12 November 2014 CASE STUDY REPORT: The use of eco-accounts in Baden- Württemberg to implement the German Impact Mitigation Regulation: A tool to meet EU’s No-Net-Loss requirement? A report authored by: Leonardo Mazza Julia Schiller Funded by: 1 Disclaimer: The arguments expressed in this report are solely those of the authors, and do not reflect the opinion of any other party. The report should be cited as follows: Mazza L., Schiller J. (2014) The use of eco-accounts in Baden-Württemberg to implement the German Impact Mitigation Regulation: A tool to meet EU’s No-Net-Loss requirement? A case study report prepared by IEEP with funding from the Invaluable and OPERAs projects. Corresponding author: Leonardo Mazza Acknowledgements: This work was supported by the ERA-Net BiodivERsA (2011 call for research proposals), with the French funder Agence Nationale de la Recherche (ANR) [grant ANR-11-EBID-0003]. The drafting of this article also benefitted from the research carried out thanks to the FP7 project Operas [grant N. 308393]. We gratefully thank Anne Böhm (LUBW), Dr Elke Bruns (INER) Prof Dr Christian Küpfer (HfWU), Prof Dr Waldenspuhl (FVA), Prof Dr Wolfgang Wende (IÖR) for their support, information and a revision of a first draft of this article and Dr Daniela Russi (IEEP) and Dr Graham Tucker (IEEP) for their review of the draft final report. Many thanks also to all our interviewees. Institute for European Environmental Policy (IEEP) London Office Brussels Office 11 Belgrave Road Quai au Foin, 55 IEEP Offices, Floor 3 Hooikaai 55 London, SW1V 1RB B- 1000 Brussels Tel: +44 (0) 20 7799 2244 Tel: +32 (0) 2738 7482 The Institute for European Environmental Policy (IEEP) is an independent not-for-profit institute. IEEP undertakes work for external sponsors in a range of policy areas as well as engaging in our own research programmes. For further information about IEEP, see our website at www.ieep.eu or contact any staff member. 2 Contents EXECUTIVE SUMMARY ................................................................................................................ ….5 1 BROADER CONTEXT: THE EU POLICY PERSPECTIVE ................................................................... 8 2 ACHIEVING NNL IN PRACTICE: OFFSETTING IMPACTS THROUGH HABITAT BANKING? ............ 10 2.1 Offsets .......................................................................................................................... 10 2.2 Habitat banking ............................................................................................................. 11 3 RESEARCH HYPOTHESIS INVESTIGATED AND RESEARCH METHODOLOGY ............................... 14 3.1 Aim and choice of the case study ................................................................................... 14 3.2 Research hypotheses and methodology ......................................................................... 14 4 OFFSETTING IN GERMANY..................................................................................................... 16 4.1 The German Impact Mitigation Regulation (IMR) ........................................................... 16 4.2 Challenges in implementing the IMR and legal responses .............................................. 17 5 CONTEXT OF THE ECO-ACCOUNTS SCHEMES IN BADEN-WÜRTTEMBERG ............................... 20 5.1 Eco-accounts: Establishment of an enabling legal framework on a regional level ............ 20 5.2 History of the schemes: From the first experiences with eco-accounts under the building law to 2010/2011 eco-accounts under nature conservation law .................................................... 21 6 THE RULES OF THE SCHEMES IN PLACE IN BADEN-WÜRTTEMBERG ........................................ 24 6.1 An overview: Basic principles of the eco-accounts’ functioning ...................................... 24 6.2 Eco-accounts: a voluntary scheme to meet the obligation to compensate impacts ......... 28 6.3 Scope of application of the eco-account schemes .......................................................... 28 6.4 The administration of the eco-account .......................................................................... 31 6.5 Attributing points to compensation measures and residual impacts: the role of evaluation models 32 6.6 Trading of eco-points and financing of eco-account measures ........................................ 36 7 COMPENSATION USING ECO-ACCOUNTS IN PRACTICE ........................................................... 41 7.1 Illustrative case examples .............................................................................................. 41 7.2 Diffusion and use of the two types of eco-accounts in Baden-Württemberg – quantitative insights 46 7.3 Stakeholders involved in the eco-accounts schemes: motivations and views .................. 49 8 ASSESSMENT OF THE ECO-ACCOUNT SCHEMES ..................................................................... 52 8.1 The effect of eco-accounts on the adherence to the mitigation hierarchy ....................... 52 8.2 Verifiability of the quality, additionality and duration of the compensation measures under the eco-account scheme ..................................................................................................... 53 8.3 Financial and ecological effectiveness of compensation measures under the eco-accounts in comparison to traditional impact compensation approaches .................................................... 55 9 CONCLUSIONS ...................................................................................................................... 60 9.1 The performance of the eco-account schemes in Baden-Württemberg ........................... 60 9.2 Conclusions on the potential contribution to implementing the EU NNL principle .......... 63 10 GLOSSARY ............................................................................................................................ 64 3 11 REFERENCES ......................................................................................................................... 67 12 ANNEXES .............................................................................................................................. 75 ANNEX I: LIST OF INTERVIEWEES AND OTHER STAKEHOLDERS CONTACTED ................................... 76 ANNEX II: EXAMPLE OF A QUESTIONNAIRE ................................................................................... 79 ANNEX III: NATURAL REGIONS IN GERMANY ................................................................................. 88 ANNEX IV: COMPARISON BETWEEN THE ECO-ACCOUNT UNDER THE BUILDING LAW AND THE NATURE CONSERVATION LEGISLATION IN BADEN-WÜRTTEMBERG– AN OVERVIEW ...................... 89 ANNEX V: INSTITUTIONAL LANDSCAPE – AN OVERVIEW: ACTORS AND THEIR ROLE IN THE GOVERNANCE OF THE ECO-ACCOUNT SCHEMES ........................................................................... 92 ANNEX VI: EXAMPLE OF A MUNICIPAL EVALUATION MODEL TO ASSESS RESIDUAL IMPACTS AND COMPENSATION MEASURES: BACKGROUND INFORMATION RELATING TO THE EVALUATION PROCEDURE OF THE DISTRICT “SCHWARZWALD-BAAR-KREIS” ...................................................... 94 4 EXECUTIVE SUMMARY The overall aim of this report is to identify and describe lessons that can be learnt from eco-account offsetting1 schemes in Baden-Württemberg in Germany that may support the EU’s intention of developing a policy by 2015 to “ensure no net loss of biodiversity and ecosystem services” (under Action 7 of the EU Biodiversity Strategy). The research aims to verify whether the schemes, which were put in place to implement offsetting requirements under the German Impact Mitigation Regulation (IMR), are effective and consistent with the EU’s no-net-loss (NNL) objective and international offsetting principles. There are two types of eco-accounts in place in Baden-Württemberg. The first eco-accounts schemes to be introduced were set up as a result of 1998 amendments to the Federal Building Code optimising the enforcement and implementation of compensation measures in urban development planning. These introduced spatial flexibility for developers having to carry out compensation measures for their developments. Besides the geographical disconnection between impact and offsetting, a temporal flexibility was introduced for municipalities allowing them to carry out compensation measures before any impact arises. The aforementioned spatial and temporal flexibility created the conditions for the emergence of formalised eco-account schemes under the building law at municipal level. In addition to this first type of eco-accounts, amendments to the Federal Nature Conservation Act in 2002 and 2009 introduced more spatial and temporal flexibility in the implementation of the requirement under the IMR as well as the possibility of “storing” anticipated offsetting measures. Following these amendments Baden-Württemberg, like many other German Laender, adopted implementing acts further specifying the conditions for the establishment of eco-accounts under the Nature Conservation Act. As a result, in Baden-Württemberg, eco-accounts established under the Federal Building Code and those established under the Nature Conservation Act co-exist. The eco-accounts schemes in place in Baden-Württemberg are means to facilitate the offsetting of environmental impacts of developments (including impacts on landscape, soils, water retention, other ecosystem functions / services and biodiversity). They are a form of habitat banking because compensation