The Great Barrier Reef (GBR) continues to face long-term decline, with poor water quality from catchment areas amajor factor. To address this, governments have been seeking private sector co-investment through mechanisms like the Reef Credits Scheme and the upcoming Nature Repair Market. However, the effectiveness of these market-based solutions remains uncertain, presenting a risk to the GBR and its management in the longer-term.

The Australian Marine Conservation Society (AMCS) engaged NCC to assess the role of market-based mechanisms in achieving GBR water quality and nature repair goals. This project involved a mix of desktop research and first principles assessments of different market mechanisms to determine (1) the prospects of success of market-based investments and (2) recommendations for the role of government in the management of this iconic ecosystem.

Our analysis found that in the absence of demand drivers, particularly strong regulatory and compliance requirements, environmental markets by themselves are unlikely to deliver intended outcomes for the GBR. We recommended greater emphasis on a suite of solutions including increasing regulatory and compliance measures to target positive outcomes for the GBR. These tools would not only incentivise private entities to address the impact that their management practices have on the Reef — known as internalising the externalities — but they would also underpin the success of market-based approaches by helping to create demand for private investment and ensure market-based approaches are more robust and effective.

Our insights were shared with relevant agencies to inform policy decisions on how best to enhance GBR water quality and ecosystem restoration.