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Round two National MBI Pilot Programme
From April 2003 the Australian, state and territory governments committed up to $10 million over two rounds to the National MBI Pilot Program. Round 2 of the program commenced mid-2006 and concluded in June 2008.

In November 2006, the Natural Resource Management Ministerial Council agreed to fund nine recommended projects under round two.

 Round 2 National Market Based Instruments Pilot Program projects

Project name

Project description and final reports

Auctions and beyond: Enhancing the cost-effectiveness of the Catchment Care Programme

This project aims to improve the cost-effectiveness of the Round One Pilot - Catchment Care: Developing an Auction Process for Biodiversity and Water Quality Gains - through:

1. enhanced measurement of environmental benefits and

2. the use of an improved bid selection algorithm that incorporates biophysical synergies and landholder bids.

The pilot will consider a number of auction design alternatives such as one price versus price discrimination formats and participation incentives.

Environmental Auctions and Beyond Final Report* (1438kb PDF)

Targeting Environmental Flow Sourcing for Salinity Benefits

This project aims to develop a mechanism that will source water to improve river salinity and improve infrastructure reconfiguration. It will test alternative auction structures that might be used to integrate the different demands placed on irrigators. It will test alternatives to encourage high rates of participation.

Targeting Environmental Flow Sourcing for Multiple Benefits Final Report* (2200kb PDF)

Design Auctions with Outcome Bonuses: An Application to Ground Nesting Birds in the Murray Catchment

This project aims to improve contract design for conservation contracts auctioned to private landholders. In particular, it proposes to test alternative input-based and outcome-based contracts.

“Designing auctions with outcome bonuses: An application to ground nesting birds in the Murray Catchment, NSW Final Project Report* (711kb PDF)

Multiple Environmental Instruments: Offsets with Auctions

This project aims to develop a process to design and refine offsets markets. The pilot proposes to use experimental economics to test and refine various elements needed to operate a successful offset market. It will examine the use of auctions to organise landholders on the supply side of the offset market and explore how developers (buyers of offsets) interact in a formal offset market.

Electronic BushBroker exchange: Designing a combinatorial double auction for native vegetation offsets * (696kb PDF)

Auction for Landscape Recovery under Uncertainty

This project aims to build on the results achieved from the Round One pilot (Auction for Landscape Recovery) by:

1. exploring improvements that might be made to auction and contract design particularly in the light of uncertain outcomes;

2. exploring alternative ways of ranking contracts received in an auction to better reflect uncertainty and incomplete information available about species persistence;

3. improving the way contracts are monitored in situation where the actions of landholders are difficult to observe.

Auction for Landscape Recovery Under Uncertainty * (392kb PDF)

 

Optimising the Efficiency of Conservation Tenders under Varying Degrees of Heterogeneity

This project aims to explore alternative ways of improving participation rates in an auction. The pilot will examine the tradeoffs associated with:

1. broadening the scope of a natural resource management programme (therefore attracting more participation) and

2. sharpening the natural resource management focus (reduced participation).

The pilot will also develop a diverse set of market based instruments for implementation in the Burdekin dry tropics area.

Using conservation tenders for water quality improvements in the Burdekin research reports * (1,333kb PDF)

Improving Water Quality Discharge from the Lockyer Creek

This project aims to explore the ways market based instruments could be used to improve the quality of water entering the Lockyer Creek catchment. This is important, as the suspended solids and associated nitrogen and phosphorus exiting the catchment significantly impact on the water quality of Moreton Bay, the cost of treating water for Brisbane’s urban use at the Mt Crosby treatment plant and the potential use of Brisbane’s grey water for irrigation in the catchment. The project will complement other projects in the wider catchment.

Improving Water Quality Discharge from the Lockyer Creek* (869kb PDF)

Issues of Enforcement and Regulation in the Application of Market Based Instruments

This project aims to explore enforcement and regulation strategies that agencies can employ to improve compliance in water quality point and diffuse trading schemes. For point sources, evidence to date suggests that the price of permits in the market, rather than the characteristics of the firm, determine its compliance choices, which has important implications for how these programs should be enforces. The focus of this project is to evaluate enforcement and regulation strategies in point-source trading programs.

Issues of Enforcement and Regulation in the Application of Market Based Instruments* (258kb PDF)

Greening Australia Farming Finance: Creating Positive Landuse Change with an NRM Leverage Fund

This project focused on testing, and the dissemination of learnings from, a leverage-based approach to securing NRM outcomes provided through sandalwood production and biodiversity plantings within south-west Western Australia.
  
Using a leverage based approach to support sandalwood production and biodiversity outcomes * (89kb PDF)


During the Round 2 selection process, the selection advisory panel identified the need for a National MBI Capacity Building Program. Capacity building is essential to increasing the potential for widespread success of well-designed MBIs for natural resource management.

From April 2003 the Australian, state and territory governments committed up to $10 million over two rounds to the National MBI Pilot Program. Round 2 of the program commenced mid-2006 and concluded in June 2008.

In November 2006, the Natural Resource Management Ministerial Council agreed to fund nine recommended projects under round two.

 Round 2 National Market Based Instruments Pilot Program projects

Project name

Project description and final reports

Auctions and beyond: Enhancing the cost-effectiveness of the Catchment Care Programme

This project aims to improve the cost-effectiveness of the Round One Pilot - Catchment Care: Developing an Auction Process for Biodiversity and Water Quality Gains - through:

1. enhanced measurement of environmental benefits and

2. the use of an improved bid selection algorithm that incorporates biophysical synergies and landholder bids.

The pilot will consider a number of auction design alternatives such as one price versus price discrimination formats and participation incentives.

Environmental Auctions and Beyond Final Report* (1438kb PDF)

Targeting Environmental Flow Sourcing for Salinity Benefits

This project aims to develop a mechanism that will source water to improve river salinity and improve infrastructure reconfiguration. It will test alternative auction structures that might be used to integrate the different demands placed on irrigators. It will test alternatives to encourage high rates of participation.

Targeting Environmental Flow Sourcing for Multiple Benefits Final Report* (2200kb PDF)

Design Auctions with Outcome Bonuses: An Application to Ground Nesting Birds in the Murray Catchment

This project aims to improve contract design for conservation contracts auctioned to private landholders. In particular, it proposes to test alternative input-based and outcome-based contracts.

“Designing auctions with outcome bonuses: An application to ground nesting birds in the Murray Catchment, NSW Final Project Report* (711kb PDF)

Multiple Environmental Instruments: Offsets with Auctions

This project aims to develop a process to design and refine offsets markets. The pilot proposes to use experimental economics to test and refine various elements needed to operate a successful offset market. It will examine the use of auctions to organise landholders on the supply side of the offset market and explore how developers (buyers of offsets) interact in a formal offset market.

Electronic BushBroker exchange: Designing a combinatorial double auction for native vegetation offsets * (696kb PDF)

Auction for Landscape Recovery under Uncertainty

This project aims to build on the results achieved from the Round One pilot (Auction for Landscape Recovery) by:

1. exploring improvements that might be made to auction and contract design particularly in the light of uncertain outcomes;

2. exploring alternative ways of ranking contracts received in an auction to better reflect uncertainty and incomplete information available about species persistence;

3. improving the way contracts are monitored in situation where the actions of landholders are difficult to observe.

Auction for Landscape Recovery Under Uncertainty * (392kb PDF)

 

Optimising the Efficiency of Conservation Tenders under Varying Degrees of Heterogeneity

This project aims to explore alternative ways of improving participation rates in an auction. The pilot will examine the tradeoffs associated with:

1. broadening the scope of a natural resource management programme (therefore attracting more participation) and

2. sharpening the natural resource management focus (reduced participation).

The pilot will also develop a diverse set of market based instruments for implementation in the Burdekin dry tropics area.

Using conservation tenders for water quality improvements in the Burdekin research reports * (1,333kb PDF)

Improving Water Quality Discharge from the Lockyer Creek

This project aims to explore the ways market based instruments could be used to improve the quality of water entering the Lockyer Creek catchment. This is important, as the suspended solids and associated nitrogen and phosphorus exiting the catchment significantly impact on the water quality of Moreton Bay, the cost of treating water for Brisbane’s urban use at the Mt Crosby treatment plant and the potential use of Brisbane’s grey water for irrigation in the catchment. The project will complement other projects in the wider catchment.

Improving Water Quality Discharge from the Lockyer Creek* (869kb PDF)

Issues of Enforcement and Regulation in the Application of Market Based Instruments

This project aims to explore enforcement and regulation strategies that agencies can employ to improve compliance in water quality point and diffuse trading schemes. For point sources, evidence to date suggests that the price of permits in the market, rather than the characteristics of the firm, determine its compliance choices, which has important implications for how these programs should be enforces. The focus of this project is to evaluate enforcement and regulation strategies in point-source trading programs.

Issues of Enforcement and Regulation in the Application of Market Based Instruments* (258kb PDF)

Greening Australia Farming Finance: Creating Positive Landuse Change with an NRM Leverage Fund

This project focused on testing, and the dissemination of learnings from, a leverage-based approach to securing NRM outcomes provided through sandalwood production and biodiversity plantings within south-west Western Australia.
  
Using a leverage based approach to support sandalwood production and biodiversity outcomes * (89kb PDF)


During the Round 2 selection process, the selection advisory panel identified the need for a National MBI Capacity Building Program. Capacity building is essential to increasing the potential for widespread success of well-designed MBIs for natural resource management.

Round 2 National Market Based Instruments Pilot program final reports

The following documents evaluate and review the National MBI Pilot Program:

Acknowledgement

Funding for these publication was provided by the the National Action Plan for Salinity and Water Quality under the National Market Based Instruments Pilot Program.

Disclaimer

These reports were prepared by an independent consultant, and the views contained are not necessarily those of the Australian Government or of the state or territory government. The Commonwealth does not accept responsibility in respect of any information or advice given in relation to or as a consequence of anything contained herein.