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Swan Bay is a good spot for canoeing. On a calm day canoers can see the marine life passing underneath the canoe and may be lucky enough to spot a southern fiddler ray!
Another popular activity is birdwatching. Other activities include snorkelling and swimming on sheltered beaches.
The Swan Bay component of the Port Phillip Heads Marine National Park incorporates Swan Bay to the eastern shoreline of Swan Island, Rabbit Island and Duck Island excluding the shipping channel to the Swan Bay Jetty.
The Bay is generally quite shallow and sheltered and contains extensive seagrass beds. The seagrass meadows are important feeding grounds and nursery habitats for many species of fish including King George Whiting, Black Bream, flathead and garfish. The importance of Swan Bay as a fish nursery area has long been recognised by Queenscliff anglers and was protected unofficially for nearly 100 years, before being officially protected under legislation from net fishers in 1970.
Seagrass meadows and intertidal mudflats are essential habitats for a range of bird species. The seagrass is an important part of the Black Swan diet and also provides a resting and feeding ground for spoonbills, cormorants and egrets. The intertidal mudflats and saltmarsh support a range of waderbirds including many that migrate from the Northern Hemisphere in the summer months. The rare and endangered Orange-Bellied Parrot uses the saltmarshes fringing Swan Bay as a winter refuge and feeding ground. As such, Swan Bay is listed as a RAMSAR site which means it is a wetland of international importance.