Biodiversity offsets
Biodiversity offsets are a form of conditional environmental financing. Like their more well-known cousin, carbon offsets, various parties (e.g. governments, companies or individuals) look to offset the damage they cause in one location by purchasing offset credits from an alternative location.
Biodiversity offsets are created and managed in a biodiversity ‘bank’. This is an area where the land is managed to conserve biodiversity. Typically, in the US context, this is for wetland areas. Project developers wishing to offset the biodiversity impacts of particular projects may then purchase offset credits from the bank. The price of offsets is controlled by market forces – i.e. supply and demand.
The number of biodiversity offsets is set to increase. In addition there are a diverse number of schemes currently in operation – this makes compiling individual profiles difficult. For the time being Shaping Sustainable Markets will provide a general outline of the mechanism type – the interested reader should look to ‘further research’ for details of more specific projects/programmes and case studies.
According to the State of Biodiversity Markets Report (2010) [link given below] there are 39 existing biodiversity offset programmes worldwide (and 25 under development). The global annual market is estimated at US$1.8 – 2.9 billion (though this is likely to be an underestimate as less than 80% of schemes are transparent enough to provide market figures). At least 86,000 hectares per year (globally) are involved in some form of biodiversity offset scheme.
Biodiversity offsets can have various names – including ‘compensatory mitigation programmes’, ‘mitigation or conservation banking’ or ‘BioBanking’. Biodiversity offset schemes are found throughout the world, though they are currently concentrated in the US and Australia.
Variable depending on the scheme. CAn often involve piublic funding from national governments. State (or county) level governments may act as brokers between landowners and project developers as seen in the US and Australia.
Conservation organisations have also become involved in developing and administering biodiversity offset schemes.
Funding can also come from private sources such as landowners who may wish to set up and administer a biodiversity bank to sell offset credits to project developers.
Multilateral organisations such as the European Union (EU) and United Nations Development Programme (UNDP) are increasingly involved in research and development of biodiversity offset schemes.
At present there are no biodiversity offset schemes in Africa, however according to Ecosystem Marketplace there are currently 6 in development.