Biodiversity offsetting: uncertainty and unanswered questions

Biodiversity offsetting is a market-based mechanism that aims to compensate for biodiversity loss as a result of development through conservation activities that deliver an equivalent amount of biodiversity elsewhere. As approaches to conservation informed by a natural capital approach enter the mainstream, offsetting is increasingly being explored as a policy option.

In 2013, the BES hosted a workshop examining the science behind biodiversity offsetting, the outputs of which informed our subsequent response to Defra’s consultation on the topic, which closed in November of that year. The workshop concluded that any offsetting policy implemented in England must be informed by scientific evidence and employ a transparent and consistent mechanism for calculation and evaluation rooted in sound ecological science. We also identified a need for further research into the design and implementation of biodiversity offsets in order to ensure the success and resilience of any policy adopted.

Since the consultation closed at the end of 2013, the Government has made little progress in finalising and implementing an offsetting policy, with the results of the consultation yet to be published.  With the general election just a few weeks away, the decision as to how – or if – biodiversity offsetting is put into practice in England will fall to the next Government.

Unanswered questions remain

Two recently published papers provide a timely reminder of the need to ensure that biodiversity offsetting is informed by robust scientific evidence. The first, an editorial by Evans et al in Animal Conservation, highlights five areas where “progress is needed to ensure biodiversity offsetting can be informed by robust scientific evidence”. These are:

1. Improving our understanding of the implications of biodiversity offsetting across a greater range of habitats. Most studies to date have focused on wetlands and grasslands, but this needs to be extended to include habitats such as forests, marine habitats and uplands.
2. Understanding the management actions and timescales required to restore sites to functioning ecosystems equivalent to the habitats lost to development.
3. Development of a comprehensive framework for treating uncertainty in offsets, for example to inform multipliers and habitat banking.
4. An accepted and universal design for biodiversity offsetting schemes that considers the wider context of development, the offset accounting system, and the approach to defining and calculating biodiversity losses and gains.
5. A deeper debate on the moral and ethical dimensions of offsetting, examining the social assumptions, implications and values that underpin this approach, and setting it within national, regional and local contexts.

Perverse Incentives?

A second paper, published by Gordon et al in the Journal of Applied Ecology, argues that insufficient attention has been paid to the risk that biodiversity offsetting could introduce “perverse incentives” that undermine their intended outcomes. The authors identify four perverse incentives that could arise from poorly designed offset schemes:

1. Biodiversity offsetting schemes could entrench or exacerbate existing baseline declines in biodiversity if the crediting baseline – the point at which an offset scheme is adjudged to have achieved “no net loss” – is poorly specified. If biodiversity is already in decline, then “locking-in” offset schemes to a declining baseline can perpetuate this decline.
2. An extensive, “liquid” biodiversity offsetting market could crowd out other conservation actions, as designation of land, and action to improve the trajectory for threatened species – rather than simply avert loss – would reduce opportunities for generating offset credits.
3. The involvement of volunteers in offset schemes – as the authors highlight has been the case in Australia – risks shifting volunteer effort away from additional schemes to those that are mandatory, whilst also undermining the voluntary ethos by providing labour that developers would otherwise have been required to pay for.
4. The presentation of offsets as environmental gains, when they are by design neutral at best, risks generating false confidence in conservation outcomes.

Gordon et al argue that these potential perverse incentives are not reasons to abandon biodiversity offsetting, but must be properly considered if “grave environmental risks” are to be avoided.  Similarly, Evans et al conclude that “constructive, critical engagement is required between conservation scientists and decision makers” to allow “adequate scrutiny” of offset schemes and enable them to become “a useful tool that can reconcile nature conservation and resource development”.

One of the BES’s key ambitions for the next Parliament is that environmental policy is informed by sound scientific evidence, and that policy-makers have access to the best available ecological science to inform decision-making. How the next Government chooses to take biodiversity offsetting forward will be a key test of this principle.

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