This is a guest post by Divya Narain, Learn­ing man­ager at Envi­ron­men­tal Man­age­ment Cen­ter in Mum­bai, India.

This com­ment has pre­vi­ously been pub­lished on Divya’s Blog. It is the expres­sion of the author’s thoughts and expe­ri­ences and as such is acknowl­edged as a fruit­ful con­tri­bu­tion to the dis­cus­sion on bio­di­ver­sity off­sets. If you want to react or clar­ify your own posi­tion (under­pin or dis­prove Megan’s rea­son­ing), please leave a reply below!

More than three years ago, I wrote a pol­icy paper explor­ing the busi­ness case for bio­di­ver­sity off­sets in India. Since then, the inter­na­tional dis­course on bio­di­ver­sity off­sets has evolved at a fever­ish pace. At this point, it is impor­tant to look at the devel­op­ments in pol­icy and prac­tice sur­round­ing bio­di­ver­sity off­sets inter­na­tion­ally and their impli­ca­tions for India.

Bio­di­ver­sity off­sets refer to the gamut of con­ser­va­tion actions (rang­ing from ‘averted loss’ activ­i­ties such as strength­en­ing or expand­ing pro­tected areas and estab­lish­ing cor­ri­dors and buffer zones to more active ‘restora­tion’ inter­ven­tions includ­ing rein­tro­duc­tion of species, removal of inva­sives and improved land man­age­ment prac­tices) that are under­taken to com­pen­sate for the adverse impacts on bio­di­ver­sity of high-footprint devel­op­ment and indus­trial activ­i­ties includ­ing min­ing, oil&gas extrac­tion, con­struc­tion of large-scale (ports, dams, power plants refiner­ies, oil rigs) and lin­ear (roads, rail­ways, pow­er­lines and pipelines) infra­struc­ture. Required by the law in some coun­tries but mostly under­taken vol­un­tar­ily by cor­po­rates, bio­di­ver­sity off­sets are the last-resort option for address­ing unavoid­able impacts, after rea­son­able efforts have been made to avert and mit­i­gate the impact. The objec­tive of the bio­di­ver­sity off­set­ting is often to achieve no net loss (NNL) and some­times even a net gain of bio­di­ver­sity, mea­sured often in terms of species rich­ness, extent of habi­tat and flow of ecosys­tem services.

As per speciesbanking.com (a global infor­ma­tion clear­ing­house for bio­di­ver­sity off­set­ting, com­pen­sa­tion and off­set bank­ing), as many as 45 laws, poli­cies and pro­grams per­tain­ing to bio­di­ver­sity off­set­ting and com­pen­sa­tion are active in coun­tries world­wide and 20 more are under devel­op­ment. More than 86,000 hectares of land has been pur­port­edly con­served or restored through off­set­ting and pay­ments to the tune of USD 1.8 to 2.9 bil­lion are being made annually.

Just as bio­di­ver­sity off­set­ting has found its way into national and state-level leg­is­la­tion, it is also becom­ing an impor­tant pre-condition for inter­na­tional project finance as most major lenders such as the IFC and inter­na­tional pri­vate banks man­date the adher­ence to the mit­i­ga­tion hier­ar­chy. Where it is not man­dated by law or the lend­ing insti­tu­tion, bio­di­ver­sity off­set­ting is being adopted vol­un­tar­ily by busi­nesses as a means to enhance rep­u­ta­tion and gain a social license to operate.

How­ever, no other con­ser­va­tion prin­ci­ple has polar­ized the con­ser­va­tion com­mu­nity as has bio­di­ver­sity off­sets. The pro­po­nents claim that the off­sets allow the inter­nal­iza­tion of the envi­ron­men­tal exter­nal­ity of bio­di­ver­sity impact into devel­op­ment decision-making, argu­ing that some devel­op­ment is inevitable and when imple­mented in accor­dance with best prac­tice bio­di­ver­sity off­sets can lead to real con­ser­va­tion out­comes at the land­scape scale and pro­vide the much-needed pri­vate sec­tor boost to cash-strapped con­ser­va­tion finance. The crit­i­cism is equally con­vinc­ing and scathing – off­set­ting is being seen as a   ‘license to trash’ and an attempt at ‘com­mod­i­fi­ca­tion of nature. As George Mon­biot inci­sively puts it – “It makes nature as fun­gi­ble as every­thing else. No place is val­ued as a place: it is bro­ken down into a list of habi­tats and ani­mals and plants, which could, in the­ory, be shifted some­where else.”

Even if we were to dis­miss the debate as a nat­ural process, the actual exam­ples of bio­di­ver­sity off­sets have met with lim­ited suc­cess. Their on-the-ground imple­men­ta­tion has been fraught with chal­lenges. To cite a review of bio­di­ver­sity case stud­ies by Fern, ‘bio­di­ver­sity off­sets face a num­ber of prob­lems: 1) tech­ni­cal (not being able to effec­tively mea­sure what is lost and gained), 2) gov­er­nance (not enforc­ing the mit­i­ga­tion hier­ar­chy or ade­quate stan­dards and mea­sure­ments, nor penal­is­ing failed projects) 3) socio-geographical per­spec­tive (the local and wider cul­tural value of nature) 4) finan­cial (fun­da­men­tal errors in the mar­ket logic of using ‘price’ to reg­u­late destruc­tion 5) Legal (evi­dence to show that bio­di­ver­sity off­set­ting inter­feres in the inter­pre­ta­tion of envi­ron­men­tal and plan­ning laws and due legal process).’

The bio­di­ver­sity impact com­pen­sa­tion regime in India con­tin­ues to be a rudi­men­tary one – in lieu of diver­sion of for­est land the devel­oper pays to the gov­ern­ment the cost of afforesta­tion of equiv­a­lent area of degraded land (Com­pen­satory Afforesta­tion or CAMPA). In addi­tion the devel­oper also pays an amount equiv­a­lent to the Net Present Value(NPV) of the forest­land which is to be used for ‘nat­ural assisted regen­er­a­tion, for­est man­age­ment and pro­tec­tion, infra­struc­ture devel­op­ment, wildlife pro­tec­tion and man­age­ment, sup­ply of wood and other for­est pro­duce sav­ing devices and other allied activ­i­ties.’ The fact that the even the recently-revised fig­ure of NPV of a hectare of forest­land ranges from a mere Rs 4.38 lakh to Rs 10.43 lakh (6900 USD to 16000 USD) is another dis­cus­sion alto­gether. The com­pen­satory reg­u­la­tion in India is still a long way from the inter­na­tional best prac­tice in off­set­ting. Vol­un­tary off­set­ting is all but non-existing. There is no deny­ing that cor­po­rates do take up afforesta­tion activ­i­ties but is often more as a social respon­si­bil­ity activ­ity than as a com­pen­sa­tion for impacts.

With India being one of the fastest grow­ing economies in the world and with con­flict between devel­op­ment and envi­ron­ment esca­lat­ing, the impact of devel­op­ment on bio­di­ver­sity and its mit­i­ga­tion is set to gain increased promi­nence in envi­ron­men­tal leg­is­la­tion. In fact, the term off­sets has already crept in pol­icy dis­cus­sions. But India will have to be very cau­tious before adopt­ing a pol­icy on off­sets. It will first have to assess whether the present Envi­ron­men­tal Impact Assess­ment mech­a­nism even begins to fol­low the mit­i­ga­tion hier­ar­chy. Envi­ron­men­tal­ists have repeat­edly slammed the EIA process in India as a mere sham. When the first two stages of avoid­ance and mit­i­ga­tion of impact are com­pro­mised, the very pur­pose of off­sets gets defeated.

It’s impor­tant to remem­ber bio­di­ver­sity off­sets come into play only in the case of unavoid­able and resid­ual impacts. Unless it has been deter­mined with­out a shred of doubt that the impact can­not be avoided nor it can be mit­i­gated through the envi­ron­men­tal man­age­ment plan, bio­di­ver­sity off­set­ting will have no mean­ing. Lest we rush into off­sets and it becomes another tool for jus­ti­fy­ing reck­less devel­op­ment, we must tread carefully.