More than 600 people signed a petition backing calls to declare Barry's Old Harbour a local nature reserve.
But Vale of Glamorgan Council says the proposal cannot be pursued for the time being due to resources and funding.
Last May, the petition set up by Barry Action for Nature campaigner Rob Curtis called on the council to declare the area as a LNR (local nature reserve) in order to help protect wildlife.
It raised concerns that jet ski users and some irresponsible dog walkers were disturbing nesting and feeding birds, along with sewage pollution in the area.
The petition said: “Saltwater marsh is one of the rarest habitats in the UK. The Old Harbour’s saltwater marsh supports wintering red listed species such as curlew and whimbrel."
“It also supports other waders and seabirds such as shelduck, grey heron, little egret, knot, and redshank."
“We call on the Vale of Glamorgan Council to declare this area a local nature reserve which can contribute to the Welsh Government’s aim of protecting 30% of Wales for nature by 2030."
“We are concerned that jet ski users and some irresponsible dog walkers are disturbing resting and feeding birds.
“We are also concerned at the sewage pollution currently being discharged into this harbour. Please help us protect our local wildlife.”
But council officers say the local authority is facing several challenges at the moment - including changes to staffing and workloads, along with budget pressures on departments, meaning other sources of funding would be needed and this could not be guaranteed.
The petitioners argued wildlife throughout the UK facing the destruction of much of their habitat and therefore a desperate need for more local nature reserves to reverse this trend.
604 people signed a hard copy version of the petition, along with three signatures for a previous online version.
In response, council officers have been asked to provide information regarding its position and proposal and they say the proposal could not be pursued at this time and should be reconsidered in the next financial year.
They added that in principle, the Old Harbour could be considered as a LNR but it would need to have sufficient wildlife value to warrant designation.
An initial search on Aderyn reveals there are about twenty or so species identified under section seven of the Environment (Wales) Act 2016 which are of conservation concern.Most of these are estuarine birds or birds of prey, although there are a few butterflies and moths.
They also say the bay represents one of the only opportunities for seagrass planting in the Vale, which is known for prodigious carbon capture.
There have also been discussions with the Seagrass Project about such opportunities as part of the coastal development project, but officers say due to lack of funds the coastal project is in abeyance at this time.
They add the guidance is clear that the council should have aims and objectives in declaring a LNR, an idea of how it will manage it, monitor it, engage the public, opportunities for education, and what the costs are.
Officers say the potential for this location to be declared a local nature reserve should be considered in conjunction with other possible locations within the county which may, for various reasons, be considered to be a higher priority for such a designation, such as Rhoose Point.
They add funding for the proposed LNR, and the challenges around it, needed to be considered and this would need to rely on potential sources of external funding, such as the Vale Local Nature Partnership (LNP), although this could not be guaranteed.
As such, funding for the current Vale LNP would only be secured until March next year due to both the Place and Neighbourhood Services departments being under severe budgetary pressures and therefore having to look for outside financial support to take this forward.
Officers says the council was facing several challenges in undertaking the proposal to declare the Old Harbour in Barry as an LNR including resources such as changes in staffing and workload.
An example is the imminent retirement of the county ecologist and his replacement by a new member of staff in this role who, although experienced, would be inheriting and handling the ongoing workload which means the council could not commit to this proposal at this time.
The officers added that current budgetary pressures for the relevant council directorates and departments meant other sources of funding would need to be sought but this would rely on external funding and support which could not be guaranteed.
They say that “due to the previous points raised this proposal could not be pursued at this time and should be reconsidered in the next financial year”.
The petition will now be scrutinised and debated at a meeting of the council’s Place scrutiny committee. which will refer any recommendations to the cabinet.

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