Biodiversity offsetting is contentious: here’s an alternative

A guest blog by Dr Jeremy Simmonds at The University of Queensland explains an alternative approach to compensating for the residual impacts of development, in a manner that is explicitly linked to the achievement of jurisdictional biodiversity targets.

It is inevitable that natural places, and the species and ecosystems they support, will continue to be developed for human needs – new mines, farms, urban areas and infrastructure. Indeed, trillions of dollars are projected to be invested in these endeavours around the world in the coming decades.

Many nations, and some major project financiers, have policies that regulate how environmental impacts from these new development projects should be managed. A widely used tool is biodiversity offsetting – the final step of the mitigation hierarchy. After efforts to avoid and minimize impacts, a new project may be required to demonstrate that it will offset the ‘unavoidable’ biodiversity impacts it causes, by creating an equivalent ecological benefit elsewhere. The aim is to achieve at least ‘no net loss’ of the impacted biodiversity.

The rapid uptake of no net loss policies and standards around the world is encouraging. However, there is debate as to whether biodiversity offsetting is effectively contributing to favourable biodiversity conservation outcomes. Variable policy design and implementation are important factors feeding concerns over offsets. However, a fundamental issue is a lack of clarity and consistency about what no net loss actually means, and how it is calculated.

In most offset policies, no net loss is determined in relative terms – in other words, the baseline against which no net loss is calculated is what would otherwise have happened without a project and its associated offset. This ‘counterfactual’ scenario is often one of ongoing decline. That means that an offset ‘gain’ can be achieved by protecting a site that might have been lost in the future if it wasn’t protected, so the loss from the development project is counterbalanced by avoiding another loss. The outcome: while relative ‘no net loss’ is achieved, there is still less biodiversity after the project than before.

This meaning of no net loss can seem unintuitive and misaligned with conservation goals that aim to recover biodiversity. It means that interventions like offsets, even when designed and implemented well, can result in ongoing and unmanaged drawdown of biodiversity.

Most ecological compensation requirements do not explicitly link project-level compensation with the biodiversity goals and targets in a jurisdiction. This disconnect will only be amplified, as outcomes-based biodiversity targets are expected to be central in the post 2020-framework for biodiversity conservation under the UN Convention on Biological Diversity.

An alternative approach

An international, multi-sector working group, brought together under the Science for Nature and People Partnership (SNAPP), has come up with a new way forward.

It’s called ‘target-based ecological compensation’.

The framework the group developed enables every compensatory action done at the project level to be clearly linked to a broader goal for the impacted biodiversity. The requirements on developers – how much, and what type of compensation they need to provide – are easy to understand, and can be calculated upfront, saving time and money.

In target-based ecological compensation, no net loss would mean what it sounds like – the amount of a biodiversity feature affected by a development must be maintained at the same level over time, when both the impact and the offset sites are considered. Put simply, a project must counterbalance the losses it causes with an increase at the offset site of the same amount - to replace the affected biodiversity at a ratio of 1:1.

The approach also works for more ambitious goals. Say, for example, there is a target to double the area of habitat for a particular threatened species, to enable its recovery. Under target-based ecological compensation, a project that causes a loss of 100 hectares of that species’ habitat would need to restore or recreate 200 hectares of that same species’ habitat. The project has created twice as much habitat as it destroyed, and therefore contributes to the jurisdiction’s target of doubling habitat availability for that species.

In another case, a jurisdiction may accept some net losses – let’s say no more than 10% – of a particularly widespread ecosystem. Any losses to this ecosystem from development would need to conserve 9 units of this ecosystem for every one that they caused to be lost, such that no more than 10% of the ecosystem is lost across the jurisdiction. This component of the framework is similar to the approach used in South Africa.

A target-based system involves changes only to the final step of the well-established mitigation hierarchy, focussed on how much, and what type, of compensation must be provided for a residual loss. The on-ground actions (improving or maintaining biodiversity in a particular place) are no different to those already used in current offsetting practice, and are subject to the same challenges that affect these (and indeed most applied conservation actions).

Outcomes-based biodiversity targets are already central in international agreements and conservation policy, and will only become more prominent. Target-based ecological compensation simply helps to connect project-level responses to these broad biodiversity targets to achieve desirable outcomes for stakeholders and biodiversity. It means everyone is ‘pulling in the same direction’ – the huge investment that goes into managing impacts from new projects will now directly and proportionately contribute to specific, outcomes-based goals for a jurisdiction’s biodiversity conservation.

Moving from biodiversity offsets to a target-based approach for ecological compensation Photo: Jeremy Simmonds

Target-based ecological compensation aligns project-level compensation for residual losses from development projects, to the achievement of a nation or jurisdiction’s explicit biodiversity targets, via one of three pathways – net gain, no net loss, or rarely managed net loss. The amount and type of compensation for a particular loss is directly linked to the achievement of the target, thus reducing complexity in calculating compensatory requirements for a given loss, and providing more certainty and transparency for stakeholders.

About the author:  Jeremy Simmonds is the lead author of the Conservation Letters article, “Moving from biodiversity offsets to a target-based approach to ecological compensation,” published in December 2019.  Jeremy is a Postdoctoral Research Fellow in the Centre for Biodiversity and Conservation Science at The University of Queensland in Australia.

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