiary-pays mechanisms (subsidies, conservation auctions and tenders). Alternative policy mechanisms for seeking changes on private lands

Simple rules for 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.

Simple public-private framework

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

Benefit: Cost Ratio

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

BCR = ────────────────────────────────────────────────── Project cost Potential project benefits E(prop’n of required adoption)  (1  Risk of failure  )  Discount factor for time lags V  W V: asset value W: effectiveness of works A  B A: adoption B: compliance F  P  G F: feasibility P: 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

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

Example BCR ranking ProjectBenefit: Cost RatioBudget 410.0$3m 28.1$13m 57.2$1m 14.0$ $1m 30.8$9m If budget = $17m, preferred projects are 4, 2 & 5

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

Interpretation and use of results

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

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

Challenges

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

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

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

Project Examples

Example Upper Lachlan River

Upper Lachlan River  Goal – improve condition and connectivity, protect fish  Threats – loss of habitat (riparian and in stream), sediments –nutrients, sand slugs  Management – fencing, grazing exclusion, habitat restoration, sediment slug control, gully control, groundcover  Moderate impact on threats

Upper Lachlan River (cont’d)  Adoption  Little/none without incentives  Standard CMA cost sharing ~50% adoption  Achievable for some elements, unlikely for larger management changes (gully, groundcover)  Overall cost around $3 million  BCR 3.6 (pretty good)

Lachlan Ranges

Lachlan Ranges  High value, but not a ‘jewel’?  Goal – high conservation vegetation  Maintain extent and condition  Threats – weeds, invasive native species, ag impacts  Reduce threat from high to medium  Management – grazing management, direct weed/pest control, reveg

Lachlan Ranges (cont)  Adoption  Little/none without incentives  Standard CMA cost sharing anticipates >50% adoption  Analysis recommended stewardship payments  7 landholders  Overall cost $1.81 million  BCR 4.65

Patho Plains

Patho Plains  Very high value  Small remnants dispersed over large area  Goal – high conservation vegetation  Maintain extent and condition  Threats – weeds, over grazing, cultivation  Reduce threat from high to medium  Management – grazing management, direct weed control

Patho Plains (cont)  Adoption  Little/none without incentives  Current MBI payments  25-50% adoption  100+ landholders  Overall cost $5 million  BCR 1.75

Acknowledgements  Affiliations of the INFFER team  University of Western Australia  Department of Primary Industries, Victoria  North Central Catchment Management Authority  Future Farm Industries CRC  Other key funders  Australian Research Council (Federation Fellow Program)  Department of the Environment, Water, Heritage and the Arts (CERF Program)  Department of Sustainability and Environment, Victoria