Biodiversity offsets Design and Implementation Features Additionality, Timing, Permanence and Leakage Matt Rayment, ICF GHK 6 November 2013 OECD, Paris
Introduction to the presentation Biodiversity offsets aim to ensure no net loss of biodiversity by delivering measurable conservation outcomes designed to compensate for losses Achieving no net loss requires careful design and implementation, taking account of key principles Presentation will focus on additionality, timing, permanence and leakage Introduction to each of these issues Implications for offsets based on international experience
Presentation draws on following studies ICF GHK and Bio Intelligence Service (2013) Exploring potential demand for and supply of habitat banking in the EU and appropriate design elements for a habitat banking scheme. European Commission ICF GHK and eftec (2011) Costs of Implementing Biodiversity Offsets in England. Defra IEEP, ICF GHK et al (forthcoming) Policy Options for an EU No Net Loss Initiative European Commission Wider literature and international standards especially Business and Biodiversity Offsets Program (BBOP)
Additionality A widely accepted principle of offsets is that they deliver demonstrably new and additional conservation outcomes, which would not have resulted without the offset. Offsets require measurable conservation gains to compensate for losses unless additionality can be demonstrated, no net loss will not be achieved. Conservation activities which would have taken place anyway should not count as offsets.
Additionality design and implementation responses Requirement to demonstrate additionality for regulatory approval or verification Evidence of additionality in biodiversity offset management plans (e.g. England) Defining allowable conservation actions Habitat creation, restoration, enhancement Protection in some circumstances where averted risk can be demonstrated (e.g. US, Australia but not Germany, England) Actions may have to exceed existing legal commitments (US) Defining criteria for funding Publicly funded conservation actions often excluded from offset schemes (e.g. Germany) Conservation activities delivered by NGOs may present challenges additionality of funding may be demonstrable?
Leakage and displacement The design and delivery of offsets should avoid leakage the displacement from one location to another of activities harmful to biodiversity. Leakage is a particular risk for offsets based on site protection or damage prevention e.g. if protecting one site merely transfers biodiversity damage to another site. Leakage/ displacement are aspects of additionality. The offset may fail to achieve no net loss if its benefits are reduced by losses elsewhere.
Leakage design and implementation responses Defining allowable actions preference for restoration or creation, which do not present same risks additionality more easily demonstrated care needed in allowing offsets based on protection/ damage prevention/ averted risk BUT note risk of inefficient outcomes [additionality vs conservation effectiveness] Regulatory scrutiny, examining risk of damaging activities being displaced elsewhere, especially in countries where site protection is less well developed/ enforced
Timing The timing of biodiversity offsets is a crucial issue in achieving no net loss. Project impacts cause immediate and certain losses, but conservation gains of an offset are often uncertain and may require many years to achieve. Timing issues vary widely between habitats creation or restoration of some wetlands may take a few years, whereas re-creation of ancient woodlands may take centuries. Changes in quality and condition over time, as well as the physical extent of habitat, need to be considered.
Timing design and implementation responses Requiring offsets to be in place before impacts occur e.g. EU Natura 2000; habitat banking systems Time discounting offsets are provided at the same time as impacts. Discount rates are used to assess the current value of future benefits, and incorporated into offset metrics, to account for temporal losses. Having offsets in place before impacts occur reduces uncertainty and makes benefits more demonstrable. However, habitat banks take time to establish, there are significant financing costs and operator risks. In practice habitat banks therefore tend to release credits in stages as conservation projects progress. Accounting for time favours offsets with short run benefit
Time preference - example metric from England Timing issues can greatly affect the extent of offset required Biodiversity metric for England measures equivalence in time using a 3.5% discount rate, giving these multipliers: Years to target condition Multiplier 5 1.2 10 1.4 20 2.0 32 3.0 Does not take account of incremental gains towards target condition Additional multipliers deal with risk and uncertainty
Permanence Offsets must deliver sustainable and secure long term conservation gains in order to demonstrate no net loss. Permanence of conservation gains depends on: Security of land use; Financial sustainability of offset provision; Arrangements for long term regulation and management.
Permanence design and implementation responses Regulatory approval and verification In approving offsets, regulators need to be convinced that gains are permanent and long term risks and uncertainties are addressed Land - achieving long term commitment for conservation Securing rights for long term management of land for conservation purposes purchase or long term lease Ensuring long term protection of land Legal provisions such as covenants and easements (US, Germany) Transfer of land to a conservation organisation or designation as a protected area may give greater long term security
Permanence how to achieve it Financial sustainability Ensuring sufficient capital to fund long term management Financial plan detailing costs of establishment and management and how they will be met Establishing long term funding arrangements, e.g. conservation trust funds (commonly used in Australia and US) Contingency funds in case of unforeseen difficulties or failure (US) Providing safeguards against financial risks Financial guarantees/ bonds (e.g. Germany) Insurance products or pools Management/regulatory arrangements Long term monitoring, reporting, verification, compliance and enforcement Covered in next presentation
Conclusions Additionality, leakage, timing and permanence are all crucial issues for offsets All need to be taken into account if offsets are to achieve their objective and attain no net loss Careful design and delivery can achieve this in approving offsets regulating or verifying bodies need to be satisfied that proper account is taken of these issues