Biodiversity offsetting

The mitigation hierarchy serves to meet the environmental policy principle of "No Net Loss" of biodiversity alongside development.

[1][2] Individuals or companies involved in arranging biodiversity offsets will use quantitative measures to determine the amount, type and quality of habitat that is likely to be affected by a proposed project.

[10] The term compensation is generally used more broadly in English to describe measures to counterbalance damages to biodiversity caused by development projects.

However, also viable are so-called "averted loss" biodiversity offsets, in which measures are taken to prevent ecological degradation from occurring where it almost certainly would have happened otherwise.

For instance, if a developer funds ecological conservation research in a region that they are impacting through a project, would not count as an offset (unless it could be shown quantitatively how specific fauna and flora would benefit).

Under many offset systems, receptor sites are areas of land put forward by companies or individuals looking to receive payment in return for creating (or restoring) biodiversity habitats on their property.

The official guidelines on offsetting published by the SEIA (National Environmental Impact Assessment System,Spanish: Sistema Nacional de Evaluación de Impacto Ambiental) in 2015[25] require an objective of "no net loss" of biodiversity and ecosystem functionality, also requiring offsets to be based on principles of additionality, ecological equivalence, and compliance with the mitigation hierarchy.

[29] With the aim of reversing the habitat destruction caused by rapid expansion of infrastructure, the Chinese Government first launched its eco-compensation scheme between the late 1990s and early 2000s.

The forestry vegetation restoration fee (FVRF) (simplified Chinese: 森林植被恢复费) was the earliest ecological compensation mechanism developed in China[28] and widely regarded as China's principal "no net loss" (NNL) instrument because it incorporates a legal commitment to no net loss of forest cover.

[28] This means that developments (such as mining operations) occupying forest land with approval from the National Forestry and Grassland Administration should pay fees to restore this vegetation.

[31] FVRFs were launched in 1998 as part of China's first Forestry Law, which established "a compensation fund for the benefit of the forest ecology".

[30] On the other hand, government participation is also regarded as important in developing countries to ensure that biodiversity offset projects operate smoothly.

[38] Section 404 of the Clean Water Act forms the legal basis of wetland mitigation banking in the United States, administered by the US Army Corps of Engineers and overseen by the Environmental Protection Agency.

[42] For example, potential adverse impacts on biodiversity where world heritage properties, wetlands of international importance under the Ramsar convention, and listed threatened species are concerned.

[41] Offsets are applied to nearly 80% of approved actions in Australia under the legal conditions of the EPBC Act, according to a report by the Australian National Audit Office in 2020.

[47] In response to the recommendation, the 'National Biodiversity Offset Guideline' was released by the Ministry of Forestry, Fisheries & the Environment[46] to guide the implementation of EIAR and NEMA.

However, if a project proposal is deemed to be fatally flawed (it has a major defect that should result in its rejection) through its impact on biodiversity, this means that offsets cannot be applied.

[50] The Act requires biodiversity offsets to be designed to address residual impacts, achieve measurable conservation outcomes, and adhere to the "like-for-like or better" principle.

[54] Developers are also required to monitor projects to ensure that mitigation measures are effective and that offsets achieve NNL, as part of the Act.

This was criticised for its impacts on biodiversity, the tourism industry that relied on recreational activities there, and because Bujagali Falls had spiritual importance for local people.

[64] In April 2012, the Department for Environment, Food, and Rural Affairs (Defra) launched a voluntary biodiversity offsetting pilot scheme.

[65] Developers in pilot areas were required to provide compensation for biodiversity loss under planning policy and were able to choose offsetting to do so.

However, the scheme also drew criticism from Friends of the Earth who described it as a “licence to destroy”[67] and the possibility of like-for-like compensation of biodiversity loss has been questioned.

[68] Consultation from environment, planning, land management, academic, and development sectors led to numerous updated biodiversity metrics over a period of several years.

The Government announced plans to mandate a biodiversity net gain policy in England in March 2019, as part of an Environment Bill that would require 'developers to ensure habitats for wildlife are enhanced and left in a measurably better state than they were pre-development’.

This delay was criticised by environmentalists, including The Wildlife Trusts, who called it “another hammer blow for nature.”[71] In response to these criticisms, a government spokesman reaffirmed the government’s commitment to BNG, saying that “we are fully committed to biodiversity net gain which will have benefits for people and nature.”[71] Biodiversity is increasingly seen as having economic value[72] due to growing recognition of the world's finite natural resources and through the benefits of ecosystem services (nature providing clean air, food and water, natural flood defences, pollination services and recreation opportunity).

[75] The schemes proposed for the UK have been regarded as failing to protect biodiversity and indeed leading to further losses in the prioritisation of development over conservation.

[80] The need to address this decline acted as a motivation for creating a system within the planning process that tackles unavoidable and residual impacts to biodiversity.

[85] For example, some of these challenges include: application of the mitigation hierarchy in practice, monitoring and evaluation programmes to track whether offsets are meeting targets, and the metrics used as a proxy for biodiversity losses and gains.

[90] A similar view is taken by the environmental organisation Friends of the Earth, who oppose the use of biodiversity offsets and have expressed concern at the use of measurable units to value nature.