Biodiversity offsets - challenges and opportunities

In the face of rapid biodiversity loss worldwide, highlighted in the Millennium Ecosystem Assessment, new approaches to promote conservation are urgently needed. The challenge is to find new sources of finance for biodiversity conservation and to develop strategies that conserve endangered species and habitats while enhancing livelihoods for those people living closest to biodiversity. Voluntary biodiversity offsets is one approach with potential that is being explored by the Business and Biodiversity Offsets Programme (BBOP), a partnership of companies, governments, financial institutions and NGOs, including IIED.

What are biodiversity offsets?

Biodiversity offsets, broadly defined, are conservation measures taken at one location to make up for biodiversity lost at another location. A well-established example is the system of wetland mitigation banking in the US where project developers are legally required to offset their residual impacts on wetlands but are able to do by buying wetland credits from others. In many countries, this type of regulatory requirement and institutional framework is lacking but companies engaged in large infrastructure projects are increasingly looking to take action on a voluntary basis to restore biodiversity. To support these voluntary approaches BBOP has been researching and developing best practice on biodiversity offsets and testing it through a portfolio of pilot projects in a range of contexts and industry sectors.

What are the challenges?

Biodiversity offsets may seem simple but are complex to design and implement. Working out what is equivalent biodiversity to that lost is an obvious challenge, but equally challenging and crucial for long-term success is securing the support of local stakeholders. Key to such support is ensuring that the offset will bring net benefits for local stakeholders, in particular local and indigenous communities. The offset needs to be designed in a participatory process with local stakeholders so that it offers livelihood-enhancing options based on sustainable use of resources rather than closing off access to land and resources in the name of conservation.

IIED's work on biodiversity offsets

IIED’s Sustainable Markets Group has worked with BBOP to develop guidance for offset designers on grappling with the socioeconomic challenges underlying biodiversity offsets. An issues paper on Stakeholder Participation sets out best practice on engaging with local communities. The Biodiversity Offset Cost Benefit Handbook explains how to use economic tools to analyse the biodiversity-related impacts of the project on indigenous peoples, local communities and other local stakeholders and compare them with the costs and benefits to these local stakeholders of the potential biodiversity offset packages.