Expertise

Biodiversity & Environmental Economics

Our economists provide biodiversity and environmental economics advice to governments, regulators, businesses, investors and legal teams making decisions about natural capital, biodiversity offsets, nature markets and ecosystem value.

Talk to our environmental economics team

Australia’s biodiversity underpins its economy and the communities that depend on it. Economics makes that value visible and something decision-makers can act on.

We help clients value biodiversity, design environmental markets, assess biodiversity offsets, evaluate natural capital and make evidence-based decisions. Our work combines economic modelling, policy analysis, cost-benefit analysis and market design to support decisions that need to withstand regulatory, legal and public scrutiny.

We are regularly asked to step into complex policy and legal debates. We provide the analysis and the data that let governments and businesses assess trade-offs and decide on the evidence. This has included building the methodology behind Australia’s national offset scheme, and designing the market rules, valuations and integrity tests that governments, courts and investors rely on.

The challenge of biodiversity and environmental decision-making

Every sector depends on natural systems, yet responsibility for protecting them is spread thinly between governments, landholders, and business. Unlike carbon, which has decades of frameworks and markets behind it, biodiversity markets are still developing.

That makes decision-making harder. Risks differ by region and ecological community, and the trade-offs between conservation, development, and funding are rarely straightforward. We give these decisions structure, using economic tools to weigh trade-offs and model scenarios where the outcome is uncertain.

For more than 20 years we have shown how nature can be valued and financed, and turned contested environmental questions into decisions that hold up to scrutiny.

Biodiversity and environmental economics problems we help solve

Our clients face challenges at the intersection of economics, law, and policy, and need clarity on risks they carry and obligations they owe. The questions we answer include:

Which carbon and biodiversity credits can be trusted? We assess method integrity, additionality and permanence risk, and set the markers that let buyers, regulators and courts distinguish a high-integrity credit from a weak one.
How do businesses measure and demonstrate their biodiversity impact? We quantify and value biodiversity footprints and dependencies and translate them into financial exposure, so the numbers hold up under Taskforce on Nature-related Financial Disclosures (TNFD) and Australia’s sustainability reporting standards.
How should nature markets operate? We identify the market failures, then design the market rules, pricing and incentives that correct them, modelling supply, demand and participation so governments and businesses know how a scheme will behave.
Where is the environmental funding coming from? We appraise the environmental markets, public programs and private finance that can fund biodiversity outcomes, and test the revenue certainty and cost recovery behind each, so clients know which sources are durable enough to invest against.
How do voluntary and compliance biodiversity markets interact? We model the returns from private land conservation, biodiversity certificates and offsets, and value the trade-off for landholders and investors deciding whether to switch between them or combine them where the rules allow.
How much should we invest in biosecurity? We build the cost-benefit case for invasive species and feral animal management, quantifying avoided damage and the cost of delay, so budgets go where the return is highest.
How do we protect biodiversity while enabling development? We appraise and evaluate policies and offset arrangements, quantifying the economic cost of conservation constraints against the environmental cost of development, so decision-makers can see the trade-off.

Who we advise on biodiversity and environmental economics

We advise clients across sectors, including:

State and federal governments on regulation, offsets, and natural capital policy
Mining, energy, infrastructure and utility proponents managing offset liabilities across Commonwealth and state approvals
Investors and corporates on ESG, financing and environmental credentials
Courts, lawyers and regulators on the integrity of carbon and biodiversity credits
NGOs, landholders and conservation organisations on funding biodiversity outcomes
Agricultural and water policy agencies managing land and ecosystem impacts

Biodiversity and environmental economics services

We advise on biodiversity offset policy, pricing and methodology design, nature market and biodiversity credit design, and carbon and biodiversity project stacking. We also deliver natural capital and ecosystem valuation, environmental cost-benefit analysis, biosecurity economics, private land conservation incentives, ESG and nature-related disclosure, and environmental policy and program evaluation.

Environmental offsets and landscape-scale programs

• Designed Australia’s Commonwealth Restoration Contributions Calculator, covering offset contributions for around 2,000 protected matters

• Rebuilt offset contribution methodologies across three jurisdictions: the Commonwealth, Western Australia’s Pilbara Environmental Offsets Fund and Part V Fund, and Queensland’s Financial Settlement Offset Calculator

• Delivered a probabilistic cost estimate for a 5,000+ hectare program under the Environment Protection and Biodiversity Conservation Act, setting out costs at 50 per cent, 75 per cent and 90 per cent confidence so government could test whether long-term funding was adequate

• Advised on methodologies for attributing offset outcomes to multiple environmental obligations, apportioning benefits across species, approvals and time so that no gain is counted twice

Nature markets: biodiversity credits, carbon and stacking

• Advised the NSW Independent Pricing and Regulatory Tribunal on the structure and efficiency of the biodiversity credits market, recommending integrity settings and pricing measures to cut transaction costs, which informed IPART’s published market monitoring report

• Advised government on the integrity and carbon leakage risks that arise when carbon and biodiversity projects are stacked on the same land, and analysed how Australia’s Nature Repair Market interacts with carbon markets and offsets

• Compared nature-based Australian Carbon Credit Unit (ACCU) methods for a major agricultural client and modelled ACCU prices to 2050 to test the durability of nature-based premiums

Natural capital, ecosystem valuation and water

• Valued the ecosystem and social services of Sydney’s Western Parkland City for the Western Sydney Planning Partnership

• Built the strategic options business case for Infrastructure NSW that led Infrastructure Australia to designate the city’s blue-green infrastructure a national priority initiative

• Evaluated the economic, social and environmental costs and benefits of increasing water availability in the Murrumbidgee River

Nature finance, ESG and disclosure

• Established TNFD-aligned climate and nature risk baselines for major corporate and property portfolios, and designed a state government’s ESG reporting framework for bond issuance

• Forecast ACCU prices and nature-based premiums to guide investment decisions by a nature-focused fund

Land management and private conservation

• Created the framework the NSW Biodiversity Conservation Trust uses to measure and report the socio-economic benefits of private land conservation, now published by the BCT

• Designed incentive structures rewarding private landholders for conserving biodiversity in multiple states, and assessed how conservation payments compete with alternative land uses

• Analysed the market, regional employment and fiscal effects of a transition away from native forest harvesting for WWF-Australia, and quantified the emissions consequences in our published work with Prof Andrew Macintosh, which found that ceasing logging in southern NSW would cut net emissions by 0.95 million tonnes CO₂-e a year

Biodiversity data, monitoring and biosecurity

Prepared the business cases for the NSW Satellite Imagery Hub and Wildlife Drone Hub, and an investment strategy to map all 110 listed threatened ecological communities in NSW
Estimated for the Invasive Species Council that feral deer cost Tasmania’s Midlands and eastern regions more than $53 million a year, and close to $1.4 billion over 30 years without stronger action
Applied cost-benefit analysis to feral horse control in Kosciuszko National Park and the case for maintaining the NSW Border Fence

Our approach to biodiversity economics, market design and valuation

Biodiversity questions rarely sit inside one discipline. The economics depends on ecological judgements about what a site can recover, and on legal judgements about what a regulator will accept. We build teams around the question. We partner with:

ecologists and environmental scientists to ground our analysis in robust ecological evidence
lawyers and policy experts to keep recommendations legally and institutionally workable
engineers and technical specialists to connect biodiversity and infrastructure decisions, and
academics and sector experts to bring the latest research to bear, including the team behind the Nature Repair Market’s first method.

Together, these perspectives mean our recommendations hold up when a regulator or a court tests them.

Our biodiversity work sits within our broader environmental economics practice, and we regularly connect it with related areas, including:

Climate resilience and adaptation: the role of ecosystems in building resilience
Water and agricultural policy: managing competing demands across land, water, and biodiversity
ESG and financing: helping clients demonstrate their environmental credentials to investors and financiers
Urban planning: ensuring we can support our thriving cities and communities while protecting our natural environments

Biodiversity and environmental economics insights and reports

We publish our analysis so it can be tested. Read our most recent case studies and articles below.

Frequently asked questions (FAQs):

How can economics help biodiversity and environmental markets?

Biodiversity sits outside traditional markets, so its value is easily overlooked when decisions get made. Economics puts a number on what ecosystems provide and on what their loss costs, which lets nature be weighed against the financial and social factors already in the decision rather than treated as a separate consideration.

How does economics support biodiversity offsets and nature markets?

Offsets and nature markets only function if the settings behind them are sound. Economics determines whether contributions and prices are sufficient to deliver the outcome, whether gains are genuinely additional, and whether a scheme can meet its obligations over the decades an offset must last. Get the settings wrong and the market either fails to attract participants or delivers less than it promises.

How can economic analysis help when environmental decisions are contested?

Contested decisions usually turn on disputed evidence and long time horizons. Economic analysis makes the trade-offs explicit and the assumptions visible, so a decision can be defended on its reasoning rather than asserted. It also gives parties who disagree a common evidence base to argue from, which narrows the dispute to the points that genuinely matter.

What makes Frontier Economics’ approach to biodiversity and environmental economics different?

We are independent economists, not market participants. We do not develop projects, issue credits or hold positions in the markets we assess, so our findings are not shaped by a commercial interest in the outcome. We also build teams around the question rather than the discipline, bringing in ecologists, lawyers and technical specialists where the economics depends on their judgement.

Who does Frontier Economics advise on biodiversity and environmental economics?

Governments and regulators designing offset and nature market policy, mining, energy and infrastructure proponents managing offset liabilities across Commonwealth and state approvals, investors and corporates on nature-related risk and disclosure, courts and legal teams on the integrity of carbon and biodiversity credits, and NGOs, conservation organisations and landholders on funding biodiversity outcomes.

What sort of economic analysis does Frontier Economics deliver?

Cost-benefit analysis, probabilistic cost estimation, market design and pricing, non-market valuation, natural capital accounting, environmental policy and program evaluation, and business cases. We work across the full question, from establishing what an environmental outcome is worth, through to what it will cost to deliver and who should pay for it.

If you are making decisions about biodiversity offsets, natural capital valuation, nature markets or environmental policy, our environmental economics team can help you test the evidence, understand the trade-offs and design options that stand up to scrutiny.