Biodiversity offsets are not a business — why I don’t think we’ll have a commercial platform for biodiversity offsets somewhere in Europe, soon

This is an opin­ion post by Mar­i­anne Darbi, researcher at Leib­niz Insti­tute of Eco­log­i­cal Urban and Regional Devel­op­ment (Ger­many) and founder of the Bio­di­ver­sity Off­sets Blog. This com­ment is the expres­sion of my own 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 my rea­son­ing), please leave a reply below!

Recently, I have been asked the fol­low­ing ques­tion from one of my new contacts:

Do you think we are some way off being able to pro­vide a com­mer­cial plat­form for bio­di­ver­sity offsets?

market iconThis ques­tion and the way it was framed made be think and wrap up some of my expe­ri­ences and thoughts on bio­di­ver­sity off­sets, so far.

Spoiler alert: In con­clu­sion, I am doubt­ful whether bio­di­ver­sity off­sets will (or can!) suc­cess­fully be deliv­ered via a com­mer­cial plat­form, i.e. a mar­ket based approach in the near future. Read below, why I think so.

Bio­di­ver­sity off­sets aren’t the same everywhere

Com­ing back to the ques­tion, bio­di­ver­sity off­sets are now a global phe­nom­e­non and thus, I’d say, it depends very much on the loca­tion and con­text. Look­ing at the US, the answer is def­i­nitely no. There, off­sets are already deliv­ered via com­mer­cial off­set providers to a large extent. For sev­eral years, it seems like Aus­tralia is on its way, but I am still doubt­ful about a real busi­ness scenario…

For Ger­many or the UK or Europe more gen­er­ally, I don’t see this com­ing — at least not now and not in a real busi­ness dimension!

Besides, it would be nec­es­sary to qual­ify what a “com­mer­cial plat­form” means and what would be the con­se­quences, i.e. whether this would be ben­e­fi­cial (and for whom).

Ger­man expe­ri­ences teaches mar­ket mech­a­nisms are just one tool to deliver off­sets, not so much a busi­ness model on their own

In Ger­many we do have com­pen­sa­tion pools and bank­ing and also “com­pen­sa­tion agen­cies” that pro­vide bio­di­ver­sity off­sets or bio­di­ver­sity cred­its to devel­op­ers, but these are run by a mul­ti­tude of dif­fer­ent actors and there is not a sig­nif­i­cant mar­ket in terms of size and homo­gene­ity (this is what I con­cluded from a study I did in 2009 — there hasn’t changed much since then, note also that impact mit­i­ga­tion is manda­tory since 1976).

I have won­dered why mar­ket based instru­ments don’t play a big­ger role in this for a long time and thought that it would be the next step even for our mature Ger­man sys­tem that this grows broader. But I am not so sure about this any­more. Let me tell you why: Mar­ket mech­a­nisms are just one tool to pro­vide com­pen­sa­tion and they have been used to over­come imple­men­ta­tion deficits and increase effi­cacy and effi­ciency of bio­di­ver­sity off­sets under the Ger­man impact mit­i­ga­tion reg­u­la­tion (IMR). But they are a means not a goal.

The focus is very much on nat­ural com­pen­sa­tion and the best out­comes for nature and land­scape and not so much on busi­ness mod­els and think­ing. This is also backed by the ter­mi­nol­ogy, i.e. the term “habi­tat BANK” isn’t used in Ger­man IMR, instead the term “com­pen­sa­tion pool” (Flächen­pool) is employed.

Seen all the cur­rent cri­tique (and also poor out­comes in some cases) that is maybe an approach to con­sider seriously.

The UK’s in the pilot stage and already faces a lot of “bad publicity”

And for the UK, it seems to be still in the pilot stage and also some polit­i­cal mis­takes and a lot of pro­pa­ganda have more or less labeled bio­di­ver­sity off­sets a “license to trash” (I can’t hear this any­more!) or “greenwashing”.

Sure, the Envi­ron­ment Bank is a com­mer­cial provider that is pio­neer­ing, but it’s still not sure where this leads to in the future — at least not for me…

Now, those are just two of the more promi­nent Euro­pean exam­ples — not to for­get the French exam­ples which have more of a “bank­ing” touch, but not yet the dimen­sion of a mar­ket and the recent enthu­si­asm to intro­duce con­ser­va­tion banks in Spain (see here and here).

Bio­di­ver­sity off­sets are not a business

In total, I admit, I can’t deny my geo­graphic (Ger­many) and dis­ci­pli­nary (land­scape and envi­ron­men­tal plan­ner) ori­gins and would some­how sum up that while there may be a busi­ness case for bio­di­ver­sity off­sets, bio­di­ver­sity off­sets are not a business!


Biodiversity offsets are not a business — why I don’t think we’ll have a commercial platform for biodiversity offsets somewhere in Europe, soon — 2 Comments

  1. I agree with much of what Mar­i­anne has to say on the sub­ject of bio­di­ver­sity off­sets, indeed nat­ural cap­i­tal off­sets over­all but would go fur­ther. Nature is not a busi­ness, it is a life-support sys­tem. I think that eco­log­i­cal off­sets are going to have to be and mean the same things to every­one every­where if we are to keep life on earth sus­tain­able. A key fea­ture of areas which are des­ig­nated off­sets after their cre­ation or restora­tion is the need to hold them in the pub­lic trust per­ma­nently, i.e., as long as the losses being off­set per­sist. Off­set bank­ing is a good idea but again it should be non-profit and any assets held in the pub­lic trust (e.g.,governments, con­ser­van­cies, pub­lic trusts). In other spheres, laissez-faire cap­i­tal­ism has been shown to be wholly insuf­fi­cient to human needs and, hence, there is lit­tle to rec­om­mend in the record of com­mer­cial bank­ing as a basis for man­age­ment of nat­ural cap­i­tal offsetting.

    • Thanks, Ken, for your thoughts and addi­tional under­pin­ning of my rea­son­ing. From my expe­ri­ence here in Ger­many I can con­firm espe­cially your point on ensur­ing the per­pe­tu­ity of off­sets, i.e. in the legal dis­cus­sion even the the­o­ret­i­cal pos­si­bil­ity that a pri­vate off­set provider might go bank­rupt and the off­set is not backed is con­sid­ered a no go. This has led to con­struc­tions where the land is put in pub­lic or other non profit trust, e.g. of a pub­lic nature con­ser­va­tion foun­da­tion. Some might con­sider this overly bureau­cratic, but some­one who is well mean­ing would admit that off­sets can’t be sim­ple to be effec­tive, so we’ll prob­a­bly have to deal with this.

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