Scoping Study for the Design and Use of Biodiversity Offsets in an English Context Scoping study for the design and use of biodiversity offsets in an English Context Final Report to Defra (Contract NE 0801) NEE 0801 Final Report: April 2009 1 Scoping Study for the Design and Use of Biodiversity Offsets in an English Context Compiled by Jo Treweek (Treweek Environmental Consultants) With contributions from: Kerry ten Kate, freelance consultant Bill Butcher, WGB Environment Orlando Venn, Treweek Environmental Consultants Lincoln Garland and Mike Wells, Biodiversity by Design Dominic Moran, Scottish Agricultural College Stewart Thompson, Oxford Brookes University Acknowledgements The authors are grateful for input from the participants at the stakeholder workshops and for advice and comments provided by several people including Roger Morris, Ian Hepburn, Riki Therivel, David Hill, Derek Wilkinson, Paul Raven, Graham Tucker. David Parkes, Michael Crowe, Anne Buchan and their colleagues at the Victoria Department of Sustainability and the Environment in Australia generously shared their experience of designing and operating a system of biodiversity offsets. The Project Steering Committee (Sarah Lucking, Pete Brotherton, Andrew Dodd, Helen Dunn, James Vause, Julian Harlow, Phil Lewis, Sarah Webster), provided valuable input and constructive criticism throughout. NEE 0801 Final Report: April 2009 2 Scoping Study for the Design and Use of Biodiversity Offsets in an English Context Executive Summary Defra commissioned a scoping study for the design and use of biodiversity offsets in an English context. The results of the study are summarised in this report and are intended to inform debate on the possible contribution of biodiversity offsets to conservation and sustainable development goals in England. Biodiversity offsets have attracted increasing interest as a mechanism for enhancing biodiversity in the wider countryside in many countries. Duties under the Countryside and Rights of Way Act (2000), the Natural Environment and Rural Communities Act (2006) and associated planning policy are driving some planning authorities to seek ecological compensation for impacts on a broader spectrum of biodiversity than before, and more specifically, to explore options for offsetting. In setting out the UK’s approach to biodiversity conservation, Defra (2007) identified a likely need to explore new policy options, possibly including market creation in biodiversity or the development of incentives for biodiversity “ such as biodiversity offsets ”. Such options were seen to be particularly necessary to reduce rates of loss of non-designated sites and features. This report presents a review of important factors to consider in designing possible options for biodiversity offsets in England, and includes: 1. a review of experience in the implementation of biodiversity offsets worldwide; 2. a consideration of whether offsets would be likely to benefit biodiversity in England; 3. an assessment of how offsets might complement existing policy 4. a review of some of the economic considerations that might influence the private and social costs of alternative offset arrangements; and 5. some possible changes that might have to be made to increase use of offsets as a mechanism to compensate for biodiversity loss. Policies and laws requiring biodiversity offsets are in place in many countries and some biodiversity offset schemes have been operating for many years. They include conservation or mitigation banks in the United States, market trading systems for biodiversity credits produced by landowners in Australia and guidance concerning integration of offsets with environmental assessment in South Africa. Experience worldwide reinforces the fact that successful implementation of biodiversity offsets depends crucially on arrangements that provide stakeholders with clearly defined rules and objectives, and are legally, institutionally and financially secure. While the business case for voluntary biodiversity offsets and the emergence of markets in biodiversity credits suggest that markets can support moves towards no net loss of biodiversity, regulation is essential to create a sufficient business case and to ensure that conditions are in place for markets to flourish. Monitoring and enforcement are also essential to ensure that commitments are met and that appropriate management remains in place. Review of relevant law and policy in England suggests that biodiversity offsets are unlikely to be implemented to any great extent under current EU law and associated regulations, particularly for biodiversity which is not designated or protected at European level. Further, the ‘Biodiversity Duty’ is open to interpretation with respect to requirements for enhancement and, in particular, with respect to requirements to compensate for residual adverse effects of any given development proposal. Under the current system in England, some offsets have been implemented, but there is no NEE 0801 Final Report: April 2009 3 Scoping Study for the Design and Use of Biodiversity Offsets in an English Context consistency in requirement or approach. So far, offsets have only occasionally been used for ‘wider biodiversity’ – i.e. for the full range of biodiversity components (beyond listed species and habitats) that comprise the richness of English wildlife and which are increasingly lost to cumulative impacts and fragmentation of habitat. It would be useful to instigate further systematic research on current and likely future interpretations of the Biodiversity Duty by UK local authorities and the extent to which they are likely to require biodiversity offsets from developers as part of the mitigation hierarchy. Such research could also identify examples of good practice. There are several reasons why biodiversity offsets should be given further consideration in an English context, including: 1. The urgent need to develop new mechanisms to arrest biodiversity decline. 2. The fact that there are many hidden environmental costs to development and it is appropriate that some of these should be offset. 3. The need to streamline the planning system for large infrastructure projects without detriment to the country’s biodiversity. 4. The fact that it might be possible to catalyse a market for enhanced biodiversity. 5. The need for clarity in terms of developers’ obligations with respect to biodiversity. The current situation in England is considered to lend itself quite well to further development of offsets for the following reasons: 1. The UK Biodiversity Action Plan approach lends itself to targeted management which is tailored to individual habitat types and species and these are a potential basis for defining biodiversity credits which could be traded. 2. There are comprehensive systems of data management and mapping in place which could be developed and adapted to meet the requirements of an offset scheme without major modification. 3. The planning system already allows for developer contributions and combines national, regional and local perspectives and priorities (as required for implementation of the UK Biodiversity Action Plan). 4. Existing agri-environment schemes have created a precedent for individual landowners to manage their land for conservation benefit and there are tried and tested administrative procedures in place. 5. Many local authorities are drastically under-resourced at present with respect to the Biodiversity Duty under NERC and would benefit from increased investment to address hidden costs of development. The development of a biodiversity offset scheme for England would require further investigation of certain key issues. The principal question is whether additional law and policy would be required in order to ensure a regular, consistent integration of a ‘no net loss of biodiversity’ requirement into development proposals, or whether this could be accomplished with the current regulatory framework if supplemented by new, clearer guidance. The authors of this report have inadequate data on planning authorities’ practice and intent, England-wide, to offer an unambiguous answer to this question. However, most biodiversity offset policies (for instance, in the United States, Australia and South Africa) are less equivocal concerning the regulatory requirement for no net loss of ‘wider biodiversity’ than relevant English policy. Working within the current policy framework of the EU Directives, implementing regulations and associated UK legislation, however, a step towards achieving ‘no net loss’ of biodiversity could be taken simply by offering clearer guidance on when biodiversity NEE 0801 Final Report: April 2009 4 Scoping Study for the Design and Use of Biodiversity Offsets in an English Context offsets are appropriate and expected, how to determine their nature, scope, scale and location and the delivery mechanisms involved. There is currently no system in place to trade biodiversity credits or to operate mitigation or conservation banks in the UK. Either or both of these mechanisms offer potential in the English context and merit further, more detailed consideration. Their overall costs and benefits are not straightforward to assess, however, and different ecological equivalence requirements would have a significant bearing on the scale and liquidity of any resulting market in biodiversity credits. Whereas a ton of carbon is the same wherever it is captured or emitted in the world, biodiversity is heterogeneous and varies considerably depending on its spatial