Early draft on a Typology of Biodiversity Offsets

Inspired by the mul­ti­tude of bio­di­ver­sity off­set­ting approaches world­wide, the inher­ent com­plex­ity of the con­cept of bio­di­ver­sity off­sets and the grow­ing infor­ma­tion over­load,Cascade of Biodiversity Offsets I have been inter­ested in the dis­tinc­tion between reg­u­la­tory and vol­un­tary off­set­ting schemes since 2009. How­ever, as I real­ized, these are not two dis­tinct cat­e­gories (“black and white”) but instead rep­re­sent the two ends of a con­tin­uum. I have made this inter­est­ing field the research sub­ject of my PhD and am work­ing out a typol­ogy of bio­di­ver­sity off­sets with regard to the degree of vol­un­tari­ness. This is an early draft on a Typol­ogy of Bio­di­ver­sity Off­sets.

Typol­ogy of Bio­di­ver­sity Off­sets between two poles: Manda­tory Bio­di­ver­sity Off­sets vs. Vol­un­tary Bio­di­ver­sity Offsets

A gen­eral dis­tinc­tion can be made between two types of off­sets (as out­lined in the research pro­posal): on the one hand Manda­tory Bio­di­ver­sity Off­sets are required by legal and plan­ning pro­vi­sions and on the other hand Vol­un­tary Bio­di­ver­sity Off­sets can either exceed these require­ments or exist com­pletely inde­pen­dent from them. [Darbi 2010a and b] This dis­tinc­tion of two kinds of bio­di­ver­sity off­sets is under­lined by BBOP as fol­lows: (a) Vol­un­tary bio­di­ver­sity off­sets, which a devel­oper under­takes in cir­cum­stances where there is no legal require­ment to do so, because it per­ceives a busi­ness advan­tage (such as license to oper­ate, rep­u­ta­tional ben­e­fits, com­pet­i­tive advan­tage, mar­ket share, etc); or (b) Reg­u­la­tory bio­di­ver­sity off­sets, which are required by law. [BBOP Sec­re­tariat 2010]

Fig­ure 1 illus­trates in which cases Vol­un­tary Bio­di­ver­sity Off­sets may emerge. They are espe­cially impor­tant where the legal basis and gen­eral guid­ance are lack­ing. How­ever, Vol­un­tary Bio­di­ver­sity Off­sets have also been noted as com­ple­ments to manda­tory approaches in some cases.

Mandatory and Voluntary Biodiversity Offsets

Fig. 1: Manda­tory Bio­di­ver­sity Off­sets and Vol­un­tary Bio­di­ver­sity Off­sets [Darbi 2010a and b]

Typol­ogy of Bio­di­ver­sity Off­sets in a con­tin­uum: cas­cade of Bio­di­ver­sity Offsets

How­ever, the dis­tinc­tion into two cat­e­gories is rather sim­pli­fied and doesn’t rep­re­sent the actual prac­tice. Instead, there is a whole range of bio­di­ver­sity off­sets between two poles: a high degree of reg­u­la­tions on the one side and a high vol­un­tary engage­ment on the other. There­fore, in order to under­stand why bio­di­ver­sity off­sets are imple­mented a num­ber of ques­tions need to be asked. Fig­ure 2 sug­gests a cas­cade of four ques­tions lead­ing to a set of four bio­di­ver­sity off­set cat­e­gories (to be exam­ined and fur­ther supplemented):

  • Case 1 Reg­u­la­tory bio­di­ver­sity off­sets: The ques­tion whether a legal require­ment to off­set exists is alone not suf­fi­cient. As has been seen manda­tory or “reg­u­la­tory” bio­di­ver­sity off­sets only exist if there is law enforcement.
  • Case 2 Con­di­tional bio­di­ver­sity off­sets: Beside the legal oblig­a­tion, there may be other require­ments that, while not being manda­tory, make bio­di­ver­sity off­sets a con­di­tion when the project pro­po­nent wants to obtain for exam­ple finan­cial sup­port (e.g. Per­for­mance Stan­dards 6 of the Inter­na­tional Finance Cor­po­ra­tion IFC). Even though he is not obliged to do so, the project pro­po­nent will have to com­ply with these stan­dards and imple­ment bio­di­ver­sity off­sets (which from a busi­ness point of view usu­ally will be a bet­ter way than los­ing the finan­cial support).
  • Case 3 Enabled bio­di­ver­sity off­sets: Even if there is no kind of legal or other require­ment present there may still be an “offset-friendly” envi­ron­ment. An offset-enabling frame­work may include poli­cies, guide­lines and all forms of incen­tives from pub­lic author­i­ties and civil society.
  • Case 4 Vol­un­tary bio­di­ver­sity off­sets: In con­trast to reg­u­la­tory bio­di­ver­sity off­sets pure vol­un­tary bio­di­ver­sity off­sets emerge and are qual­i­fied as such when nei­ther any forms of require­ments nor incen­tives exist.

Cascade of Biodiversity Offsets

Fig. 2: Cas­cade of bio­di­ver­sity off­sets (draft)

Other aspects for the Typol­ogy of Bio­di­ver­sity Offsets

Nev­er­the­less, the sug­gested clas­si­fi­ca­tion hasn’t taken into con­sid­er­a­tion a num­ber of aspects, in par­tic­u­lar tem­po­ral aspects, the role of stake­hold­ers and the insti­tu­tional con­text and the dis­crep­ancy between the one who is respon­si­ble to off­set and the one who imple­ments bio­di­ver­sity offsets.

With regard to tem­po­ral aspects it is impor­tant to note that off­set­ting schemes usu­ally are dynamic sys­tems that undergo changes. This is in par­tic­u­lar true for vol­un­tary com­pen­sa­tion schemes. This can be illus­trated at the exam­ple of the Malua BioBank in Sabah (Malaysia). Ini­ti­ated as a credit-based vol­un­tary cer­ti­fi­ca­tion sys­tem set up as a coop­er­a­tion of the Forestry Depart­ment, Sabah and (pub­lic author­ity) and New Forests (a pri­vate tim­ber­land invest­ment man­age­ment com­pany with a focus on sus­tain­able forestry and emerg­ing envi­ron­men­tal mar­kets), the biobank now imple­ments bio­di­ver­sity off­sets. To date all is on vol­un­tary basis but estab­lish­ing a manda­tory reg­u­la­tory frame­work is being dis­cussed. A gen­eral rec­om­men­da­tion of a recently held work­shop was to go towards mak­ing off­sets and no net loss manda­tory with a vol­un­tary trial period. [per­sonal com­mu­ni­ca­tion with Fred Kugan and Dar­ius Sar­shar, 2010]

Another Case is that of a gold mine in Ghana (oper­ated by New­mont Min­ing Cor­po­ra­tion). The min­ing com­pany had set out a plan to imple­ment vol­un­tary bio­di­ver­sity off­sets. Through the inclu­sion of this plan in the Envi­ron­men­tal Impact Assess­ment and the approval pro­ce­dure this ini­tial vol­un­tary engage­ment was con­verted into a legal per­mit require­ment. [per­sonal com­mu­ni­ca­tion with Nana Adun­siah, 2010]

Gen­er­ally, in addi­tion to the two cited exam­ples, it is not sel­dom that new off­set reg­u­la­tions emerge or exist­ing ones are enforced. In such cases vol­un­tary bio­di­ver­sity off­sets are likely to be (antic­i­pa­tory) “pre-compliance mea­sures” [per­sonal com­mu­ni­ca­tion with Nathaniel Car­roll, 2010]

 Typol­ogy of Bio­di­ver­sity Off­sets with regard to the mar­ket opportunities

As pre­vi­ously men­tioned there is often a dis­crep­ancy between a project pro­po­nent who is respon­si­ble for the neg­a­tive envi­ron­men­tal impacts of his activ­i­ties and a third party who imple­ments bio­di­ver­sity off­sets (com­pen­sa­tion ser­vices provider). Accord­ing to the “pol­luter pays prin­ci­ple”, gen­er­ally the project pro­po­nent is liable for the dam­ages caused by the project, and has there­fore to put in place appro­pri­ate com­pen­sa­tion mea­sures. Nev­er­the­less, the devel­op­ment and imple­men­ta­tion of off­sets can be car­ried out either on a project-by-project basis, i.e. by the project pro­po­nent pro­vid­ing actions and mea­sures, or devolved to a third party [Escor­cio Bez­erra 2007]. The lat­ter includes mit­i­ga­tion banks (e.g. US Wet­land Mit­i­ga­tion Bank­ing), con­ser­va­tion banks, in-lieu fee arrange­ments, auc­tion and bro­ker­ing schemes (Darbi et al. 2009).

Third party approaches could be sub-divided in bank­ing frame­works and in-lieu arrange­ments. Bank­ing frame­works are those schemes in which entre­pre­neurs, by devel­op­ing their own off­set ini­tia­tives can earn cred­its and then recap­ture their invest­ment by sell­ing these cred­its to project devel­op­ers with off­set oblig­a­tions. [Escor­cio Bez­erra 2007]

This shift of respon­si­bil­ity from the project pro­po­nent to a third party is par­tic­u­larly impor­tant for vol­un­tary bio­di­ver­sity off­sets. A clear dis­tinc­tion between the respon­si­bil­ity and moti­va­tion of the project pro­po­nent on the one side and the com­pen­sa­tion ser­vices provider on the other side has to be made. For com­pen­sa­tion ser­vices providers bio­di­ver­sity off­sets rep­re­sent a mar­ket oppor­tu­nity. Fig­ure 3 illus­trates that the mar­ket secu­rity is higher in reg­u­la­tory bio­di­ver­sity off­set schemes than for vol­un­tary approaches (due to the fact that vol­un­tary bio­di­ver­sity off­sets are often imple­mented on a case-by-case basis and the demand is thus dif­fi­cult to esti­mate in advance).

Market opportunities for Biodiversity Offsets

Fig. 3: Mar­ket oppor­tu­nity for bio­di­ver­sity offsets


BBOP Sec­re­tariat (2010): Bio­di­ver­sity Off­sets: A tool for CBD Par­ties to con­sider and a brief­ing on the Busi­ness and Bio­di­ver­sity Off­sets Pro­gramme (BBOP), Draft, unpublished.

Darbi, M (2010a): Bio­di­ver­sity Off­sets – a tool for envi­ron­men­tal man­age­ment and bio­di­ver­sity con­ser­va­tion. In: In: Sanchez Ben­goa, D.; Pow­ell, D. (Eds.) : TOP Bio­di­ver­sity 2010. Intercollege-Larnaca, Cyprus. Con­fer­ence Pro­ceed­ings. Lar­naca : Intercollege-Larnaca, 2010, S.289–301.

Darbi, M (2010b) Vol­un­tary Bio­di­ver­sity Off­sets: Frei­willige Kom­pen­sa­tion­s­maß­nah­men für Ein­griffe in die Bio­di­ver­sität – eine neue Per­spek­tive für den Erhalt und die Wieder­her­stel­lung der biol­o­gis­chen Vielfalt weltweit und in Deutsch­land? In: Feit, U.; Korn, H. (Bearb.): Tre­ff­punkt Biol­o­gis­che Vielfalt IX — Inter­diszi­plinärer Forschungsaus­tausch im Rah­men des Übereinkom­mens über die biol­o­gis­che Vielfalt. BfN, Bonn. S. 199–204

Darbi, M.; Ohlen­burg, H.; Her­berg, A.; Wende, W., Skam­bracks, D. & Her­bert, M. (2009), Inter­na­tional Approaches to Com­pen­sa­tion for Impacts on Bio­log­i­cal Diver­sity. Final Report. Im Inter­net: http://www.forest-trends.org/biodiversityoffsetprogram/library/new/Bio-kom_Final %20Report_IOER_TUB.pdf.

Escor­cio Bez­erra, L G (2007): Bio­di­ver­sity Off­sets in National (Brazil) and Regional (EU) Manda­tory Arrange­ments: Towards an Inter­na­tional Regime? http://www.forest-trends.org/biodiversityoffsetprogram/library/new/Dissertation%20Biodiversity%20Offsets%20LGB%20IUCN%20BBOP.doc



Early draft on a Typology of Biodiversity Offsets — 1 Comment

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