Review Biodiversity offsets in theory and practice J OSEPH W. B ULL,K.BLAKE S UTTLE,ASCELIN G ORDON,NAVINDER J. S INGH Q1 and E . J . M ILNER-GULLAND Abstract Biodiversity offsets are an increasingly popular Introduction yet controversial tool in conservation. Their popularity lies in their potential to meet the objectives of biodiversity he conservation of global biodiversity alongside conservation and of economic development in tandem; Teconomic development is a key challenge for the the controversy lies in the need to accept ecological losses 21st century. Human societies depend on diverse, fun- in return for uncertain gains. The offsetting approach is ctioning ecosystems in innumerable ways that are not being widely adopted, even though its methodologies fully understood (Lubchenco, 1997), yet there are few and the overriding conceptual framework are still under mechanisms that facilitate the accounting of biodiversity development. This review of biodiversity offsetting evaluates within development activities. Consequently, con- ff implementation to date and synthesizes outstanding theor- servation concerns are ine ectively integrated into de- etical and practical problems. We begin by outlining the velopment and risk being perceived as incompatible ff ff criteria that make biodiversity offsets unique and then with economic growth. Biodiversity o sets o er an explore the suite of conceptual challenges arising from approach that links conservation with industry, potentially these criteria and indicate potential design solutions. We providing improved ecological outcomes along with find that biodiversity offset schemes have been inconsistent development. in meeting conservation objectives because of the challenge Legislation mandating compensatory biodiversity ff of ensuring full compliance and effective monitoring conservation mechanisms (including o sets) exists in and because of conceptual flaws in the approach itself. 45 countries and is under development in another ff Evidence to support this conclusion comes primarily from 27 (Madsen et al., 2011). Voluntary o sets, meanwhile, ff developed countries, although offsets are increasingly being although not legally required, o er a number of potential implemented in the developing world. We are at a critical attractions to developers, as discussed in TEEB (2010) and stage: biodiversity offsets risk becoming responses to ten Kate et al. (2004). Consequently, there has been ff immediate development and conservation needs without a proliferation of voluntary o sets in recent years. ff an overriding conceptual framework to provide guidance From a conservation perspective, biodiversity o sets and evaluation criteria. We clarify the meaning of the may present a conceptually attractive approach (Gibbons term biodiversity offset and propose a framework that & Lindenmayer, 2007; Bekessy et al., 2010). However, integrates the consideration of theoretical and practical substantial problems exist with the perception, design and ff fi challenges in the offset process. We also propose a research implementation of o sets. In this review, we rst discuss ff agenda for specific topics around metrics, baselines and the use of the term biodiversity o set, and ambiguities fi uncertainty. surrounding the way it is de ned. We bring together and discuss the disparate theoretical problems identified in the Keywords Compensation, habitat banking, mitigation, literature, which need addressing for biodiversity offsets no net loss, offsets, restoration to attain their potential (we define ‘theoretical’ to mean pro- blems that could in principle be resolved through improved scientific understanding). This leads to a discussion of the JOSEPH W. BULL (Corresponding author) and E. J. Milner-Gulland Department practical challenges that have arisen from the implemen- of Life Sciences, Imperial College London, Silwood Park Campus, Buckhurst Rd, tation of offset schemes; i.e. those that could be addressed Ascot, Berkshire, SL5 7PY, UK. E-mail [email protected] through better governance and existing science. Whereas K. BLAKE SUTTLE Department of Life Sciences and Grantham Institute for practical challenges have also been discussed in the Climate Change Research, Imperial College London, London, UK literature, we bring them together for elaboration, and also ASCELIN GORDON School of Global, Urban and Social Studies, RMIT University for the first time combine empirical estimates of implemen- NAVINDER J. SINGH Department of Wildlife, Fish, and Environmental Studies, tation success from different national offset policies. Faculty of Forest Sciences, Swedish University of Agricultural Sciences, Umeå, Sweden Finally, we propose how these problems could be integrated ff Received 6 August 2012. Revision requested 18 October 2012. to allow the development of o set methodologies in a more Accepted 22 November 2012. systematic way. © 2013 Fauna & Flora International, Oryx, 0(0), 1–12 doi:10.1017/S003060531200172X 2 J. W. Bull et al. seeking to compensate for unavoidable damage, after having applied some form of mitigation hierarchy (Kiesecker et al., 2010). This might require, for example, that developers ‘avoid, minimize and rehabilitate’ any biodiversity impacts as far as possible, before offsets are then applied to residual impacts (BBOP, 2012). A distinguishing characteristic of biodiversity offsetting is the common inclusion of a ‘no net loss’ requirement (Fig. 1). An alternative interpretation of this stipulation is to say that offset policies require in- kind compensation that balances biodiversity losses. Some mechanisms go further, aiming for a ‘net gain’ in biodiversity. All such outcomes are pursued by quantifying residual ecological impacts arising from development, and creating equivalent biodiversity components elsewhere (BBOP, 2009a). In reality, phrases such as ‘no net loss’ and ‘in-kind compensation’ have different meanings for different stakeholders, and offset schemes consequently FIG. 1 Schematic of the offsetting principle for development vary significantly in their objectives, methodologies and impacts. A development that will damage biodiversity is delivery. contemplated (top left). Potential options are: (1) development Offsets is a term given to a family of related policies, also only, resulting in net loss (−) of biodiversity; (2) protect existing known as compensatory habitat creation (Morris et al., biodiversity elsewhere, resulting in a compensated net loss 2006), mitigation banks (Gibbons & Lindenmayer, 2007) (large − and smaller +); or (3) create or restore additional comparable biodiversity elsewhere, resulting in no net loss, conservation banking, habitat credit trading, complemen- i.e. a biodiversity offset (− and + same size). tary remediation, and more (Madsen et al., 2011). Offset ‘banks’ are essentially where providers have created offset project/s in exchange for biodiversity credits, which can What is a biodiversity offset? subsequently be sold to compensate for developments with comparable residual ecological impacts. The concept of One definition of biodiversity offsets (‘offsets’) is given utilizing a banking mechanism for offset schemes predates by the Business and Biodiversity Offsets Programme, an the concept of offsets itself by 10 years (Environmental international collaboration for the development of offset Law Institute, 2002). The Business and Biodiversity methodologies. Guidance from this Programme is widely Offsets Programme guidance further characterizes offsets cited in the literature, providing a useful basis for discussing as primarily one-off conservation projects tied to a given offsets. The Programme’s definition states ‘Biodiversity development, that specifically require: ‘measurable con- offsets are measurable conservation outcomes resulting servation gains, deliberately achieved to balance any from actions designed to compensate for significant residual significant biodiversity losses that cannot be countered by adverse biodiversity impacts arising from project de- avoiding or minimizing impacts from the start, or restoring velopment after appropriate prevention and mitigation the damage done’, and ‘no net loss of biodiversity from the measures have been taken. The goal of biodiversity offsets perspective of all relevant stakeholders’ (BBOP, 2009a). is to achieve no net loss and preferably a net gain of Offsets are often considered a market-based instrument biodiversity on the ground with respect to species for conservation of biodiversity, enabling a ‘baseline and composition, habitat structure, ecosystem function and credit’ market (eftec et al., 2010; Parker & Cranford, 2010; people’s use and cultural values associated with biodiversity’ Wissel & Wätzold, 2010) for the trade of biodiversity ‘value’. (BBOP, 2009a). These documents provide one interpret- Systems such as Wetland Banking in the USA (US NRC, ation of biodiversity offsets, and the term offset actually 2001) and BioBanking in Australia (DECCW, 2009) encompasses a range of mechanisms. Note that, unless specifically create markets for biodiversity credits. But the otherwise stated, we use the term ‘biodiversity’ in the impossibility of defining a consistent, fungible unit that broadest sense (i.e. total biotic variation, from the level of comprehensively captures biodiversity (Purvis & Hector, genes to ecosystems). 2000) means that biodiversity itself is not a tradable market In line with the Business and Biodiversity Offsets commodity (Salzman & Ruhl, 2000; Walker et al., 2009), Programme definition, offsets are commonly viewed as hence the need for proxies