The State of Biodiversity Mitigation 2017 report reviews the scale, scope, and performance of a new class of policy mechanisms, biodiversity offsets and compensation, that use market instruments to respond to negative impacts of infrastructure development. Proud to say my ex-colleague Divya Narain has contributed to this report, someone who I had the pleasure assisting in creating a course on Biodiversity Impact Assessment.
To better understand the report and its scope, it’s important to understand the following concepts, which I’m going to cherry pick out of its glossary:
Offsets and compensation: In this report, this phrase is used as an umbrella term for the three main mitigation types (permittee-responsible offsets, financial compensation, and mitigation banking) that may be used as the final step of the mitigation hierarchy ( will come to ‘mitigation hierarchy’ just after we finish learning about these three terminologies) to address residual negative impacts.
Permittee-responsible offset: “Do-it-yourself” offsetting conducted by the developer or a subcontractor (as opposed to a third party). Permittee-responsible offsets are typically conducted concurrently with the development project or projects resulting in negative residual impacts, unless advance offsets are used (see “Advance offsets”
Advance offsets: Offsets developed for future use, transfer, or sale, typically in anticipation of mitigation requirements from one or more development projects.
Financial compensation: A third-party mechanism that collects and administers fees from developers to make a contribution towards offsetting their impacts to biodiversity. The money may go directly towards compensating biodiversity loss or to more indirect biodiversity-related projects (i.e., funding protected area management or research). In the United States, also known as “In-lieu fee mitigation.”
Mitigation bank: A site, or suite of sites, where resources (e.g., wetlands, streams, habitat, species) are restored, established, enhanced, and/or preserved for the purpose of providing compensatory mitigation for future impacts. In general, a mitigation bank sells compensatory mitigation credits to developers whose obligation to provide compensatory mitigation is then transferred to the mitigation bank sponsor. Also referred to as a “habitat bank” or “species bank.” In contrast to mitigation banks, advance offsets are generally developed by the impacting party themselves rather than a third party.
We now come to Mitigation Hierarchy. Understanding what this is will help us understand what exactly we are trying to do with offsets and mitigation. Mitigation Hierarchy is a process for managing negative impacts of a development project in order to achieve no net loss of biodiversity or net gain. The mitigation hierarchy consists of four sequential steps:
- offset/compensate – last resort.
This I feel is a good foundation for us to delve into the findings of the report. Following are the few of the findings from the report:
- $4.8B went into in mitigation bank credits and financial compensation was transacted in 2016, more than double since 2011.
- Globally, 99 regulatory programs in 33 countries used compensatory mitigation to achieve biodiversity conservation goals in 2016.
- Permittee-responsible offsets are still the only option for compensatory mitigation in many countries. These offsets typically operate with far less public transparency than banking or financial compensation, and often enjoy lower standards set by regulators in terms of public notice during project design or reporting later on implementation and long-term outcomes. Mitigation banking primarily operates in only a few countries (US, Australia, Canada, Germany, France).
I’ve lived in three countries so far so here’s a bit about them:
India has the largest compensation program in the world according to this report, however to my surprise it has not really spent a lot of its funds. To fasten the process, a new Act and a committee was established in 2016.
USA is still trying to figure out the Trump Effect on this.
The place where I live there is a British Columbia Environmental Mitigation Policy, that offers Permittee responsible offsets and Financial compensation, but not Mitigation banking. Plus a lot of other places in Canada have similar policies.
You may now enjoy the full report here for a full learning experience!