A balancing act

Steve Edwards of IUCN’s Business and Biodiversity Programme explains how government and business are looking at ways to compensate for the impacts of development on biodiversity.

Steve Edwards of IUCN's Business and Biodiversity Programme

We’re hearing more and more how economic development and nature conservation can go hand in hand. This is encouraging and there are some promising examples. But how does it work in practice when, every day, wildlife habitat is being lost through the construction of buildings, roads, dams, mines, oil and gas installations and other infrastructure?

Conventional measures to reduce development impacts on nature are not stopping the serious decline in biodiversity. This is mainly because biodiversity is not well accounted for under our current economic system and often not valued during development decisions.

But with development unlikely to slow any time soon, there is growing interest by governments and the private sector to look for ways of compensating for its impacts.

Measures such as protecting threatened forest to compensate for biodiversity lost through road building or mining, or by restoring coastal mangroves affected by tourism development are collectively known as biodiversity offsets.

These are measurable conservation outcomes designed to compensate for adverse and unavoidable impacts, in addition to prevention and mitigation measures already implemented. Offsets should be used as a last resort, after all other attempts at preventing or reducing impacts. The goal of offsets is to achieve no net loss and preferably a net gain of biodiversity on the ground in relation to species numbers, habitat and ecosystem function.

Countries like Australia and the United States have been using offsets for several years and interest is growing around the world. Significantly, offsets are making their way into the policies of finance institutions such as the International Finance Corporation, the Inter-American Development Bank and the World Bank.

Regardless of the conditions being imposed by lending institutions, many companies are voluntarily taking it upon themselves to use offsets. Their motivations vary: some simply want to be good corporate citizens; others know their licence to operate is at stake and want to be ahead of the curve, anticipating future legislation, others want to be industry leaders and implement the highest standards of environmental performance even if not legally required.

As implementing biodiversity offsets is a long-term exercise, there are as yet, limited examples. Some that are showing promise include offsets that are in progress such as at Rio Tinto’s QIT Madagascar Minerals (QMM) site or regulations around offsets in New South Wales, Australia.

Aside from biodiversity impacts, there are many cultural and social aspects to consider, making the concept of offsets complex and controversial. Concerns are being raised that offsets are being used as a ‘licence to trash’ and that lost biodiversity cannot be replaced. Others warn against the ‘commodification’ of biodiversity. Another criticism is the danger of ‘cost shifting’, for example, when funding for offsets for species protection potentially erodes government responsibility for nature conservation.

At the same time, however, proponents of offsets say that they can potentially generate important investment in biodiversity conservation, particularly in countries where it could not otherwise be afforded.

Several of IUCN’s member organisations have been involved in advising government and industry on offsets for several years. But with the emergence of offsets, both voluntary and regulatory, there is lack of clarity on what they mean, how to design and implement them, and what mechanisms can be put in place to ensure they are used properly, and even more importantly, when offsets cannot or should not be used. Some policies exist at a national and regional level but none that can be universally applied.

Find out more about IUCN's work on business and biodiversity.

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