Abstract
Market-like mechanisms for biodiversity offsetting have emerged globally as supposedly cost-effective approaches for mitigating the impacts of development. In reality, offset buyers have commonly found that required credits are scarce and/or expensive. One response has been to seek improved market functionality, increasing eligible offset supply by allowing greater flexibility in the offset trading rules. These include increasing the size of geographical trading areas and expanding out-of-kind trades (‘geographical’ and ‘ecological’ flexibility). We summarise the arguments for and against flexibility, ultimately arguing that increasing flexibility undermines the achievement of No Net Loss (or Net Gain) of biodiversity where high-quality governance is lacking. We argue expanding out-of-kind trading often increases the pool of potentially eligible offsets with limited conservation justification. This interferes with vital information regarding the scarcity of the impacted biodiversity feature, thereby disincentivising impact avoidance. When a biodiversity feature under threat of development is scarce, expensive offsets are an essential feature of the economics of offsetting which communicate that scarcity, not a problem to be regulated away. We present examples where increasing ecological flexibility may be justifying the loss of conservation priorities. We also discuss how increasing geographical flexibility might compromise the additionality principle. We highlight alternative mechanisms for enhancing offset supply without the risks associated with increasing flexibility, including reducing policy uncertainty and improving engagement and awareness to increase landholder participation. Although there are legitimate reasons for increasing offsetting flexibility in some specific contexts, we argue that the biodiversity risks are considerable, and potentially undermine ‘no net loss’ outcomes.
Highlights
Biodiversity offsets are a globally significant mechanism for recon ciling potential trade-offs between biodiversity and infrastructure expansion or other development projects (Bull and Strange, 2018; Shumway et al, 2018; zu Ermgassen et al, 2019a)
Offsets are conser vation actions taken to compensate fully for the residual biodiversity losses associated with development following the application of a mitigation hierarchy, with the overall aim of achieving No Net Loss (NNL) or Net Gain of biodiversity (Bull et al, 2013a; Gardner et al, 2013)
The ultimate purposes of biodiversity offset regulatory markets are to internalise the value of biodiversity into the land-use planning process and deliver biodiversity gains that fully compensate for losses induced by development activities, in a cost-effective way (Calvet et al, 2015)
Summary
Biodiversity offsets are a globally significant mechanism for recon ciling potential trade-offs between biodiversity and infrastructure expansion or other development projects (Bull and Strange, 2018; Shumway et al, 2018; zu Ermgassen et al, 2019a). The ultimate purposes of biodiversity offset regulatory markets are to internalise the value of biodiversity into the land-use planning process and deliver biodiversity gains that fully compensate for losses induced by development activities, in a cost-effective way (Calvet et al, 2015). Offset policies often compromise on ecological theory in order to satisfy other economic or industry objectives (Calvet et al, 2015) This is risky as there is currently limited information on the actual effectiveness of offsetting schemes at delivering appropriate biodiversity gains (Gibbons et al, 2018; zu Ermgassen et al, 2019b). Recent evidence (outlined below) suggests that several established offset systems have permitted increasing ecological and/or geographical flexibility over time, consistent with non-ecological objectives such as improving the function of offsetting market-like mechanisms through increasing the ease of trades (Needham et al, 2019). In early-stage offset systems where the regulatory architecture is still under development, such as the UK’s Net Gain policy for development activities in England (Defra, 2019), questions surrounding flexibility are fundamental as, once embedded, they determine the future functioning of the policy
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