What Is Biodiversity Offsetting?

Biodiversity Offsetting Policy Brief Policy Brief No. 1

Biodiversity Offsetting in the UK: A Beginner’s Guide

C O N T E N T S : What is Biodiversity Offsetting? What is Biodiversity Offsetting? 1 Biodiversity How does Biodiversity Offsetting offsetting is a work? 1 policy approach Where did the idea come from? 2 that seeks to Biodiversity Offsetting in the UK 2

Biodiversity Offsetting and Habitat minimize the

Banking 4 environmental

Acknowledgements 4 impacts of a

Further reading 4 development project by ensuring that any damage in one place is biodiversity gain to adopted only after compensated for compensate for all measures had somewhere else. residual losses. been taken to avoid and minimize In the UK, Biodiversity development biodiversity offsets offsetting is impacts and to have been defined understood as a rehabilitate or as conservation ‘last resort’ in a restore biodiversity activities that are ‘mitigation on-site. designed to give hierarchy’, to be

How does Biodiversity Offsetting work?

In biodiversity conservation credits. example a number of offsetting, ecological biodiversity ‘units’ in Ecological losses and gains and losses are England. In contrast gains from a represented through with carbon offsetting, development proposal numerical scores setting where measurements are calculated through the base for the creation are based on numerical scores, for and exchange of greenhouse gas Page 2 Biodiversity Offsetting Policy Brief No. 1

greenhouse gas diversity, ecosystem habitat (assessed as low, concentration in the functions or ecosystem medium or high), the atmosphere and the mass services) and there are quality of the habitat

of CO2 emitted, no single academic disputes over (assessed as poor, metric underpins the the suitability of different moderate or good) and discussion on biodiversity metrics, exchange rules the area of the habitats in trading in the ecological and methodologies to hectares. literature. establish equivalence.

It is far from settled In England, the metric

among ecologists what quantified the value of exactly should be habitats on the basis of measured to comprise a three criteria: the metric (e.g. species distinctiveness of the

Where did the idea come from? Biodiversity offsetting than regulation and laws the Endangered Species (also sometimes called to achieve environmental Act. Biodiversity compensatory mitigation, goals. In the USA, offsetting is a part of the mitigation banking, or commercial wetland fundamental shift in the compensatory habitat) mitigation banking, way we think about was developed in the late involving a ‘free market’ nonhuman nature 1980s. It was a fruit of the in wetland ecosystem towards the economic neoliberal turn in services, developed from valuation of ecosystem environmental policy in 1991, and ‘species services and natural the USA in the early banking’ expanded at a capital. 1970s, which sought to similar period driven by

use the market rather

Biodiversity Offsetting in the UK In England, the first creation in biodiversity’. targeted management of explorations of the In 2009, Defra individual habitat types concept of biodiversity commissioned a scoping and species offering a offsetting started under study for the design and basis for defining tradable the Labour government use of biodiversity biodiversity credits. Also, elected in 2007 as part of offsets. At this time, the finance for offsets was a wider discussion on the UK Biodiversity Action needed to address the possibility of ‘market Plan was focusing on

Page 3 Biodiversity Offsetting Policy BriefPage No. 31 needed to address the The 2011 Natural developments, the HS2, drastic under-resourcing Environment White Paper the Thameslink Project, of many local authorities built on the Making Space and the Coventry and with respect to their for Nature Review and Warwickshire Gateway. Biodiversity Duty. announced Defra’s decision to test In 2012, the Environment Biodiversity offsetting biodiversity offsetting in Bank, the first private was also suggested as a selected pilots across the compensation brokering means to achieve habitat country for two years and consultancy company restoration and deliver a (April 2012-April 2014). In in the UK more ‘landscape scale’ 2012, the government (http://www.environment approach to nature launched six voluntary bank.com/about.php), conservation in the 2010 pilot areas in England launched the Making Space for Nature (Devon; Doncaster; Environmental Markets Review. It was suggested Essex; Greater Norwich; Exchange (initially known that biodiversity Nottinghamshire; as Conservation Credits offsetting could Warwickshire, Coventry Exchange). Its goal was to contribute to these goals and Solihull). In these provide a one-stop-shop by pooling a number of areas Local Planning for people to register offsets required for Authorities, and a range their offsetting receptor separate small of other partners sites and have the credit developments into a (including NGOs and value of their site larger habitat block businesses) formed measured. The without imposing various public-private Environment Bank hoped additional burdens on partnerships to pilot that the exchange would developers. voluntary offsetting and pave the way for the creation of a ‘biodiversity The Coalition test the Defra metric. offsetting market’ in the government elected in Simultaneously, UK by providing a 2010 took the view that developers began testing national resource for offsetting could provide a the potential of identifying sites to straightforward approach biodiversity offsetting as receive offset funds and to assessing development a way of mitigating the that in turn a large impacts, creating greater environmental impacts of number of available sites certainty leading offset development projects in ready to sell credits would suppliers to come forward other areas that were not foster companies and and establishing an officially part of the developers to buy offsets market, ultimately pilots, including, the biodiversity credits. increasing the number Lodge Hill and North and quality of bio-diverse Tyneside housing habitats in England. Page 4 Biodiversity Offsetting Policy Brief No. 1

Biodiversity Offsetting and Habitat Banking

The creation of biodiversity credits also enables ‘habitat banking’ (also known as ‘conservation banking’ and ‘biodiversity banking’). In banking, credits are provided by a conservation or mitigation bank, consisting of a site (or a suite of sites) where resources (e.g. habitats, species, wetlands) are restored, established, enhanced and/or preserved. Providers of credits enter an agreement to sell credits to developers to offset impacts on biodiversity that result from their projects. Through banking, biodiversity offsets can be turned into ‘assets’ potentially creating a market for developers’ compensation liabilities. Even though biodiversity offsetting can be exercised without being linked to banking, the two work ideally together. Thus the new EU NNL initiative favors the establishment of biodiversity offsetting in conjunction with banking.

In the UK, habitat banking has yet to be established. Attempts by broker companies to do so are ongoing.

Acknowledgements This Research Brief is an output of the Marie Curie Intra-European Fellowship (PIEF-GA- 2013- 622631) under the 7th European Community Framework Programme entitled ‘Conservation and Ecosystem Services in the New Biodiversity Economy’ (CESINE). http://www.geog.cam.ac.uk/research/projects/biodiversityeconomy/