The committee, made up of members of the government, opposition and the crossbench, received more than 100 submissions on the matter.

An investigation by The Guardian found offsets for vast tracts of key habitat razed for the construction of the new Sydney airport were delayed by years. In other examples, developers paid to protect land that was already protected by other laws, regulations or schemes.

The chair of the inquiry, Greens MP Sue Higginson, said Thursday’s report highlighted how complex the scheme was.

She added there was evidence showing stakeholders were unhappy with the scheme, including from developers or landholders trying to create a biodiversity site and an ecologist trying to facilitate the success of the scheme.

“No one came to us saying it was working well,” she said. “It is likely that the scheme has enabled biodiversity loss [rather] than achieved its objective of no net loss.”

Nature Conservation Council chief executive officer Jacqui Mumford said the report further highlighted the need for reform and urged the government to adopt all 19 recommendations.

“Once the scheme has undergone a thorough redesign, it must only ever be used as a last resort for genuinely essential and unavoidable development projects,” she said.

Environmental Defenders Office head of policy and law reform Rachel Walmsley said the scheme did more harm than good.

“Our laws must recognise that some things are too precious and vulnerable to ever be offset. Since those laws came into force, land clearing rates have skyrocket and remain dangerously high. Plants and animals continue to be added to the list of threatened species every year.”

Opposition spokeswoman for the environment and committee member Penny Sharpe said the government was relying on a “fundamentally broken” scheme to fix the state’s biodiversity crisis.

Earlier this year, a report by the NSW auditor-general found the Department of Planning and Environment “has not effectively designed core elements of [the scheme], did not establish a clear strategy to develop the biodiversity credit market and did not determine whether it worked to protect biodiversity”.

NSW Environment Minister James Griffin welcomed the report and said he would respond to the recommendations in due course.

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He added that since he took office last year, his department had been tasked with improving the scheme through greater integrity and transparency.

“I will continue to deliver improvements that protect our environment and allow economic opportunities to be realised across NSW,” he said.

Part of the new changes included stronger compliance and assurance plans, clearer data collection and access, as well as ecological monitoring requirements in all biodiversity stewardship agreements.

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