Abstract
Although many countries have included biodiversity offsetting (BO) requirements in their environmental regulations over the past four decades, this mechanism has recently been the object of renewed political interest. Incorporated into the mitigation hierarchy in three steps aimed at avoiding, reducing and offsetting residual impacts on biodiversity arising from development projects, BO is promoted as the way to achieve the political goal of No Net Loss of biodiversity (NNL). The recent success of BO is mainly based on its ability to provide economic incentives for biodiversity conservation. However, the diversity of BO mechanisms (direct offsets, banking mechanism and offsetting funds) and the various institutional frameworks within which they are applied generate substantial confusion about their economic and ecological implications. In this article, we first analyze the rationale for the BO approach from the welfare and ecological economics. We show that both these frameworks support the use of BO to address environmental externalities, but that they differ in how they consider the substitutability issue and levels of sustainability with regard to natural and manufactured capital, and in how they address ecological concerns. We then examine the economic and ecological performance criteria of BO from conceptual and empirical perspectives. We highlight that the three BO mechanisms involve different economic and ecological logics and inherent benefits, but also potential risks in meeting biodiversity conservation targets. We lastly investigate the ecological constraints with respect to the BO practice, and economic and organizational limitations of the BO system that may impede achievement of NNL goals. We then reveal the existence of a tension between the economic and ecological rationales in conducting BO that requires making choices about the NNL policy objectives. Finally, this article questions the place of BO in conservation policies and discusses the trade-off between political will and ecological opportunities involved in the BO approach.
Highlights
Over the last two decades, environmental policies have increasingly used economic incentives for biodiversity conservation as more efficient ways of achieving conservation outcomes than traditional approaches [1]
We reveal the existence of a tension between the economic and ecological rationales in conducting biodiversity offsetting (BO) that requires making choices about the No Net Loss of biodiversity (NNL)
The first objective of this paper was to clarify the economic background to the BO approach to biodiversity conservation
Summary
Over the last two decades, environmental policies have increasingly used economic incentives for biodiversity conservation as more efficient ways of achieving conservation outcomes than traditional approaches [1]. The BO principle encompasses three main mechanisms: (1) direct offsets, requiring developers to carry out compensatory measures themselves through restoration actions or acquisitions of natural areas in which appropriate conservation plans are implemented; (2) the banking mechanism, whereby a third party called a bank operator implements larger restoration projects ahead of future impacts, generating thereby offsetting credits for future needs of developers; and (3) offsetting funds, organized by certain environmental organizations (public agencies or non-governmental conservation organizations) in order to collect money from developers to carry out restoration actions or conservation projects [7] How these different mechanisms are used and regulated depends on the legislation and the institutional environments of each country [8]. The economic rationale behind the BO scheme has raised major concerns with both academics and conservationists especially with respect to ecological goals This approach gives rise to a commodification of biodiversity that tends to jeopardize biodiversity conservation instead of ensuring it [9,13]. In the third part of this article, we discuss the main economic and ecological structural limitations and challenges of the BO approach when it comes to meeting biodiversity conservation objectives
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