The Role of Biodiversity Offsets in Conservation

1. The Role of Biodiversity Offsets in Conservation An open roundtable discussion Conservation International Global Symposium “Defying Nature’s End: The African Context” 21 June 2006

2. An introduction to biodiversity offsets Kerry ten KateDirector, Business and Biodiversity Offset Program Conservation International Global Symposium “Defying Nature’s End: The African Context” 21 June 2006

3. Issues for discussion • Definition: What are biodiversity offsets? • Context: Where do biodiversity offsets fit within: • global sustainable development goals • projects’ environmental mitigation hierarchy? • Opportunities and Risks: What are the: • potential benefits • potential risks? • Challengesto tackle • About BBOP

4. What are biodiversity offsets? “Conservation actions intended to compensate for the residual, unavoidable harm to biodiversity caused by development projects, so as to ensure no net loss of biodiversity. Before developers contemplate offsets, they should have first sought to avoid and minimise harm to biodiversity.” ten Kate, K.., Bishop, J., and Bayon, R. (2004). Biodiversity offsets: Views, experience, and the business case. IUCN and Insight Investment.

5. Reduce impacts towards zero residual Positive contributions (Net biodiversity benefit) Biodiversity offsets and impact mitigation The mitigation hierarchy: Avoid Reduce, moderate, minimize Rescue (relocation, translocation) Repair, reinstate, restore Compensate/offset

6. Biodiversity offsets & sustainable development • Ecological sustainability • “no net loss” → “net positive impact” • Economic efficiency • cost effectiveness → welfare maximization • Social equity • no harm to the poor → poverty reduction

7. Global policy context for offsets • “To achieve, by 2010, a significant reduction of the current rate of biodiversity loss at the global, regional and national level” • CBD Conference of Parties, 2002 • “Halve, between 1990 and 2015, the proportion of people whose income is less than $1 a day” (Goal 1, Target 1) - UN Millennium Development Goals • “We resolve … to protect our natural resource base in support of development” - 2005 World Summit Outcome

8. BBOP Developed Preserved Developed Preserved The “conservation case” More and better conservation: • Balance development and conservation. More conservation efforts than “status quo”. • Additional finance & mainstream biodiversity into business & regional planning. • Focus conservation efforts on priorities, in context of landscape/regional planning. • Trade small compromised sites for larger areas with better prospects. Greater connectivity of areas. • Potential for pooled resource and development of conservation based markets e.g. wetland banking. Sources: 2004: Insight/IUCN; White; Maze.

9. A brief history of biodiversity offsets • First formalised in 1970s: USA system of wetland mitigation. • Now legislation in USA, Canada, Europe (25), Brazil, Switzerland, Australia • Policy under discussion in New Zealand, Uganda and Mexico. • Investor interest (IFC, Equator Banks, fund managers) • Companies (Rio Tinto, Newmont, Anglo American, Shell, BP, Walmart) • Industry associations (ICMM, IPIECA) • Multistakeholder initiatives (EBI, BBOP, Cambridge Conservation Forum)

10. Why should business offset the harm it causes to biodiversity ? • Legal requirements: • Law that mandates offset (e.g. US, EU, Brazil, Australia) • Law that facilitates offset (e.g. EIA, planning law, concession agreements) • The business case for voluntary biodiversity offsets

11. The business case for biodiversity offsets • Access to land and resources:Significant overlap between projects and areas of high conservation value. • Maintaining license to operate: Satisfy increasing stakeholder concern for conservation: • Increased “regulatory goodwill”:Good relationships with regulatorsCan lead tofaster permitting. “Preferred partner” status. • Social license to operate:Better relationships with local communities, government regulators, environmental groups, employees. • Reputational benefits. • A practical tool for managing social and environmental risks and liabilities. • Flexibility: location/scale of rehabilitation; third party implementation/liability. • Efficiency: often more cost-effective than on-site rehabilitation. • Easier access to capital and associated competitive advantages. • Influence emerging regulation and policy. “First mover”advantage.

12. Opportunities & Risks Risks: • No substitute for “no go” areas • Failure to deliver • Controversy • Credible standards Opportunities: Conservation • more & better conservation, mainstreaming mechanism, gives value to biodiversity Business • economically efficient means to secure license to operate & reputation; influence policy: market mechanism not regulation Policy-makers • involve private sector in achieving 2010 target; use market mechanism Local communities • means to minimise impact on livelihoods and secure additional benefits

13. Issues to resolve (1) • Slippery slope:will biodiversity offsets lead to the approval of development projects that should not take place (e.g. destruction of unique habitats, or irreversible loss)? • Social equity: how to ensure equitable distribution of costs and benefits of offsets, while respecting the rights and concerns of local and indigenous communities? • Currency: can offsets provide comparable biodiversity and livelihood benefits as the original ecosystem? How to measure impact and determine a suitable offset? • Responsibility: how far does responsibility for environmental impact extend? Should developers offset the indirect impacts of their projects (e.g. labour migration)?

14. Issues to resolve (2) • Additionality: how to ensure that offsets deliver new and additional biodiversity benefits, and that biodiversity loss is not simply displaced (“leakage”)? • Sustainability: how to ensure that biodiversity offsets are secured in perpetuity or at least for the duration of the impact? • Timing: should offsets be in place prior to any environmental impact? How can this be achieved? • Peformance standards: need credible metrics and governance for biodiversity offsets, including effective mechanisms for stakeholder participation and oversight

15. The Business & Biodiversity Offsets Program Ensuring no net loss of biodiversity in development projects through prioritised in situ conservation and livelihood outcomes

16. Vision for the Program All future major development projects (in the private and public sectors alike), and certainly those which will have a significant impact on biodiversity, should ensure that they bring about no net loss (and preferably a net gain) in biodiversity.

17. Objectives and Structure Learning Network Advisory Committee Pilot 1 Pilot 2 Secretariat Pilot 3 Pilot 4  PILOT PROJECTS: Portfolio of pilot projects worldwide demonstrating “no net loss” of biodiversity and livelihood benefits  TOOLKIT: “How to” toolkit on offset design and implementation  POLICY: Influence policy on offsets to meet conservation and businessobjectives.

18. Advisory Committee • The National Ecology Institute, Mexico • The National Environmental Management Authority, Uganda • The Nature Conservancy • The Royal Botanic Gardens, Kew • The South African National Biodiversity Institute • The United Nations Development Program (Footprint Neutral Initiative) • The US Fish and Wildlife Service • Wageningen University, Netherlands • The World Conservation Society • Birdlife International • Cambridge Centre for Conservation Policy • The Centre for Research-Information-Action for Development in Africa • Conservation International • Department of Sustainability & Environment, Victoria, Australia • Fauna and Flora International • Forest Trends • Insight Investment • IUCN, The World Conservation Union • The Biodiversity Neutral Initiative • The London Zoological Society • The Ministry of Ecology and Sustainable Development, France

19. Learning Network • ABN-Amro  BG Group • Earthcall  Fundaçao Boticario • Goldman Sachs  Rio Tinto • The International Council on Mining and Metals • The International Finance Corporation • The International Petroleum Industry Environmental Conservation Association; • The Katoomba Group (over 200 international experts dedicated to advancing markets for ecosystem services); • The Secretariat of the Convention on Biological Diversity; • The World Bank  The World Bank Institute • The World Resources Institute • The World Wildlife Fund

20. Ntronang Akyem Deposit Current pilot projects • Gas to liquid project in Middle East • Gold mine in Ghana • Tourism lodge in Uganda • Platinum mine in South Africa

21. National Bioregional Site level How ? • Review mitigation hierarchy • Review ESHIA for completeness and baseline data for offset design • Quantify impact • Identify offset options (priority conservation and livelihood projects) • Design offset • Implement, monitor

22. Offset: livelihood component • Address underlying causes of loss of biodiversity at offset sites • Meet biodiversity-related livelihood needs of local communities (e.g food, energy) • Link offsets to achieving priority development outcomes.

23. SPARE MATERIALS

24. What are pilot projects? • New projects in the field • Objective: demonstrate no net loss (or net gain) of biodiversity • Diverse portfolio: • oil & gas, mining, construction • US$7bn to <US$500k • tropical forest, desert, marine • stakeholders& experts: companies, local & central govt, local & intl NGOs, local communities

25. Challenges with offset design • Appropriateness of development decisions • Shared responsibility • Measurement of impacts and offsets: primary vs secondary impacts • Priority setting: lack of consensus on priorities • Understanding trends for definition of baselines • Prediction of underlying baseline in the context of underlying trends • Comparability and currency: how to measure impact and determine a suitable offset, like for like or like for not like? • Scale issues: distance and ratio of offset • Timing • Equity: equitable distribution of the economic, social and environmental costs and benefits • Integration with other issues: ensuring the rights and concerns of local communities are considered • Additionality and leakage • Sustainability: ensuring offsets operate for the duration of the impact • Assurance: assurance to stakeholders that offsets are operating effectively