Anne-Charlotte Vais­sière and Harol Lev­rel have pub­lished a new paper enti­tled “Bio­di­ver­sity off­set mar­kets: What are they really? An empir­i­cal approach to wet­land mit­i­ga­tion bank­ing” in Eco­log­i­cal Eco­nom­ics (Vol­ume 110, Feb­ru­ary 2015, Pages 81–88). Read more on the Jour­nal web­site (pay-walled). For more infor­ma­tion see also a related dis­cus­sion on LinkedIn (in the Bio­di­ver­sity Pro­fes­sion­als Group, you need to become mem­ber of the group to join the dis­cus­sion) and the authors’ con­clu­sions below.

Con­clu­sions

The goal of this paper was to inves­ti­gate the “mar­ket” nature of wet­land mit­i­ga­tion bank­ing. By study­ing a total of 16 cri­te­ria from three com­ple­men­tary approaches, the paper shows that the mit­i­ga­tion bank­ing sys­tem is akin in some respects to a mar­ket but that it is actu­ally a hybrid form halfway between mar­ket and hier­ar­chy. The mar­ket char­ac­ter­is­tics of the mit­i­ga­tion bank­ing sys­tem allow a cer­tain degree of auton­omy and self-adjustment between devel­op­ers and mit­i­ga­tion bankers, once the num­ber of allo­cated or required cred­its has been deter­mined by reg­u­la­tors. Issues of bio­di­ver­sity con­ser­va­tion have led the reg­u­la­tors respon­si­ble for the imple­men­ta­tion of the wet­land mit­i­ga­tion bank­ing sys­tem to take into account the com­plex­ity and geo­graphic speci­ficity of aquatic ecosys­tems. This means that there are mul­ti­ple mar­kets for wet­land off­sets, both geo­graph­i­cally (ser­vice areas) and in the types of traded goods (cred­its). Thus, we con­clude that the mit­i­ga­tion bank­ing sys­tem can­not be com­pared with a global mar­ket such as carbon.

Over­sim­pli­fy­ing the nature of the mit­i­ga­tion bank­ing sys­tem as a “mar­ket” has led to exces­sive crit­i­cism of this bio­di­ver­sity off­set. For instance, Walker et al. (2009) crit­i­cizes mar­kets ded­i­cated to nature as com­mod­i­fi­ca­tion devices, while Robert­son (2004) describes mit­i­ga­tion bank­ing as a risky neolib­eral approach to envi­ron­men­tal governance.

How­ever, these two papers do not pro­vide empir­i­cal evi­dence for these claims. More recent papers have given some empir­i­cal details to clar­ify the risks of this sys­tem (Ben­Dor et al., 2011; Robert­son and Hay­den, 2008; Robert­son, 2009). The present paper should help to iden­tify theop­por­tu­ni­ties and the risks of the mit­i­ga­tion bank­ing sys­tem using rec­og­nized the­o­ret­i­cal frame­works, such as the fea­tures of hybrid forms as given by the new insti­tu­tional eco­nom­ics framework.