Published on February 19, 2014
Achieving Net Positive Impacts for Biodiversity Through the Mitigation Hierarchy
What is the Challenge to Biodiversity? • New investments in infrastructure and resource development are growing rapidly. • Company commitment to biodiversity conservation is growing. • Financial institutions seeking more environmental responsibility BUT … • Most funding is project based and does not look at impacts beyond the project boundary. • Impacts from multiple developments are typically cumulative. • Existing environmental compliance process does not achieve no net loss of biodiversity (NNL) or net positive gain (NPG)
Implementing the Mitigation Hierarchy Offset to Achieve Net Positive Impact Offset to Achieve No Net Loss Restoration Minimization Avoidance • Create a system for planning and that limits impacts to biodiversity and ecosystem services and incorporates that into the EIA process • Create a value for biodiversity and ecosystems services and system where the developer pays.
Definition What are Biodiversity Offsets? Measurable conservation outcomes to compensate for significant impacts to biodiversity that remain after appropriate prevention and mitigation measures have been taken. The 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.
Some Key Offset Concepts Ecological Equivalence or Like for Like = ≠
Some Key Offset Concepts Limits to What Can be Offset Feasibility best below curve (lower risk) High Low to moderate irreplacability Irreplaceability Vulnerability moderate to high - conservation options should exist Low Low Vulnerability High Vulnerability low but biodiversity is restorable adding value
A Key Role forProject Metrics Thresholds – offsets • Biodiversity counts and measures (what - is being exchanged, or lost and gained) • A currency constructed from these data (how much of what is being exchanged) • An accounting model defining offset specifications (how much of what is needed) • Spatial information to identify potential offset locations (where)
Some Key Offset Concepts Permanence – Offsets should be designed and implemented to guarantee the outcomes over the long-term Legal, financial and management mechanisms need to be in place to secure outcomes that last at least as long as the development project’s impacts and preferably in perpetuity.
Types of offsets 1) Individual offset Source: Ambatovy Project 2) Aggregated offset Source: World Bank, 2009 1) Conservation bank Source: Carroll, Ecosystem Marketplace
Implementation options Option 1: Single (individual) site • Address the residual impacts of a single project • Demonstrate additional, measurable conservation outcomes Option 2: Aggregated site Option 3: Conservation banking • One offset/compensation is planned to address several projects’ impacts • Offset/compensation demand is known in advance • Designed to compensate for specific biodiversity impacts • Biodiversity credits are established in advance of any losses they may be used to offset/compensate • Designed to supply offsets/compensation over time for multiple losses
Three ways to implement offsets or compensatory conservation: • Developer and/or partners (NGO, consultant, multi-stakeholder group) undertake the offset • Developer buys sufficient ‘credits’ from a landowner or conservation bank to offset its impacts. • Payment to a government authority ‘in lieu’ (least desirable – other options preferred)
What Can We Learn from BBOP to Respond to this Challenge? A collaboration of >75 companies, financial institutions, government agencies and civil society organizations working collaboratively, to develop best practice in biodiversity offset design and implementation based on agreed principles.
Principles for biodiversity offsets Principles for biodiversity offsets agreed by all the BBOP members 1. Adherence to the mitigation hierarchy 2. Limits to what can be offset 3. Landscape context 4. No net loss 5. Additional conservation outcomes 6. Stakeholder participation 7. Equity 8. Long-term outcomes 9. Transparency 10. Science and traditional knowledge
Can’t EIA take care of Offsets compared with Environmental Impact Assessment (EIA) biodiversity? • EIA rarely considers ‘no net loss’. • EIA typically only requires avoidance/minimization for some impacts. • Usually does not address residual impacts. • Does not address all components of biodiversity. • Often very site specific – requires a landscape scale. • Often fails to address indirect and cumulative impacts. • HOWEVER the Mitigation Hierarchy can be integrated into the EIA process to deliver NNL and NPG!
Going Beyond Compliance Integrating the mitigation hierarchy within the EIA process allows projects to: • • • Apply a landscape perspective Respond to cumulative impacts Produce comprehensive and permanent solutions that can Avoid Minimize Mitigate Offset-Compensate Impacts to biodiversity and ecosystem services
Working with a Broad Array of Stakeholders Business – Making the Business Case Government- NNL Policy Development Civil Society Consultation and Participation Financial Institutions – Lending Practices PS6, Green Protocols, Equator Banks
The Business Case: Managing Risk Conservation planning can mitigate Risk • Regulatory risks – Profitability may be threatened by fines, claims for damage, delays or loss of authorization • Reputational risks – Loss of trust, poor profile, target of negative publicity, NGO campaigns, loss of license to operate • Financing risks – Tougher access to investment capital—debt and equity—especially given growing offset requirements by Equator banks • Operational risks – Poor consideration of biodiversity & ecosystem services can increase future vulnerability to risks (e.g. inadequate water supply, flooding)
The Business Case: Gaining Competitive Advantage • Access to land – at initial stages of project development & for ongoing exploration to extend the lifetime of existing projects; • Legal and social license to operate • Access to old & new markets • Access to human capital • A seat at the policy development table
What do Governments Need? • Provincial and federal standards and policies that support the Business Case • Standards and policies that fulfill international agreements • IUCN Red list, CITES, etc. • Complementarity with growing lender standards and policies – IFC Performance Standards 1 and 6
Financial Institutions Step up to the Challenge IFC PS6 and the Equator Principles Association Canada Banks Adhering to Equator Principles • Bank of Montreal • Bank of Nova Scotia • Canadian Imperial Bank of Commerce • Export Development Canada • Manulife Financial • Royal Bank of Canada • TD Financial Group
What Do Equator Principles Require from Borrowers? • To protect and conserve biodiversity. • To maintain the benefits from ecosystem services. • To promote the sustainable management of living natural resources through the adoption of practices that integrate conservation needs and development priorities.
Applying a Multi-Tiered Approach Projects and policies that affect the decisions and behavior of key stakeholders: Governments Mandates, standards and regulations on best practices (mitigation, compensation) affect company behavior and investment approaches Financial Sector Safeguards that affect performance through pre and postproject requirements Most Effective & comprehensive Companies Industry CSR and market access affect their actions on the ground (voluntary)
Mitigation Hierarchy Lessons Learned Benefits for government and society • Clear, streamlined guidance is needed for all stakeholders to create certainty & to avoid delays • Adequate performance monitoring and enforcement • Incorporate the mitigation hierarchy into EIA and SEA • Avoid methods that don’t deliver NNL (e.g. poor metrics) • Avoid use of “in lieu” payments • Develop effective financial mechanisms that provide longterm funding • Involve the private sector as partners in the development of best practice • Landscape level approach is key to meeting conservation objectives - Government role is key in this regard
Challenges to progress with NNL/NPG Definition • Political will • Corporate commitment • Institutional commitment within banks • Greater participation from the NGO and scientific communities • And overall: greater capacity + more models to show results
Summary and Conclusions • Business case is growing for companies that often extends beyond legal compliance • Lending community requirements increasingly include higher standards than required by governments • Governments have an important opportunity to contribute directly to biodiversity conservation by creating an even playing field for all businesses through clear regulations on mitigation and offsets. Need to move beyond current compliance In order to adequately protect biodiveristy
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