Conservation tenders or ‘auctions’ fund conservation works on private land where there is little incentive for land managers to undertake the works privately. Conservation tenders target environmental outcomes such as better vegetation management, erosion control, biodiversity, water quality, water environmental flows, salinity control and carbon sequestration. Sophisticated applications of conservation tenders can target multiple environmental objectives, for example erosion control and water quality.

Land managers are invited to submit bids to undertake conservation works on their property. For example, land managers may change their dominant land use to a conservation purpose and undertake positive on-ground actions such as revegetation, weeds management or stream bank rehabilitation. Bids are assessed, ranked and funded based on value for money. Formal agreements between the funder and the land manager are then established.

Conservation tenders are emerging as a common tool for regional bodies to deliver cost effective outcomes. In many cases, conservation tenders are replacing devolved grants programs.

Details on how to design and run a conservation tender are provided in the Design principles section on this website or you can down load the fact sheet Running a conservation tender.

Pros and cons of using conservation tenders

Conservation tenders do not estimate the economic benefits of actions or the value of environmental objectives. Tenders are used after it is agreed that particular conservation actions will provide a net benefit to society.

There are a number of pros of using conservation tenders.

• The tender process is open to all eligible landholders. This increases the chances of identifying feasible and cost-effective conservation works.
• Regional natural resource management (NRM) groups can achieve more outcomes per dollar spent using a tender approach. The competitive nature of the process keeps bid costs down. Information about the true costs of undertaking conservation works is revealed through landholders’ bids. Evaluations of conservation tenders have found that tenders can provide more cost-effective outcomes than policies such as fixed-price grants or fixed-cost sharing grants.
• Conservation tenders fund the shortfall between the landholders’ private costs and the private benefits of the conservation works. This reduces the likelihood of overpaying land managers for the conservation works.
• The bid assessment and selection processes enable regional NRM groups to select the most efficient group of bids.
• Conservation tenders can provide greater certainty of environmental improvements than other programs because funding is provided to works that specifically contribute to regional NRM groups’ objectives. Tenders also provide a formal mechanism to record, monitor and evaluate the performance and effectiveness of conservation works. Because conservation tenders are underpinned by enforceable contracts, they provide the same certainty as regulatory approaches.
• Conservation tenders are complementary to other policy approaches and are generally run in conjunction with other policy tools.

While conservation tenders produce significant benefits, the cost of developing and implementing the tenders is usually higher than traditional devolved grant programs. However, the efficiencies of using tenders should outweigh any additional costs.

Trends and opportunities for regional NRM groups 

Conservation tenders are the easiest form of market-based instruments for regional NRM groups to use as the tenders do not require regulatory underpinning and can be secured by common law contracts. Conservation tenders could be considered as a more sophisticated and efficient set of arrangements for grants programs. Tenders are emerging as a major policy tool for governments where the delivery of programs is often contracted out to third parties.

Several governments and regional NRM groups across Australia have run successful conservation tender programs. Sophisticated assessment tools and metrics have been developed that can be re-used by other regional bodies, adapted for local circumstances.

Significant opportunities also exist for regional bodies to pool knowledge and resources to develop and implement more effective conservation tenders. Other opportunities include the following.

• Conservation tenders can be used to establish high-value conservation commodities with a realisable value in other markets. For example, regional bodies can use conservation tenders to create supplies of offsets to sell to developers through one-off arrangements or via formalised offset markets. This can allow regional bodies to recover funds invested in other programs to reinvest in additional NRM activities.
• Conservation tenders can create environmental by-products that have values elsewhere. For example, carbon sequestration is the by-product of projects that re-establish native vegetation. However, regional NRM groups should consult with regulatory authorities before designing tenders for this purpose.
• With experience in efficient tender design and implementation, regional NRM groups can also potentially deliver conservation tenders for government clients under fee-for-service arrangements.