Tuesday, Jul 1st 2014
On 3 and 4 June, 280 individuals from 32 countries met in London to discuss how to ensure that development is planned to achieve no net loss or preferably a net gain in biodiversity. Hosted by Forest Trends, the Business and Biodiversity Offsets Programme (BBOP), the UK Department for Environment, Food and Rural Affairs (Defra), and the Zoological Society of London (ZSL) at ZSL, the representatives 62 representatives from footprint companies, 34 from governments and intergovernmental organizations, 31 from financial institutions, 81 from NGOs and civil society, 65 from universities and research organizations and 66 from consultancies and small businesses such as conservation banks.
In a series of lively discussions the conference participants explored issues related to how to avoid, reduce and finally offset residual harm from development, with a view to ensuring no net loss or preferably a net gain of biodiversity. Discussions focused on making progress against these four conference objectives:
Catalyse agreement on practical ways for business leaders, policy-makers, communities and other decision-makers to make this generation the first to leave the world’s biodiversity and ecosystem services in a better condition than that in which they inherited it; Exchange ideas and experience from many countries and industry sectors on best practice; Provide advice on the design and implementation of mitigation measures, offsets and conservation banks to those who need it; and Build capacity of participants on the technical and policy issues involved.
Participants attended seeking practical solutions to reconcile development with environmental protection and social fairness. Throughout the conference participants stressed the importance of applying the mitigation hierarchy as part of the project development process. This means that project developers need to plan their projects to first avoid impacts to biodiversity and then to find ways to minimize those impacts through specific actions on the ground. Only after taking these two important steps would offsets of the residual impacts be considered. The message that biodiversity offsets are the end result of a rigorous planning exercise and not a license for developers to trash the environment was repeated often and agreed by all parties, including those who distrust the effectiveness of offsets to protect biodiversity.
This need to change current practices was highlighted by Peter Bakker of the World Business Council for Sustainable Development when he spoke dramatically, saying ‘Business as Usual is dead’. He appealed for holistic solutions that link no net loss of biodiversity to other conversations on carbon, water and development, to find systemic solutions and scale them up through innovation and valuation, and standards on natural capital accounting just as we have them for financial accounting. He argued that conserving ecosystems and biodiversity can promote economic growth and urged development of actionable goals for business in this area.
The concept of pursuing holistic approach rang true for many participants. A key issue emerging from the conference was a need to undertake effective land use planning to set priorities and ensure viable conservation outcomes. Undertaking spatial planning at a landscape or national scale and within the context of project development and mitigation of impacts is important to support sound land use decision-making. For instance, it informs where development should or should not take place. Where possible, guidelines to identify “no-go” zones and areas of high biodiversity value suitable for conservation efforts through offsets should be identified as a matter of policy and not relegated to case-by-case decisions. Other key issues identified by the conference attendees included: the need to strengthen protection of biodiversity; the importance of developing effective capacity building programs; the need to develop clear and unambiguous policy requirements that establish high standards for developers; the adoption of best practice standards in mitigation (e.g. BBOP Standard, IFC PS6) in order to enable good outcomes for biodiversity and people; the need for effective monitoring, verification and enforcement; and the imperative to create more opportunities for dialogue around these issues.
The issue of sustainable financing arose as part of a discussion related to implementation mechanisms to ensure the effectiveness of offsets. Offsetting residual impacts means designing conservation measures that result in no net loss or a net gain in biodiversity. This implies developing of conservation measures that require management plans backed by strong financial planning. Success requires the development of legal, financial and institutional arrangements and mechanisms to ensure the long-term success and good governance of all mitigation measures including biodiversity offsets. A variety of tools are at offset planners’ disposal including, management agreements (performance contracts), conservation covenants and trust funds.
Some of the key points raised include:
Strong government policies, a regulatory framework and consistent and strong enforcement are the basis for establishing long-term legal, financial and institutional implementation arrangements, including management agreements, covenants and easements, and endowments and conservation trust funds. In performance-based management agreements, landowners or mitigation banks are key actors to ensure successful management. Measures are important: outcome-based measures can provide specific indicators that ensure accountability. Financing instruments ensure performance and permanence in implementing offsets. Implementation of management plans requires financial projections for investment and operating costs. Pricing of offsets needs to cover costs, factoring in the long-term nature of offset obligations and risk of delivery.
Participants at the NNL Summit recognized the important role that conservation trust funds can play in ensuring the success of offsets. CTFs are well suited to play an important role in managing biodiversity offset financing based on best practice standards for good governance and financial management. They also can be effective in managing long-term endowments; ensuring the management and oversight of annual payments to protected area authorities or community-based PA managers; and fulfilling the payment of performance-based management contracts with local landowners. Moreover given that offsets are generally financed over a long time period (i.e. more than 20 years) CTF’s have the management flexibility and long-term planning horizon needed to effectively manage offset payments. For example, by Luis Bernardo Honwana of Biofund in Mozambique, explained that Biofund expects to play a role in biodiversity offsets by convening actors, channeling funds to protected areas and to other conservation actions, and monitoring the impacts of the offset financing.
The financing of existing protected areas as part of an offset merited some discussion. Offsets are governed by several principles including additionality and there are questions whether existing protected areas can be offsets. However many countries see offsets as a way to provide financing for under-funded protected area systems. In Mozambique where only 35% of the protected area budgets are covered by Government and donor resources, the potential for financing existing protected areas as offset sites are an attractive proposition. In such situations, where protected areas are underfinanced, funding from biodiversity offsets may be considered “additional”, complementing other sources of funding and other conservation measures undertaken as part of an offset. Countering this argument is that financing of protected areas could lead to a slippery slope where governments will see private sector funding as a solution and begin to decrease their support for protected areas.
Given the high levels of financial support needed by protected areas, developing rules that can address the funding needs within the scope of offsets and the additionality requirements makes practical sense and the increased funding can go a long way toward meeting country-level PA financing goals.
The Summit raised many important issues and engendered interesting debates that will guide the future development of offset and offset approaches around the world. What was clear was that for offsets to work, they must form part of a well-developed mitigation plan where project developers assess their impacts on biodiversity and seek ways to avoid and minimize those impacts. Offsets will then be developed for the residual impacts – those impacts that remain after the mitigation measures have been undertaken.
Participants recognized the importance of establishing regulations that create effective rules of the game that set high standards and create a level playing field for all companies. With mitigation rules in place that promote best practice and with offsets of residual impacts required, there is great potential to achieve more and better conservation. And this will be achieved through funding from the private sector, thus making investors significant partners in the conservation of biodiversity.
Ray Victurine is the Director of the WCS Conservation Finance Program and the leads the WCS Business and Conservation Initiative. He is trained as a natural resource economist and has worked on conservation and development issues in Africa, Asia and Latin America for more than 25 years. He's been a key CFA member since the network was created in February 2002, integrating CFA Executive Committee since 2010 and co-chairing the Innovative Finance Mechanisms Working Group since 2012.
Photo Credits: Derzsi Elekes Andor