Compensation ratios needed to offset timing effects of losses and gains and achieve no net loss of productive capacity of fish habitat

Abstract

Minns' (Can. J. Fish. Aquat. Sci. 54: 2463–2473 (1997)) framework for assessing net change of productive capacity of fish habitats in Canada is expanded to include the effect of timing of losses and gains on cumulative net change. The expansion requires establishment of a reference time frame for assessment. A time frame of twice the project's duration is recommended. Delaying compensation actions while incurring losses early in a project increases the levels of compensation required. The addition of future discounting had much less effect on compensation requirements than the effects resulting from timing differences between losses and compensation. As discounts apply equally to losses and gains, they likely balance out over time. Delays between when habitat alterations occur and when expected productive capacity is attained increase the required compensation. There are advantages to starting compensation efforts early in a development project. A case study of a hypothetical northern diamond mine shows how various components of compensation (replacement, uncertainty, and timing) can be integrated when assessing net change. Consideration of all components of compensation indicates the need for tougher precautionary compensation guidelines with ratios greater than the current 1:1. Values of 2:1 or higher may be necessary to ensure attainment of Canada's guiding policy principle of no net loss.