LTW10 - Biodiversity and Ecosystem Service Conservation
LTW10 - Biodiversity and Ecosystem Service Conservation
3. Market Approach
Market-based approaches have largely failed in the past due to a poor understanding of
faced by land users
The key message of this approach: If you want people to do conservation, pay them
Payment must be in excess of the OC of doing the conservation
Can be done by transfers of money from those who benefit from conservation to those who lose out
They're gaining popularity - e.g. REDD/REDD+
Markets for Environmental Services Today
These payment options can (and normally should) coexist with other schemes
E.g. the payment can act as the carrot, and regulation work can act as the stick
The benefit of environmental conservation policy is that you can often run many schemes in tandem
Example: In 2005, the Rainforest Coalition - a group of 10 tropical developing countries, led by Costa Rica, asked developing countries to purchase carbon credits off them to enable them to preserve their rainforests (
Examples of economics being brought into Conservation Policy include:
The Economics of Ecosystems and Biodiversity (TEEB)
TEEB argues we need to bring economics in to provide a better understanding of the true economic value of biodiversity and ecosystem services, and that we need to create economics tools from this that properly account for the value
UK National Ecosystem Assessment (NEAs)
We need innovative financing MBIs to turn WTP into cash flow
In past 15 years, multi-million dollar markets have opened for carbon, wetlands, water pollution and biodiversity
No single mechanism has emerged as the standard - mix always seems to work better
Most MBMs are still in the pilotting stages, with adaptation to local circumstances, yet to be scaled up
Seen as the carrots to make the sticks of regulation more palatable
PES scheme in Costa Rica
Carbon makes and REDD, REDD+
Eco-labelling and eco-certification
1. Debt-For-Nature Swaps
Established during the 80s
Essentially: Developing countries saddled with huge governmental debts would be offered debt relief in return for the promise of protection of some environmental assets
First Trial: In Bolivia - Seems to be an effective scheme, ticking a lot of target boxes
Typically, an example might be: Bolivia owes the UK $100m of debt - we wipe this debt in return for Bolivia investing $20m of local currency in conservation efforts (WWF, 2002)
It somewhat disappeared for a period, but has reemerged with the Seychelles agreeing a debt-for-nature swap with Leonardo DiCaprio
They have roughly $400m of foreign debt
Leonardo and others purchased $20m of this debt in return for their agreement to protect 1/3 of their water to reverse coral reef damage - note - he is one of 5 investors paying a total of $20m - not paying it all himself
Rules out fishing in areas of high marine biodiversity, such as the Aldabra region, and limits fishing in other areas with "medium protection status", which have been used by commercial fisherman and tour operators for decades
The debt restructuring will effectively funnel a stream of Seychelles repayments into a seperate trust, which will begin investing in schemes to build an environmentally sustainable "blue economy" from April this year
The frist DfN swap was done in Bolivia in 1987, where a conversation group paid off some of the country's debt
This entails trying to get Big Pharma companies to pay to protect areas of rainforest as much of their future medical breakthroughs will likely come from medicines found in nature - they're paying for the
A lot of medical prospecting depends on local knowledge
E.g. in Madagascar, the Rosy Periwinkle was found and is used as a cancer treatment
A well known bio-prospecting contract: Merck-INBio in Costa Rica in 1991
Was an upfront payment of more than £1m for bio-prospecting rights + locals would be given a share of any profits, but ultimately, no discoveries were made
Zebich Knos, 1997
: Even though Costa Rica was generating income for environmental protection from ecotourism, this wasn't enough and it also risked damaging the environment
Replaced traditional mechanisms whereby monetary value is only accurued, if at all, by locals after the samples have proved useful
The reasons for doing this in Costa Rica are first, rich biodiversity (5-7% of world's species), but also due to a solid scientific tradition, adequate technical expertise, and a strong national commitment to education and conservation, and stable democracy, and also good transport infrastructure
argues somewhat more subjectively that it was 'secondary factors' that were important for allowing the deal to go through, i.e. Costa Ricans displayed a sense of orderliness, organisation and trustworthiness necessary for establishing business
The issue with these schemes is that all the deals completed so far place a very low per-hectare value on the rainforests - around $20/ha in Ecuador, $7 in Madagascar, and just $2.1 in Tanzania
3. Payment for Ecosystem Services (PES)
Traditional Model: Deal made between resource user and resource provider
E.g. a farmer can chose to conserve or to transform to pasture - pasture has significant negative externalities
E.g. people downstream face water pollution, the wider community/world faces species loss and GHG emissions
Add up all the benefits to the land owner of conversion to pasture
Add up all the costs to others of conversion to pasture
This total cost is the maximum theoretical WTP of everyone else to STOP the conversion
Then need to calculate the benefit to the land owner of forest conservation
The difference between benefit of pasture and benefit of conservation is equal to the farmer's minimum WTA value to stick with conservation
As long as the total cost is greater than this amount, we should theoretically be able to make monetary transfers to stick with conservation - i.e we need
LEARN HOW TO draw the graphs
as the adding up process described is repeated each year
It's based on the Coase Theorem: when parties can bargain, given well-implemented property rights (and other assumptions e.g. low transaction costs)
two types of PES
Self-organised, private deal
Public payments to farmers e.g. by a government agency - seems somewhat counterintuitive paying farmers to not farm, however, schemes in the past such as the EU set-aside policy in 1988 is an example of where farmers were paid to 'do nothing' - in this case, it was to reduce large food surpluses, however, the same logic applies
Engel et al, 2008
: PES mostly targets private land owners, however, communities who have common property rights over resources, as well as the (land-owning) state can be ES providers
Defines PES as a voluntary transaction where a well-defined Environmental Service (or a land use likely to secure that service) is being 'bought' by one or more ES buyers on the condition that the ES provider secures the ES
The payment is often cash, but could also be benefits in-kind, with a value at least equal to the benefits forgone by the ES providers
This is difficult to implement when there are many people affected by their actions - e.g. GHG emissions affect everyone - how do you then gather the payment?
The services need to be well defined
The property rights need to be well-defined
It's only really possible at a large scale with external coordination e.g. from an NGO or from the Government
Governments needed to (i) establish property rights (ii) facilitate bargaining as many people live too far from the resource, and international transfers are difficult to negotiate (iii) regulate, enable, monitor, enforce - there will often be administrative inefficiency and sometimes corruption
It's efficient, as we only protect what we believe is worth protecting - if there's no conservation value to a land, it won't be protected - not necessarily true - if a scrubland with little conservation value is mined, it can still cause pollution downstream which residents are WTP to stop
It can have the benefit of introducing a cash flow to often very poor resource owners
It's potentially very sustainable - doesn't rely on the whims of donors - it's a solid MBM, fuelled by more reliable self-interest of service users and providers
The need for the services being protected won't go away, thus we could have an indefinite payment scheme
Case Study 1: PES in Costa Rica
: Pago Por Servicios Ambientales
In the late 1980s, only 25% of the forest cover remained in CR
They came up with the international PES scheme in 1997
It would focus on 4 key services:
The government paid forest owners to protect existing forests and reforest other areas, and also to set up agro-forestry
The payments were based on a rate per hectare protected
The most popular contract was forest protection
Payments from the government were raised via a fuel tax (3.5% of the revenue used)
Many private companies also contributed including nations such as Norway who contributed towards carbon sequestration projects
By 2005, 10% of the country was covered by this scheme
Even farmers who weren't planning on cutting down some of their forests were getting paid to not cut it down - this is inefficient - knew it was happening but lack of capacity to monitor meant they went with it
Success has been difficult to measure
: they've used satellite imagery to try and assess levels of forest cover, but with many simultaneous projects in place, it's difficult to identify a causal link
End of 80's forest cover: 25%, 1997: 40%, 2002: 46%
Initial studies weren't very good - they looked at 500km grids and compared forest cover within these - i.e. lack of granularity
A regression analysis found PES covered areas had no more forest cover, however, the 500km sq grids likely hinder this
In the SR there didn't appear to be much effect, but in LR, farmers were found to be progressively abandoning their agricultural practises
Morse et al, 2009
found that without PES payments, 2/3 of interviewed farmers would NOT have reforested their land
Sanchez-Azofeifa et al, 2007
were the ones that did a remote sensing check of forest cover, then ran an OLS deforestation rate regression, with PES density as the variable, finding that PES did not lower the national deforestation rate
way to evaluate is to use
random control trials
I.e. enrol some people in PES and keep some out
And 5 years later, see who has the most forest cover
Not equitable and not feasible
Can therefore do
Pick farmers who are as similar as possible in all respects except whether or not they join the PES scheme
Difference-in-difference estimators then allow econometric analysis
Recent, state of the art study: Arrigada et al (2012):
Looked at an 8 year period
Found the PES scheme had a moderate impact on forest cover in participant farms: an extra 11-17%
They used remote sensing at the farm level, looking at land-cover changes and other
They carefully selected and matched PSA and non-PSA farmers together
The 8 year duration allowed for treatment effects to become detectable
Need well-defined property rights
Need spatial targeting and differentiation
Need to avoid leakage effects - i.e. if they're protecting forest in one area, are they offsetting this by deforesting in another? How can we stop this?
Need to lower transaction cost - on average, 12-18% of the payments go to the intermediaries
People were cutting trees, replanting and claiming money for both the timber sales and the reforestation
This was a test case with massive implications
Widely seen as a conservation success story, but few high-quality systematic reviews mean it's hard to discern the effect of it yet
Opened the door for similar projects:
More than 419 forest projects in over 49 countries (
Diaz et al 2011
More than 200 landmark PES projects in more than 20 countries
E.g. more than $4bn in the US farm bill
More than $4bn EU agri-environmental payments
E.g. between 2007-13, more than 20bn...
... euros spend on agri-environmental schemes in the EU (
European Commission, 2017)
- equivalent to 22% of rural expenditure
Their schemes include:
Extensification of farming
Management of low-intensity pasture schemes
Preservation of landscape and historical features, e.g. Hedgerows, ditches, woods
Must make a minimum of 5 years commitment to qualify for compensation
, farmers paid to plant trees - ended up planting them in a row as they weren't told how to plant them
PES and Poverty
Most schemes don't consider poverty alleviation in their creation, but can play a role
Can be designed to be 'pro-poor', ensuring poor communities aren't marginalised, pushed into poverty, and/or excluded from the services
Evidence suggests land owners benefit a lot, but that many other people lose out
We need to think about how these people can be compensated
Grieg-Gran, Porras and Wunder (2005)
did a review of 8 Latin America case studies and found:
Positive income effect in most cases - sometimes between 16-30% of household income
More land tenure security
Social capital strengthening - i.e. community relations
Some increase in training and knowledge
Some negative effects in some cases
Show me the Money: Do Payments Supply Environmental Services in Developing Countries?
(Pattanayak et al 2010)
Economic theory suggests that some form of subsidy or contracting between the beneficiaries and the providers could result in an optimal supply of environmental services
if the poor own resources that give them a comparative advantage in the supply of environmental services, then payments for environmental services (PES) can improve environmental and poverty outcomes
theory is relatively straightforward, the practice is not, particularly in developing countries where institutions are weak
This article reviews the empirical literature on PES additionality by asking, “Do payments deliver environmental services, everything else being equal, or, at least, the land-use changes believed to generate environmental services?”
We find that government-coordinated PES have caused modest or no reversal of deforestation. Case studies of smaller-scale, user-financed PES schemes claim more substantial impacts, but few of these studies eliminate rival explanations for the positive effects.
EG 1: Colombia: the Regional Integrated Silvopastoral Ecosystem Management Project (RISEMP)—which focused on program participation by poor households - authors attempted to include a control group of landowners, but unfortunately found ex post that the characteristics of control group members differed from PES contract holders in many important respects (such as income, farm size, or herd size) (
Rios and Pagiola
EG 2: Mexico: Alix-Garcia, Shapiro, and Sims (2010) recently began an evaluation of Mexico's Payments for Hydrological Environmental Services—using a combination of matching and regression methods. Thus far, they find that program participants deforest their properties 10 percent less than matched controls selected from denied program applicants
Has theory about PES been right?
On the supply side, PES programs insist on conservation as a quid pro quo: those who voluntarily provide valuable services should be compensated. Just as importantly, they will be compensated only if they do in fact provide services (conditionality). However, PES programs offer few gains if the compensated services are not additional
On the demand side, PES programs offer the possibility of increasing conservation funding, in some cases reducing the responsibilities of governments that often lack well-trained bureaucrats and sufficient budgets
The first set of concerns is associated with any process that involves creating market-type transactions against a backdrop of weak institutions and missing markets (Muller and Albers 2004).
The second set of concerns relates to simplistic models of constrained optimization by suppliers. Payments can clearly induce landowners to protect ecosystems, but in certain cases (e.g., small payments), payments may reduce landowners’ private conservation incentives, and thus weaken their overall instincts to conserve (Cardenas, Stranlund, and Willis 2000).
More generally, experimental evidence from behavioral economics suggests that responses to financial incentives (e.g., payments) may vary in ways that are different from those predicted by simple models of rational choice, for example, because of (a) loss aversion; (b) fairness and altruism concerns
PES and REDD:
REDD represents an array of international programs and projects to reward landowners, communities, and countries in tropical regions for reducing greenhouse gas (GHG) emissions from deforestation
design of REDD programs already reflects the influence of past and current experience with PES in the sense that conditionality is a key design characteristic (Angelsen et al. 2009).
it is very likely that many REDD projects will ultimately be PES-like projects
In most REDD proposals, payments are only to be made if there are improvements relative to a historical or predicted deforestation baseline. This conditionality feature is a sharp, but promising, departure from previous international efforts to slow tropical deforestation.
As with government-coordinated PES programs, the political costs for donors of withholding money are often very high and therefore they will likely ignore noncompliance - i.e. you end up giving the money anyway otherwise it looks bad
Arguably, REDD's second promising feature is its scale. Small-scale PES may generate leakage because of partial displacement of emission-generating land uses locally, although the extent to which this leakage takes place is debated (Chomitz 2006). More critically, perhaps, PES may not address key drivers of deforestation—such as commodity prices, road construction into forests, and other extrasectoral trends and policies. REDD, however, is frequently conceptualized as targeting national-level deforestation rates, which forces governments to be accountable for leakage and extrasectoral factors that promote deforestation
to a large degree, REDD can be seen as an international PES: governments will be paid if and only if they reduce forest-based emissions beyond what would otherwise have been the case
Our optimism about the potential for REDD to improve PES evaluations stems from three features of REDD. First, it has the clear goal of additionality. Second, large amounts of international resources are being poured into its design and the implementation of pilot initiatives. We are confident that some fraction of those resources will be devoted to monitoring and evaluation. Third, given the advances in science and remote sensing, carbon storage is becoming easier to measure and monitor, especially compared to biodiversity and watershed services.
Although it is not unusual for empirical research to lag well behind theory, policy design, and implementation, the current state of PES is cause for concern. Not only do we see nominal monitoring and sanctions to ensure conditionality (see Appendix Table 2), but we also see very little evaluation of additionality
we do not yet fully understand either the conditions under which PES has positive environmental and socioeconomic impacts or its cost-effectiveness. While we also lack such understanding of alternative conservation policies, including ICDPs, protected areas, and environmental education, the dearth of evidence in the case of PES stems partly from the short lifespan of the concept itself. Thus it is not surprising that Costa Rica, which has one of the longest-running PES programs in the world, is the only program with multiple rigorous evaluations. However, the continued poor understanding of program implementation and the continued lack of data collection to facilitate evaluations suggest there will be little growth in the evidence base in the near future. Alternatively, if more PES programs were designed at the outset with the intention of evaluating their effectiveness, it would make a vital contribution toward filling the large gap in our knowledge about effective conservation investments
(Munoz-Piña et al., 2008)
Payment for Hydrological Environmental Services (PSAH) Program
Mexican federal government pays participating forest owners for the benefits of watershed protection and aquifer recharge in areas where commercial forestry is not currently competitive
Funding comes from fees charged to water users, from which nearly US $18 million are earmarked for payments of environmental services
Many of the program's payments have been in areas with
low deforestation risk
. Selection criteria need to be modified to better target the areas where
benefits to water users are highest and behavior modification has the least cost
, otherwise the program main gains will be distributive, but without bringing a Pareto improvement in overall welfare
It seeks to complement the more richly endowed reforestation, plantation, and forestry development programs by addressing well preserved forests that are at risk of deforestation but that lack the countering force of profitable timber or non-timber forestry activities.
The public good nature of water services made the Mexican government opt for a system in which it would act as intermediary between service providers and users, instead of creating a framework for private transactions between them. The lesson so far is that indeed the PES schemes are launched more easily and faster this way, but the point of showing they have value to individual water companies and individual users cannot be made aside at the risk of losing support for the measure.
The PSAH is not a market. The Mexican government is acting as a monopsonistic buyer on behalf of water users. It establishes a price and waits to be offered forests to set aside for conservation. An auction could have found the price at which no excess demand for participation remained, but was deemed too complex for the country.
These prices were later raised through the political process, resulting in substantial excess demand for participation. With current payment per hectare being difficult to reduce because of political restrictions, an ad-hoc allocation mechanism that created
several targeting failures
we can conclude that: Programs that lack a way to identify and filter out plots with zero opportunity cost will spend a large share of their budget paying to protect forests that were not going to be deforested anyway, as Mexico did until 2005. This reallocates environmental service rents to forest owners, but does not maximize welfare gains to water users.
there is some evidence that the poorest of the poor are not participating as much as the rest, and more research is needed to find out whether this is due to the inability of the poorest communities to cover some transaction costs (Landell-Mills and Porras, 2002) or because of exclusion from the political networks linked to the forestry agency.
The Mexican PSAH is among the largest in scale and scope, and it is providing important lessons for the collective learning that is taking place, especially for cases where forest ownership and poverty are highly correlated. PES programs are not a panacea for deforestation or for water or biodiversity problems, but they certainly are a valuable addition to the set of policies available to solve them.
Payments for environmental services as an alternative to logging under weak property rights - Engel and Palmer, 2008
Looks at introducing PES using game theory:
: Positive incentives from PES may mean that the costs go up if there's a competing land use payment option like logging
Decentralization reforms in Indonesia have led to local communities negotiating logging agreements with timber companies for relatively low financial payoffs and at high environmental cost. This paper analyzes the potential of payments for environmental services (PES) to provide an alternative to logging for these communities and to induce forest conservation.
We apply a game-theoretical model of community–firm interactions that explicitly considers two stylized conditions present in the Indonesian context: (i) community rights to the forest remain weak even after decentralization, and (ii) the presence of logging companies interested in the commercial exploitation of the forest. Intuition may suggest that PES design should focus on those communities with the lowest expected payments from logging deals. However, we show that these communities may not be able to enforce a PES agreement, i.e., they may not be able to prevent logging activities by timber companies. Moreover, some communities would conserve the forest anyway; in these cases PES would not lead to additional environmental gains. Most important, the introduction of PES may increase a community's expected payoff from a logging agreement.
A failure to consider this endogeneity in expected payoffs could lead to communities opting for logging agreements despite PES,
simply allowing communities to negotiate better logging deals
. - i.e. they use PES as a bargaining chip with loggers
Our results indicate that PES design is a complex task, and that the costs of an effective PES system could potentially be much higher than expected from observing current logging fees.
The results indicate that the common intuition is misleading for two main reasons. First, communities with very low expected payoffs from negotiations tend also to be those that are not able to self-enforce property rights and prevent unilateral forest exploitation by firms. Therefore, PES agreements with these communities may not be effective. Second, the introduction of PES affects communities' valuations of the standing forest. This will not only impact on the com- munity's ability to self-enforce its property rights, but may also affect its expected payoff from a negotiated agreement. If this endogeneity of community payoffs is ignored, the implemen- tation of PES may result in better logging deals for local communities, without achieving forest conservation. That said, better logging deals for communities could well have a positive welfare impact.
Much depends on the starting point of the community and how much it values the standing forest.
any conservation program that attempts to use positive incentives will suffer from a similar problem in that the value of the required incentive may need to exceed the foregone logging fees. Even if PES were more costly and less effective than originally thought, it may thus still be more effective and/or efficient than alternative conservation approaches.
An important positive result of our analysis is that PES design is not necessarily futile where property rights are weak, as often assumed by practitioners. Rather our analysis high- lights the fact that property rights may be endogenous, and that the introduction of PES, by raising the value of natural resources to local communities may enhance their ability to enforce their property rights.
: The CAMPFIRE programme in Zimbabwe: Payments for wildlife services (Frost and Bond, 2007)
We describe the evolution over the first 12 years (1989–2001) of Zimbabwe's Communal Areas Management Programme for Indigenous Resources (CAMPFIRE), a community-based natural resource management programme in which Rural District Councils, on behalf of communities on communal land, are
granted the authority to market access to wildlife in their district to safari operators
. These in turn sell
hunting and photographic safaris
to mostly foreign sport hunters and eco-tourists. The
District Councils pay the communities a dividend
according to an agreed formula. In practice, there have been some underpayments and frequent delays. During 1989–2001, CAMPFIRE generated over US$20 million of transfers to the participating communities, 89% of which came from sport hunting.
The scale of benefits varied greatly across districts, wards and households. Twelve of the 37 districts with authority to market wildlife produced 97% of all CAMPFIRE revenues, reflecting the variability in wildlife resources and local institutional arrangements. The programme has been widely emulated in southern and eastern Africa.
We suggest five main lessons for emerging PES schemes:
community-level commercial transactions can
seldom be pursued in isolation
start-up costs can be high
and may need to be underwritten;
can allow service providers to hold on to rents;
and schemes must be
flexible and adaptive
Although its underlying philosophy places it firmly within the ‘community conservation’ paradigm, its workings share some features with PES.
property rights are not clearly defined; both individual and community tenure are insecure. Whereas households have usufruct rights over their arable lands, their rights elsewhere are collective, often overlapping with neigh- bouring communities. This creates uncertainty, competing interests, and can result in opportunistic use of resources
Investments in management tend to be limited to those that produce short-term returns. As the producer communities are not legal entities, their contracts are subject to common law. Despite calls to strengthen both communal and individual rights, including by a government-appointed commission on land tenure (Rukuni, 1994), communities and their constitu- ents remain in legal limbo. For CAMPFIRE to be sustained these contradictions eventually will have to be resolved.
UK: Case study of agri-environmental payments
Dobbs and Pretty, 2007
The Environmentally Sensitive Areas (ESA) program, when launched in the United Kingdom (UK) in 1986, was the first agri-environmental program in the European Union (EU)
Countryside Stewardship Scheme (CSS), established in 1991. The CSS was available to farmers outside the ESAs, and like the ESA program, was intended to protect valued landscapes and habitats and to improve public enjoyment of the countryside. By 2003, over 10% of England's agricultural land was enrolled in either ESA or CSS agreements. These voluntary agreements were long-term contracts (usually for 10 years) between the government and farmers to provide environmental services
Both the ESA program and the CSS proved to be generally effective in enrolling many farmers in the entry-level contract tiers, thereby halting or slowing degradation of rural landscape and other environmental features. However, the schemes did not generally offer sufficient economic incentives to attract high levels of enrollment in the intensive farming areas. Also, the schemes were limited in their success in enrolling farmers in higher payment tiers, tiers that required more substantial changes in farming practices. The high crop and livestock-related payments received by farmers under the EU's Common Agricultural Policy
(CAP) contributed to the disincentives to participate
, especially in higher tiers. Following the latest (2003) reforms of the EU's CAP, England's ESA program and CSS are being replaced by a new, consolidated package of schemes that draws on lessons learned over the past 15–20 years with these two flagship programs.
Many of the UK agri-environmental programs of the past 10–20 years involved, to varying degrees, some form of ‘payment for environmental services’ (PES). The UK's ESA and CSS programs, in particular, were based on payments to farmers to practice particular kinds of agricultural stewardship.
The multidisciplinary evaluation team concluded that 36% of the agreements had “high” addition- ality, meaning “...it was clear that none of the work under the CSS would have been undertaken without the agreement (Carey et al 2003)
We do not have evidence of “leakage” with the CSS to cite. However, our comments earlier in this article about possible within-farm leakage in the ESA scheme could also apply to the CSS.
Like the ESA scheme, the CSS was not designed to target disadvantaged groups. However, there is some evidence available on participation by farm size. The CG/ADAS evalu- ation found CSS farms to be larger, on average, than the population of farms in England. Some 20% of CSS farms were over 300 ha in size, compared to only 3% of all farms.
in the more productive arable areas, such as East Anglia, it was difficult for the stewardship payments offered under the ESA and CSS programs to compete with the income support and risk-reducing CAP policies available to specialized, conventional farmers - tended to work better for farmers in hilly, less productive areas
We concluded that success in obtaining high farmer participation rates in agri-environ- mental schemes or tiers that ‘green the middle’ in major arable areas would require such high payment rates that they would be deemed politically unacceptable.
Future plans: The aim of the Entry Level Stewardship (ELS) scheme, which is open to all who farm their land ‘conventionally’, is to encourage farmers to deliver simple environmental manage- ment in addition to cross-compliance requirements.
Farmers have to complete a plan of the farm showing the main environmental features, called the Farm Environmental Record (FER), and select options from a menu of measures that are rated with points. At least 30 points per hectare are required over the whole farm to qualify for the £30 per hectare payments. The application is for a 5-year term.
The new combination of agri-environmental schemes in England appears t
4. Biodiversity Offsets
Idea: 'goal of biodiversity offsets is to achieve no net loss and preferably a net gain of biodiversity on the ground with respect to species composition, habitat structure, ecosystem function and people’s use and cultural values associated with biodiversity' (
I.e. If you create adverse environmental impacts in one place, you compensate for this by improving the environment of another area
It's at the top of the mitigation hierarchy: Below it you've got:
avoid or prevent
': First step of the mitigation hierarchy: I.e. don't impact biodiversity at all - careful spatial or temporal placement of infrastructure or disturbance - e.g. placement of roads outside of rare habitats or key species’ breeding grounds, or timing of seismic operations when aggregations of whales are not present.
Is often easiest and cheapest option, but requires biodiversity consideration from an early stage
': I.e. Consider alternative location, plans etc. that minimise biodiversity impacts
E.g. reducing noise and pollution, designing powerlines to reduce the likelihood of bird electrocutions, or building wildlife crossings on roads
': In areas where impacts are unavoidable, return the impacted area to a near-natural state after mine closure - applied at the end of a project lifespan
So BOs are '
': Once you've taken every effort to do the above things in order, i.e. rehabilitation last, you then look at the remaining net damage (there usually is some) and you offset this last amount of damage by improving the environment somewhere else. There are two types:
'Restoration Offsets': Rehabilitate or restore degraded habitats
'Averted Loss Offsets': Aim to reduce or stop biodiversity loss in areas where it's predicted to occur
Both types are relatively expensive on average - thus the first three stages should be considered first (
Mandatory or Voluntary?
Will only work at a large scale if it's mandatory
Need to develop metrics to make quantified estimates of potential biodiversity losses (from residual project impacts) and potential biodiversity gains (from offsets), and to then monitor success in achieving No Net Loss
If offsets are to be effective they must be achievable ‘on the ground’:
There's limits to offsetting
: some losses are so great in type or amount that no offset could appropriately compensate for them – such as species extinction
Offsets should be additional
: biodiversity gains should be caused by offset actions and not by other factors. In other words, the offset gains would not have happened in business-as-usual scenarios. This is similar to the concept of additionality in REDD - i.e. need to ensure the offsets are causal in improving the environment, not just correlated
Offsets should be comparable
: the balance of losses and gains should represent a fair exchange - requires exchanging similar types and amounts of biodiversity
Offsets should be lasting
: The gains should last at least as long as the losses/impacts
Government-backed conservation/habitat banks
aka Conservation Banking :
E.g. Wetland banking in the US
E.g. BushBroker in Australia:
Initiated in 2006 to help those clearing native vegetation find offsets
The BushBroker program works primarily on the supply-side, identifying landowners willing to preserve and manage native vegetation
A government representative of the BushBroker program then assesses the site and determines the number and type of credits available
The Framework details impacts that must be offset, like-for-like conditions, and requirements for the proximity of offset relative to the impact site. Neither impacts nor offsets are allowed
in areas of 'very high' conservation significance
except in 'exceptional circumstances.'
Single (Individual) Site
Case by case addressal of the residual impacts of a single project
Offset site close to impact site
If developers are choosing their own offset site, you'd end up with a very inefficient, patchy conservation network - e.g. forests are much more synergistic/resilient if created in a single area rather than multiple patches
One offset compensation scheme is used to offset multiple individual projects' impacts
Offset/compensation demand is known in advance of the site being set up - e.g. you look at how much offsetting you need to do and then work out where best to do all this offsetting
NOTE: Type 1 process:
A mitigation bank is established by acquiring land for the creation, or enhancement and management of habitats or ecosystems for a particular wildlife or environmental resource
Asset is valued in terms of
: The land will be assessed and the better condition the land is in in terms of meeting conservation objectives, the greater the value, and larger the number of credits allocated
Credits can then be held, purchased or traded -
analogous to carbon trading
Implementation Experience So Far
Shown to look pretty successful in the US, with the creation of the Wetland banking system
Operated for over 15 years
If mitigation can't occur on-site, offsetting is a federal requirement for a developer
Now have over 2000 mitigation banks (wetlands, streams, species)
Over 450,000 acres are permanently protected in wetland and stream banks and around 75,000 acres protected in species banks
Criticism of Offsetting
: Lowering the threshold of acceptance of conservation outcomes results in a 'license to trash' as long as you pay for the trashing
: It's hard to show that the maintenance activities done for the offsetting wouldn't occur anyway
: If they're not chosen properly, offsets could simply displace impacts
Example: If a mining company pays to offset damage being done in a forest where illegal logging is taking place, the offsetting money may put a fence up around this forest, stopping illegal logging, but the loggers may then simply move to an alternative location and continue their operations, thus there's been no net benefit
: In some habitats, it takes time and technical skills to restore, meaning it's infeasible, and others such as ancient woodland is impossible to recreate in a human lifetime - primary forests are much more complex than secondary, and long ecovery times of some species not achievable within the timeframe of the offset and losses may be irreversible (extinctions)
: Unlike carbon credits, there's not a single index for quantifying damage - thus involves a subjective element as measuring every component of biodiversity is incomplete - issues can often be overlooked e.g. effect of habitat fragmentation on ecosystem function - typically, for each biodiversity component, we look at (i) intrinsic values, (ii) Use values and (iii) cultural values
: Impacts of the damage have to fall into a sweet spot: too much impact and the cost of offsetting is too great to make the development affordable (e.g. with species loss), and too small an impact, and the offsetting is not worth going about - we need the following equation to hold: Impact area
Change in condition = Offset area
Change in condition <<-- typically, this means offset areas must be larger as the benefit done to the land is normally of a smaller magnitude than the damage done in the development area
: Need to account for the health of entire ecosystems as the upkeep of the offset site may include actions that could alter the landscape, compromising long-term viability of other species - i.e. it's not a simple case to know how to 'enhan...
...ce an area
Management and Compliance
: Enforcement is vital - Early offsetting schemes abroad had low compliance rates. In the US, the introduction of new performance standards, allowing for fewer alternative ways to implement offsets, have improved enforcement - E.g. in Appalachian Mountains, fines for MTR mining companies were often not enforced, and they paid for just a small fraction of the true damage caused
: Offsetting too far from the development site means local communities could lose cultural values associated with the biodiversity, access to green spaces and other ecosystem services - i.e. the local people need to be compensated the most as it's them that are directly seeing/experience the damages
Benefits of Offsetting
No Net Loss
: Gives developers a clearer idea of their expected costs/project feasibility
: Introducing a mandatory scheme means companies will adapt to show more conservation awareness - much more likely to invest in the first 3 stages of the mitigation hierarchy in order to avoid more expensive offsetting costs at the end of the project --> sector efficiency gains
: Nature is given a monetary value that cannot be avoided
: Owners of conservation credit banks e.g. forest owners are able to receive a more diversified income stream
Houses of Parliament Post Note: Biodiversity Offsetting (Post, 2011)
Given growing recognition of the importance of biodiversity, all sectors are looking for ways to mitigate the environmental costs of development activity. Biodiversity offsetting refers to market-based schemes designed to compensate for losses of biodiversity due to development projects
Biodiversity is the genetic diversity within species, species diversity within ecosystems, and ecosystem diversity across landscapes. It supports ecosystem functions vital for human well-being, such as agricultural crops, timber, medicinal plants and industrial raw materials. Furthermore, the services provided by healthy ecosystems indirectly benefit humans by, for example, purifying air and water, regulating climate, generating atmospheric oxygen and providing recreational opportunities
Species are currently being lost up to 10,000 times faster than the natural rate of extinction
The annual economic cost of global biodiversity and ecosystem degradation is currently estimated to be £1.28-2.88 trillion, or around 7.5% of global GDP
Historically, biodiversity loss has been addressed mainly through multilateral conservation agreements as well as domestic protected area legislation
Participants to the recent intergovernmental meeting of the 193 parties at the Convention on Biological Diversity in Nagoya, Japan, agreed on several measures to reduce the rate of loss of biodiversity by 2020
Key to the success of future conservation efforts is recognition of the social and economic values of biodiversity by decision makers
Limitations to scientific knowledge have led to a selection process whereby most protected areas are primarily based on charismatic species and habitats.
The basic premise is that, through market-based instruments, the positive and negative impacts on biodiversity can be measured and represented as credits and debits. Thus quantified, they are more easily integrated through cost-benefit analysis into economic decision-making
Benefits of Offsetting:
removal of developer’s long-term liability for damage to biodiversity aken on by a third party organisation (habitat banking)
places value on nature, introducing incentives for conservation
Etc. - already mentioned most
A range of third-party organisations, including local government, NGOs, insurers, brokers, traders and technical experts, may facilitate interactions between these two parties
3 options for implementation:
The developer or its partners (such as an NGO) implement the offset
The developer pays the government the amount needed to implement the offset ‘in lieu’ of implementation itself
The developer buys ‘credits’ from a landowner or conservation bank sufficient to offset its impacts.
The opportunity to aggregate credits into larger, connected offset areas could be beneficial in the establishment of Ecological Restoration Zones, as recommended in the
However, successful existing strategies, notably in the United States and Australia (Box 4), generally involve an impartial oversight body as well as the various operational actors. Most experts agree that the oversight body is a vital element within the offsetting strategy mechanism.
Offsets also featured in the Conservative Party’s 2010 Election Manifesto. Proponents argue that measuring the impact of development on nature, and encouraging developers to take responsibility for their footprint, may be the only way to address biodiversity degradation
In the UK, offsetting schemes are currently only applied on a site-by-site basis, including as part of a pilot study currently underway at the Thames headwaters. Though details of loss/gain calculations and potential delivery mechanisms have yet to be decided, at least one habitat banking organisation is in place
Biodiversity Offsetting Examples
Policy Development for Biodiversity Offsets: A Review of Offset Frameworks (McKenney and Kiesecker, 2010)
Offsets are emerging as an increasingly employed mechanism for achieving net envi- ronmental benefits, with offset policies being advanced in a wide range of countries (i.e., United States, Australia, Brazil, Colombia, and South Africa).
we review a set of major offset policy frameworks—US wetlands mitigation, US conservation banking, EU Natura 2000, Australian offset policies in New South Wales, Victoria, and Western Australia, and Brazilian industrial and forest offsets.
six key issues for implementing offsets:
of project impacts with offset gains;
of the offset relative to the impact site;
’’ (a new contribution to conservation) and acceptable types of offsets;
of project impacts versus offset benefits;
’’ and mitigation replacement ratios
We also identify issues requiring further policy guidance, including how best to:
with the mitigation
(2) identify the most
offsets within a landscape context; and
(3) determine appropriate mitigation
With global economic output expected to double over the next two decades (World Bank 2006), such impacts could increase dramati- cally. Tremendous investments are expected in energy, mining, and infrastructure sectors, among others. For example, the International Energy Agency (2007) forecasts more than $20 trillion in energy investments through 2030.
Biodiversity offsets are potentially a powerful tool for balancing conservation and development.
Multinational corporations such as Rio Tinto (2004) aim to have a ‘‘net positive impact on biodiversity’’ as part of their biodiver- sity strategy, and offsets will play an important role in meeting this objective.
US Wetlands Mitigation: This is the most mature of the offset frameworks reviewed, with its foundation in the section 404 amendments to Clean Water Act (33 U.S.C. § 1344). Wetlands mitigation aims to avoid and minimize impacts, and then offset residual impacts through compensatory mitigation that replaces wetland functions and values.
US Conservation Banks: Conservation banking is modeled after wetland mitigation, except that the objective is to offset adverse impacts to species, rather than replace wetland functions and values. California’s Resources Agency and Environmental Protection Agency (1995) were first to issue guidance for conser- vation banking, followed by the US Department of the Interior (2003).
EU Natura 2000: The Birds Directive of 1979 (Council of the European Communities 1979) and Habitats Directive of 1992 (Council of the European Commu- nities 1992) underpin the effort to establish a network of Natura 2000 conservation sites throughout the European Union. The European Commission issued guidance on offsets in 2000 and 2001.
Australian Offset Policies: Australian offset policies are developing rapidly. The federal government supports offsets under the Environment Protection and Biodi- versity Conservation Act of 1999. At the state/territory level, offset policies have been developed in New South Wales, Victoria, Western Australia, South Australia, and Queensland, with most focused on offsetting the clearance of native vegetation. New South Wales has introduced BioBanking, a market-based offsets approach involving ecosystem and species credits
Brazilian Industrial and Forest Offsets: Brazilian federal legislation requires
industrial developments to offset their environmental impacts
through payments to the
National Protected Areas System
(Brazil Fed. Law 9985, Decree 4340). The system is still in its early stages of development, especially with regard to equivalency between industrial environmental im
... pact and the benefits derived from offset payments. For Brazilian forest offsets, federal legislation requires that a minimum area of natural vegetation be maintained on private landholdings (Brazil Fed. Law 4771, Provi- sional Measures 2166/67). However, the legislation allows for off-site conservation offsets to compensate for natural vegetation clearing that exceeds the required minimum.
Offset Policy Goals
we find offset policy goals vary from ‘‘net gain’’ to ‘‘no net loss’’ to general statements about the need to address adverse impacts
Native vegetation regulations in New South Wales require that offsets ‘‘improve or maintain’’ envi- ronmental outcomes for relevant environmental values
Australia’s Environmental Protection Agency (2006) states ‘‘offsets should be used with an aspiration of achieving a ‘net environmental benefit’.’’
Brazilian forest policy implies no net loss of habitat by requiring private landholders to retain a defined minimum forest/vegetation cover, with the minimum area require- ment varying by region, such as 80 percent for Amazon Forest and 35 percent for Amazon Savannah
Where a pri- vate landholder is not meeting the minimum area requirement, the policy allows for compensation through the establishment of off-site conservation offsets.
US conservation banking, EU Natura policy goals, and Brazilian industrial offsets do not directly address issues of no net loss or net gain. Conservation banking objectives are to offset adverse impacts to threatened and endangered species, but federal and state guidance do not specify how much such impacts should be offset.
Our review of offset policy frameworks in the United States, European Union, Australia, and Brazil finds much consensus on offset goals, the importance of adhering to the mitigation hierarchy (i.e. doing the other steps first), and approaches for addressing key challenges to implementing offsets.
First, while offset frameworks emphasize the impor- tance of the mitigation hierarchy—avoiding and minimiz- ing impacts before proceeding to compensatory mitigation—there is little guidance on how this critical sequence should be followed to ensure projects conform to it. Guidance tends to focus on avoiding impacts to ‘‘diffi- cult-to-replace’’ and ‘‘high significance’’ resources, but ultimately provides wide discretion to regulatory authori- ties on decisions about when to avoid, minimize, or offset.
chief concern about advancing biodiversity offsets
is that, if not implemented according to the mitigation hier- archy and a set of standards, the approach could provide a ‘‘license to trash’’ —development in areas where impacts should have been avoided or more effectively minimized.
To safeguard against this concern, more effective policy guidance is needed for determining whether projects con- form to the mitigation hierarchy. Such guidance should incorporate science-based criteria—irreplaceability and vulnerability
policy guidance on issues of equivalence and location is trending away from strict requirements for in- kind offsets located as close to impact sites as possible, in favor of identifying the most environmentally preferable offset options within the watershed or landscape.
Within a watershed or landscape context, what approach should be taken for offsetting ecosystem service impacts, given that service benefits tend to be
tied closely to location
(e.g., non-timber forest products, water services) and people benefitting from such services are
unlikely to find it adequate compensation
if offsets are
from the impact site?
To address these issues, offset frameworks need to move beyond encouraging a landscape/watershed approach to making this planning a requirement, especially for land- scapes where future impacts are projected to be significant.
This can guide which step of the mitigation hierarchy should be applied (i.e. avoidance versus off
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New Zealand: Two New Zealand Case Studies and an Assessment Framework
Two recent New Zealand examples of biodiversity offsets are reviewed— while both are positive for biodiversity conservation, the process by which they were developed and approved was
based more on the precautionary principal
than on any
Based on this review and the broader offset literature, an environmental framework for devel- oping and approving biodiversity offsets, comprising six principles, is outlined:
(1) biodiversity offsets should only be used
as part of an hierarchy
of actions that first seeks to avoid impacts and then minimizes the impacts that do occur;
guarantee is provided
that the offset proposed will occur;
(3) biodiversity offsets are
inappropriate for certain ecosystem
(or habitat) types because of their rarity or the presence of threatened species within them;
(4) offsets most often involve the
creation of new habitat
, but can include
protection of existing habitat
where there is currently no protection;
clear currency is required
that allows transparent quantification of values to be lost and gained in order to ensure ecological equivalency between cleared and offset areas;
(6) offsets must take into account both the
uncertainty involved in obtaining the desired outcome
for the offset area and the time-lag that is involved in reaching that point.
Biodiversity offsets have been defined by ten Kate and others (2004) as: ‘‘Conservation actions intended to compensate for the
residual, unavoidable harm to biodiversity caused by development projects
, so as to ensure
no net loss
In Europe, offsetting is more often referred to as compensation, and usually involves habitat creation to offset development impacts
One of the major criticisms of biodiversity offsets, especially in North America, is that
most approved offsets fail to meet their objectives or never actually occur
one study of wetland offsets in Florida found that no mitigation work had even been attempted for 34% of the 63 permits reviewed (Race and Fonseca 1996), while a more recent study of 76 wetland mitigation projects found that 67% failed to create or restore their minimum required area (Matthews and Endress 2008) <<- shows good in theory, bad in practise
In Canada, Harper and Quigley (2005) found that offset conditions were not fol- lowed in 86% of 124 fish habitat developments.
NZ Biodiversity Offset Examples
Where development results in what are considered as ‘‘more than minor’’ effects on the environ- ment, then the applicant needs to show how they will ‘‘avoid, remedy or mitigate’’ effects.
The application of biodiversity offsets in New Zealand is relatively new
Kate Valley Landfill
located in coastal hill country in New Zealand’s eastern South Island
After a long period of investigation, Transwaste Canter- bury Ltd. (TCL) identified Kate Valley as the preferred site for a new regional landfill and applied in 2002 to Hurunui District Council for resource consent.
The consent was granted in 2003 subject to a number of conditions, some of which TCL felt were too restrictive while parties in opposition to the landfill felt that consent should have been declined in its entirety.
required a <1 ha remnant of Nothofagus solandri (black beech) forest (referred to as ‘Remnant A’) be retained. TCL wished to see this removed to enable the landfill to be of a viable size
As part of their appeal TCL revisited a number of elements of the project including the environmental compensation (biodiversity offset) being offered and put a new and substantially bigger offset package before the Court. The Court accepted the biodiversity offset proposed and granted consent for the revised proposal
The biodiversity offset proposal accepted by the Court involved the long-term protection, rest..
...oration, and management of a 410 ha ‘‘Conservation Management Area’’ adjacent to the Kate Valley landfill (now known as Tiromoana Bush
Had to meet certain conditions e.g.:
Permanently fence Tiromoana Bush and remove all domestic grazing animals within two years of the issuing of the consent and prior to the acceptance of first waste.
-commission and submit a detailed restoration plan for Tiromoana Bush
producing an annual report on progress on the Restoration Plan
sourcing all plant species used for planting either from Tiromoana Bush itself or from the southern part of the Motunau Ecological District
initiating and continuing animal and plant pest control programmes within Tiromoana Bush during the operating life of the landfill
providing controlled public access for recreational, educational and scientific use to Tiromoana Bush by a walking track
The costs of the obligations arising under this condition are to be funded directly by TCL, with such funding being independent of and not reliant upon cashflow from the landfill
Waikatea Station Farm Development
Waikatea Station (3570 ha) is typical of sheep and cattle farms that occur through the hill country of New Zealand’s eastern North Island
In November 2004 the Bayly Trust, who own Waikatea Station, applied to Wairoa District Council for resource consent to clear 536 ha of Kunzea ericoides shrubland and low forest for pasture reestablishment, while protecting a further 674 ha of forest remnants and riparian zones
the Council granted consent in March 2006 which, subject to conditions,
DOC then appealed this decision to the Environment Cour
A revised proposal involving the clearance of 354 ha of Kunzea ericoides shrubland and low forest for pasture development, and protection through covenanting and fencing of a further 799 ha of forest and shrubland as a biodiversity offset was put to the Environ- ment Court at this hearing.
Although DOC expert witnesses at the hearing claimed that the project, including the offset proposal, would result in a net loss of biodiversity on the property, the Court accepted expert evidence that there would in fact be a net-gain in biodiversity because of the removal of grazing animals from the 799 ha to be protected and granted consent for the revised proposal (Environment Court decision W081/2007, 19 September 2007).
Permanent protection of 799 ha of indigenous forest and shrubland
Removal of domestic grazing pressure from all pro- tected areas through the establishment of new fencing and the repair of existing fencing
Active control of feral grazing and browsing animals especially goats and brushtail possums
Monitoring of biodiversity values
Framwork for Assessing BOs
P1: Biodiversity offsets should only be used as part of an hierarchy of actions in which a development project must first seek to avoid impacts and then minimize the impacts that do occur
explicitly places biodiversity offsets within a broader context of responsible development
A development project must first seek to avoid any adverse impacts, or when these are unavoidable, it should seek to minimize such impacts. Only when these steps have been addressed and there is still residual impact (e.g., through vegetation clearance), can offsets be considered as a compensation mechanism
offsets should not be used to justify adverse impacts; rather they are the final step in a process that focuses first on avoidance and minimisation
In the Kate Valley case, a rigorous process was under- taken to identify the best site for the regional landfill that had to meet geotechnical, logistical, and environmental concerns (including avoiding damaging or destroying sig- nificant indigenous habitat)
The Waikatea situation was more complex as the land owner was restricted to the one loca- tion and wished to increase the area of pasture. This meant that ‘‘avoidance’’ was not possibl
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Conservation serration twhen nothing stands still: moving targets and biodiversity offsets - Bull et al 2013
Conservation is particularly difficult to implement for “moving targets”, such as migratory species or landscapes subject to environmental change. Traditional conservation strategies involving static tools (eg protected areas that have fixed spatial boundaries) may be ineffective for managing species whose ranges are changing. This shortfall needs to be addressed urgently. More dynamic conservation‐based approaches have been suggested but remain mostly theoretical, and so implementation issues and measures of success have yet to be explored. In recent years, however, the concept of biodiversity offsets has gained traction in the conservation community. Such offsets effectively replace biodiversity “lost” during current economic development projects, and are intended to ensure “no net loss” of biodiversity overall. Given their flexibility and unique no‐net‐loss requirement, offsets provide a platform for testing dynamic new approaches to conservation. Here we explore the potential for offsets to conserve moving targets, using a complex dynamic example: the
migratory saiga antelope (Saiga tatarica) in Uzbekistan
Conservation of biodiversity relies heavily on the use of protected areas (PAs) that are “fixed” in place on the landscape or seascape and therefore static in space and time (Rayfield et al. 2008). When conservation targets are not stationary on the same scale as their respective PAs – which is common – the effectiveness of PAs may be compromised
Habitats themselves may also “move” in space over longer time scales, driven by environmental change and anthro- pogenic activities. It is increasingly recognized that, to be effective, conservation planning must account for the dynamic nature of ecosystems (Nicholson et al. 2009) and do so at large spatial (eg landscape-level) scales
The concept of offsetting originated with the US Water Resources Act of the 1970s, which requires that development-oriented wetland loss or degradation in one location is offset by establishing “equivalent” wetlands elsewhere.
Discussion has also focused on designing PA networks that are resilient to climate change through the use of dis- persal corridors and less vulnerable core refugia (Malhi et al. 2008), careful spatial planning based on habitat type (Hannah et al. 2007), and projections of habitat suitabil- ity (Singh and Milner-Gulland 2011).
Consequently, offsets provide an appropriate mechanism through which some of the pro- posed new approaches to conservation might be tested.
Examples of why migratory species are an issue in current BOs:
Habitat: Any habitat degraded or lost through development is replaced with created/ restored habitat (indirect species conservation is assumed), as in EU Natura 2000 - pecies are not explicitly targeted or conserved, so it cannot be assumed they will be conserved along with their habitat.
Adapting the BO technique for Migratory species
Instead of being targeted by fixed PAs and existing offset methodologies, highly mobile species could be targeted anywhere within their range where they are vulnerable to development-related impacts.
Alternatively, offsets could incorporate the approach of targeting the most vulnerable stages in a species’ life his- tory, rather than the life stages directly affected by devel- opment. For example, Wilcox and Donlan (2007) pro- posed an offset for seabird bycatch among commercial fisheries in which fishermen would pay a levy for unavoidable seabird mortality, to fund the removal of invasive species from island breeding sites elsewhere in the birds’ range.
Offsets have arguably been most effective when specifi- cally designed to account for environmental change, such as in Victoria, Australia, for example, where legislation requires compensation for cleared native grassland. The original range of native Victorian grass
land has greatly contracted, and remnants are now threatened by habitat- degrading invasive species. Offset sites are now being actively managed to suppress or remove invasives and prevent future decline in habitat condition, as well as restoring previously degraded sites.
Consequently, because they have been designed with respect to back- ground trends, these offsets could deliver genuine ecolog- ical gains in native grassland condition over time (Gordon et al. 2011)
A situation characterized by contemporary environ- mental degradation, projected climate-change-related impacts, high uncertainty, and a paucity of available data would complicate conservation efforts for many species, let alone imperiled migratory organisms. Any attempt to define NNL, implement an offset, and report against meaningful baselines under such circumstances could be doomed to failure. Nonetheless, an offset scheme is under development in just such a case: a
project to compensate for petroleum and natural gas development
impacts in Uzbekistan, with the migratory saiga antelope (hereafter “saiga”) as a key conservation target.
The saiga population has declined by 95% since the fall of the Soviet Union, and the species is listed as Critically Endangered on the International Union for Conserva- tion of Nature Red List
Saiga migration is driven by climate and forage avail- ability (Singh et al. 2010a), and saiga calving sites have shifted northward in recent decades in response to changes in both climate and forage
The Uzbek Government is collaborating with the United Nations Development Programme to investigate mitiga- tion and compensation measures, including offsets, for reducing impacts to biodiversity from the extractive sec- tor. Broadly, offsets would create conservation zones with ecological values equal to or exceeding those lost due to industrial development. These zones would be protected and the habitat within them potentially restored to bene- fit target conservation species, with varying restrictions on further natural resource use inside the zones by either companies or individuals. One proposal requires compa- nies active in the area to fund 80% of management and anti-poaching enforcement costs in a greatly expanded “Saigachy” PA, as compensation for direct impacts else- where on the Ustyurt Plateau (Figure 4a; UNDP 2010). The smaller existing Saigachy PA is effectively inopera- tive at the present time.
Therefore, while the offset would not promote additional biodiversity, it would prevent impacts from multiple sources unrelated to oil and gas activities, thereby avoid- ing potentially substantial projected losses.
One key objective for the proposed offset is to prevent further decline and potential extirpation of the saiga in Uzbekistan. To satisfy the NNL requirement, managers must assess current and future species abundance and popu- lation dynamics.
Simply protecting the saiga in a fixed PA within Uzbekistan is insufficient, given that saigas are also heavily poached in Kazakhstan
Consequently, as offset actions are not limited to fixed PAs, the offset should incorporate other conservation activities. Clearly, the problem of conserving the saiga along with its habitat
must also be viewed in a landscape context, rather than just at the development project level
One conservation option would be to fund anti-poaching measures in Uzbekistan and Kazakhstan during the winter and summer, respectively
Another option could finance mobile PAs that track the most vulnerable parts of the saiga life cycle (eg calving locations)
Alternatively, as dis- cussed by Cole (2010), conservation efforts could be tar- geted at reducing incentives that result in species’ impacts
might include various interventions, from training enforcement dogs (to locate saiga horn) to creating alternative livelihoods for economically disadvan- taged families that might otherwise poach
Because saigas may be an inadequ
inadequate proxy for assessing the condition of biodiversity on the Ustyurt Plateau, off- sets could focus on habitat conservation instead. In this case, achieving NNL would also require consideration of regional environmental change.
This case study illustrates some of the challenges concern- ing conservation in a dynamic world. The currently pro- posed offset scheme would primarily result in a single fixed PA, which
fails to cover the target species’ entire range and life-cycle component
The relative futility in applying static con- servation tools to dynamic targets is exemplified by the saiga, a migratory species within a changing habitat. However, in explicitly considering the mobile nature of both the species and its habitat, proposals for an offset framework to test more dynamic conservation approaches could be explored
Likewise, political considera- tions would inform discussions regarding the use of transboundary offsets
Offset schemes are supposedly structured in a way that can address the dynamic nature of conservation targets.
By requiring NNL of biodiversity within a region and over a specified time period, these schemes account for spatial and temporal dynamics
1. Protected Area Approach (PAs)
This is a regulatory approach that provides outright protection to a habitat area and species within it, such as a national park does
Also known as fortress conservation - i.e. create a perimeter/boundary for protection
It's most often a high-cost, low-returns option, and runs alongside the unreasonable exclusion of local human populations
Hence, there's often low adoption rates, followed by abandonment of enforcement leading to 'paper parks' - often, local populations have no alternative but to continue income-generating opportunities in a now illegal fashion - i.e. illegal logging in what was once a legal area to do so
It's most often done in biodiversity hotspots, as these areas provide the biggest bang for buck - these are areas with endangered or unique species
It's often been done in areas where conservation has only had a small chance of success
2. Community-based Conservation Approach
Encourages rural communities to provide Ecosystem Services by providing them with alternatives to environmentally-damaging activities
Seen as a direct alternative to traditional PA approach
Rests on assumption that conservation shouldn't be pursued against the wishes of local people - should be participatory and organised to yield economic returns
Note that it does not significantly contribute to conservation goals as it's not conditional on conservation outcomes
E.g. You're saying here's the tools to do something different - doesn't necessarily say you can't harm the environment - it's a carrot without the stick in a way
I.e. it's an indirect approach, with incentives delivered upfront, rather than as reward, with the hope that they will result in conservation
It's had a lower success rate than other options in conservation, however, it has more benefits across social justice issues
Economic Approach: Valuation and Capture
Conclusion/The Way Forward
Adoption of a comprehensive package of flexible market mechanisms, including both PES and offsets allows a variety of values to be captured, facilitates benefits reaching local communities
Current markets aren't big enough - only cover a small amount, but are expected to grow over the coming decades
Market creation is
in a bigger toolkit which includes further roles such as command and control regulation
Policy Background - Ecosystem Services - how we can take valuation further
We used to frame environmental issues around 'biodiversity', but the mainstream these days is
Biodiversity essentially underpins ecosystem services - what we mean by ES is the
benefit that humans get from ecosystems
There was a policy shift that brought these 'services' into focus due to topical issues - e.g. Climate Regulation, e.g. provision of food and water, e.g. non-use values
And even more modern is the shift to looking at the environment through a natural capital frame
E.g. DEFRA has recently presented its natural capital approach for the next 25 years
It's more of an accounting approach - looks at the impacts of degradation of both the assets and the services
Millenium Assessment - published in 2005 - was largest ecosystem assessment ever undertaken
It found 60% of these 'services' were being rapidly degraded
Subsequently, many targets were set to avert this trajectory
Issues ranged from disease, to invasive species, to over-hunting, to habitat loss caused by humans or CC
Economists would argue that these services are being lost due to market failures - i.e. we need to internalise the damage to them or create markets for them (Coase)
Similar to last week, they are public goods - often global public goods with
Externality problem is this: Private land owner can either conserve or develop - they make this decision based on maximising PNBenefit - i.e. the usual thing of the land owner not accounting for social benefit of each option
So the purpose of this lecture is looking at some
policy options that help get us around this issue
- quite similar to some of the topics addressed last year in the sustainable development module
Forest Figures: Ecosystem Services Valuation and Policy Evaluation in Developing Countries (Ferraro et al, 2012)
Throughout human history, the services provided by ecosystems have been critical to the functioning and growth of the worldÕs economies. This natural capital has been particularly important to the rural economies of developing nations, which often possess relatively little physical capital
The ‘‘ecosystem approach,’’ pro- moted by the MA as a framework for environmental study and action, has become the pri- mary framework for action under the international Convention on Biological Diversity. In the last ten years, most large international conservation organizations have created initiatives, hired specialists, and embraced rhetoric around the concept of ecosystem services. In par- ticular, emerging international programs to reduce emissions from deforestation and degra- dation (REDD) in developing countries are reorienting forest conservation around delivery of carbon storage services
Moreover, in the last two years, motivated by the perceived success of the Intergovernmental Panel on Climate Change (IPCC), ecosystem advocates have initiated efforts to create an Intergovernmental Platform on Biodiversity and Ecosystem Services
Scientists and policymakers in developing countries are leading this broad international movement
to use ecosystem services as an organizing framework for science and action. For example, Costa Rica pioneered a national program to pay landowners for four ecosystem services in the mid-1990s
not until 2009 that the U.S. Department of Agriculture created an Office of Ecosystem Services and Markets and the U.S. Environmental Protection Agency created the Ecosystem Services Research Program Partnership. Thus international flows of information about the science and policy of ecosystem services often go from developing to developed nations
World Wildlife Fund and its partners recently created an exchange program through which U.S. ranchers travel to Namibia to learn about Namibians success in harness- ing ecosystem protection to promote economic growth
Why has ecosystem services gained traction?
The most important reason reflects the connotation associated with the term services, which differs from the connotations associated with terms that have been emphasized historically, such as nature, species, and biodiversity. Ecosystem services connote utilitarian values of nature, which resonate in developing nations, where reducing poverty and growing the econ- omy are paramount concerns.
also offers conservation practitioners access to economic development funds from international donors and national governments, which is a much larger finance pool than what is available for biodiversity conservation.
has gained trac- tion because of a predicted relationship between such services and climate adaptation capacity
Valuation of Ecosystem Services is Rare and Disconnected From Policy
despite the apparent richness of the literature suggested by simple searches in Google Scholar, few studies rigorously measure and value ecosystem services
Finally, and most importantly, few valuation studies link a specific policy (e.g., protected area, decentralization) to changes in ecological conditions and resulting welfare impacts.
Careful Evaluation of Programs and Policies Aimed at Delivering Ecosystem Services is Rare
little is known about the effectiveness of the most popular efforts (and even less is known about their cost effectiveness
To date, the majority of the well-designed empirical evaluations have been conducted by economists, but these studies have not had much influence on the scientific and policy discourse. As with valuation studies, biologists and other social scientists have tended to lead the way
Potential Exam Questions
Compare/contrast PES and Bos
Evaluate either PES or Bos x2
Discuss PES in terms of conservation effectiveness + distributional outcomes + e.gs