Consultancy firm PwC has walked back findings from a report it wrote last year claiming a biodiversity market in Australia could unlock A$137 billion ($91 bln) in finance by 2050.
The report, A nature-positive Australia, has been frequently cited by Environment Minister Tanya Plibersek to promote the creation of the country’s nature repair market, a world-first government-backed voluntary market for biodiversity credits, which she has described as a “Green Wall Street”.
PwC’s initial claims were called into question in a submission to a parliamentary inquiry on the NRM’s legislation by think-tank the Australia Institute (TAI).
TAI was critical of the government’s reliance on the PwC report’s findings to justify setting up the NRM, rather than carry out its own modelling relating to the NRM itself or verify the findings of the PwC report.
“Critically, the A$137 billion figure presented in the PwC report seems to be in 2050 dollars. That is, PwC has inflated the figures to what they would be in 2050,” the Australia Institute submission said.
“It is not an accurate representation of what the financial flows it presents are in 2023 or will be in the near future.”
The submission said adjusting the estimates to 2023 dollars lowers the total financial flow to just A$70 billion, and ‘market-based’ flows down to A$18 billion.
“The A$9 billion that PwC suggests will flow to biodiversity offsetting (the nearest approximation of the NRM in the report) in 2050 is reduced to A$5 billion,” the submission said.
It went on to say that while the PwC report claims to forecast market benefits of a biodiversity market, the research is simply measuring the financial flows to biodiversity using an OECD categorisation framework, a significant share of which is not related to markets.
Instead, it factors in direct government intervention and environmental spending by NGOs, and charitable donations.
“To be clear, PwC has not modelled the economic benefits of the government’s NRM, nor environment markets in general,” TAI said.
In a response to TAI’s submission, PwC acknowledged its report “details the assumptions underpinning growth assumptions, and notes the limitations in estimating the value of financial flows to biodiversity”.
“We also acknowledge in the report that financial flows capture indirect spending towards biodiversity through environmental and conservation initiatives, but the proportion spent on targeted threatened species conservation, with clear outcomes, is likely much less.”
Its reply went onto to emphasise that the report did not attempt to outline the impacts specific to the NRM, and was developed independently of the Australian government, and before the NRM legislation was made public.
“The report was developed in light of government interest in market-based mechanisms, as well as businesses and financial institutions becoming increasingly aware of nature-related risks and opportunities,” PwC said.
“It was developed at a time where there was significant push for increased private investment in nature; including the lead up to multiple global forums including [COP15] in Montreal, and the G20 in Bali where nature and biodiversity (including markets) were a major theme.”
It said the report was designed to inform a broader discussion about Australia’s relationship with biodiversity.
“The purpose of quantifying these financial flows was to provide an indication of the scale of future biodiversity related finance, to reflect private sector demand and opportunity for a market to connect landholders engaging in biodiversity restoration and management with those willing to pay for these activities,” it said.
PwC’s image has been tarnished in Australia, following damning revelations that it shared confidential government information to help clients avoid tax.
It has since committed to selling its Australian government consulting arm for the price of A$1, and name all staff involved in the scandal, in a bid to reduce the growing fallout engulfing the firm.
The government’s NRM legislation is currently before the Senate, after it was passed in the lower house once independent MPs made amendments to strengthen the legislation.
The bill’s fate now rests with the Greens party, after the Coalition opposition reverted its support for it.
The Greens have been critical of the NRM legislation, arguing it should instead focus on reform to strengthen environmental and biodiversity conservation laws.
TAI’s submission said the government had yet to provide any economic or environmental justification for the NRM.
“If the government is to proceed wit Green Wall street, a critical first step would be to carry out credible economic analysis,” it said.
By Mark Tilly – mark@carbon-pulse.com
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