In-depth Q&A: What are ‘biodiversity offsets’?

In-depth Q&A: What are 'biodiversity offsets'?  Carbon Brief

In-depth Q&A: What are ‘biodiversity offsets’?

Introduction

In recent years, “biodiversity offsets” and “credits” have been promoted as one of the key ways to finance nature conservation and support global biodiversity goals.

Put simply, “biodiversity offsetting” is a system for placing a value on a habitat, plant or animal, meaning the “credit” or “unit” can be bought or sold to “offset” damage being done, thereby creating a financial incentive to conserve natural assets elsewhere.

Biodiversity-rich developing countries have been demanding more public finance and “debt forgiveness” from developed countries – which is distinct from climate finance – to help meet their biodiversity targets.

Meanwhile, rich countries, such as Australia, the UK and France, have been promoting and rolling out new “nature markets”, claiming that conservation budgets are stretched and that private finance must play a more prominent part in closing the finance “gap”.

Biodiversity offsetting now sits at the heart of these tensions.

“Until now, we were doing development without any due regard for biodiversity,” Prof David Hill of the UK’s Environment Bank tells Carbon Brief. He argues that regulation-backed biodiversity markets could “provide a pressure valve by which finance can be generated [for] proper biodiversity restoration”.

Critics of offsetting disagree. “These metrics are quite simplistic, mechanistic and crude,” Dr Evangelia Apostolopoulou of the Autonomous University of Barcelona and the Cambridge Institute for Sustainability Leadership tells Carbon Brief. “What you need to actually question is the very idea of the economic valuation of nature.”

While biodiversity-offset markets have so far escaped the intense criticism that carbon-offsetting has been subjected to, they are growing in prominence and were included as one of the ways to finance a global deal for nature agreed at the UN’s COP15 biodiversity summit last year.

 (Clicking links with a will display the full glossary term.)

In this in-depth Q&A, Carbon Brief breaks down the history of biodiversity offsets, where and how they are being used around the world and concerns surrounding their use.

What are biodiversity offsets?

Biodiversity offsets are defined as conservation activities intended to compensate for the lasting impacts of development on species and ecosystems that persist even after other mitigation measures.

These offsets are built around the idea of “no net loss”.

This is an assumption that damage to ecosystems wrought by large-scale development projects – from mining and industry through to highways and land-use planning – can be balanced or outweighed by “producing” or preserving nature elsewhere.

In theory, biodiversity offsets are deployed as the last stage of what is called the “mitigation hierarchy” – a set of five principles (pdf) to adequately respond to negative impacts on biodiversity from development and to ensure no net loss. As defined by the UN Environment Programme and the World Conservation Monitoring Centre, these steps are:

  1. To avoid negative impacts where possible.
  2. To minimise impacts, if necessary.
  3. To restore and rehabilitate the environment.
  4. Only then, to offset unavoidable and necessary harms through compensatory conservation actions.
  5. To accrue benefits to the environment over time.

The diagram below presents different stages of the mitigation hierarchy and states when offsets should be applied to ensure no net loss.

Hierarchy of actions to mitigate biodiversity loss. Source: Cares et al. (2023).

Advocates of offsetting believe that conservation actions can also yield net-positive outcomes, whereby biodiversity increases overall year-on-year – a concept known as “biodiversity net gain”.

Closely related to the concept of biodiversity net gain is what is known as “nature positive”, which many liken to a “net-zero” target for nature. “Nature positive” is a much wider process that incorporates aspects of nature beyond just biodiversity gain, such as climate mitigation. However, the term and its metrics are yet to be comprehensively and credibly defined, despite its increasing use.

Some proponents make a distinction between biodiversity offsets and biodiversity credits.

Carbon Offsets Newsletter Asset

Sign-up to Carbon Brief’s award-winning newsletters here

According to the Taskforce on Nature Markets, an initiative led by a coalition of financiers, entrepreneurs, academics and conservation groups, biodiversity offsets aim to compensate for direct or indirect impacts on ecosystems from development projects. By contrast, biodiversity credits are not necessarily linked with specific ecological damage. Instead, they can contribute to conservation directly.

Critics tell Carbon Brief that they disagree with this framing of biodiversity credits as being a “positive contribution” and any different from offsets. They question the motivations of investors who purchase such credits and ask whether they would want to buy them if they could not be used to make a “nature neutrality” claim. (See: What are some of the main criticisms of biodiversity offsets?)

In the case of carbon, some choose to make a distinction between offsets and credits based on the marketplace they are traded in and whether they are mandated to deliver on emissions cuts.

When emission cuts are mandated by law, companies buy carbon credits from a compliance marketplace to meet their binding emissions targets. However, when there’s no such legal “cap” on emissions, companies and individuals are free to buy offsets from voluntary carbon-mark

SDGs, Targets, and Indicators

SDGs Addressed or Connected to the Issues Highlighted in the Article:

  • SDG 14: Life Below Water – Protect and restore marine ecosystems and promote sustainable use of marine resources.
  • SDG 15: Life on Land – Protect, restore, and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt biodiversity loss.

Specific Targets Under Those SDGs Based on the Article’s Content:

  • SDG 14.2: By 2020, sustainably manage and protect marine and coastal ecosystems to avoid significant adverse impacts, including by strengthening their resilience, and take action for their restoration in order to achieve healthy and productive oceans.
  • SDG 15.9: By 2020, integrate ecosystem and biodiversity values into national and local planning, development processes, poverty reduction strategies, and accounts.

Indicators Mentioned or Implied in the Article:

  • Indicator 14.2.1: Proportion of national exclusive economic zones managed using ecosystem-based approaches.
  • Indicator 15.9.1: Progress towards national targets established in accordance with Aichi Biodiversity Target 2 of the Strategic Plan for Biodiversity 2011-2020.

The article discusses the concept of biodiversity offsets and credits as a means to finance nature conservation and support global biodiversity goals. These goals align with SDG 14 and SDG 15, which focus on protecting and restoring marine and terrestrial ecosystems, respectively. The specific targets under these SDGs include sustainable management and protection of marine and coastal ecosystems (SDG 14.2) and integration of ecosystem and biodiversity values into national and local planning (SDG 15.9). The indicators mentioned or implied in the article relate to the proportion of national exclusive economic zones managed using ecosystem-based approaches (Indicator 14.2.1) and progress towards national targets for biodiversity conservation (Indicator 15.9.1).

Table: SDGs, Targets, and Indicators

SDGs Targets Indicators
SDG 14: Life Below Water Target 14.2: By 2020, sustainably manage and protect marine and coastal ecosystems to avoid significant adverse impacts, including by strengthening their resilience, and take action for their restoration in order to achieve healthy and productive oceans. Indicator 14.2.1: Proportion of national exclusive economic zones managed using ecosystem-based approaches.
SDG 15: Life on Land Target 15.9: By 2020, integrate ecosystem and biodiversity values into national and local planning, development processes, poverty reduction strategies, and accounts. Indicator 15.9.1: Progress towards national targets established in accordance with Aichi Biodiversity Target 2 of the Strategic Plan for Biodiversity 2011-2020.

The table summarizes the relevant SDGs, targets, and indicators identified in the article. SDG 14 addresses the sustainable management and protection of marine and coastal ecosystems, while SDG 15 focuses on integrating ecosystem and biodiversity values into planning and development processes. The specific targets and indicators provide more detailed objectives and measures of progress towards these goals.

Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

Source: interactive.carbonbrief.org

 

Join us, as fellow seekers of change, on a transformative journey at https://sdgtalks.ai/welcome, where you can become a member and actively contribute to shaping a brighter future.