Jennifer Molnar @ The Nature Conservancy

Working Group:
Compensatory Conservation

Ongoing industrial development is a reality, and, for many countries, an imperative. Increasingly, governments and others are turning to compensatory mechanisms, such as offsets, to counterbalance unavoidable biodiversity and ecosystem service impacts and provide urgently needed resources for underfunded environment programs. In such circumstances, how can people best harness the new push for compensatory conservation approaches, like offsets, to leverage the best outcomes for biodiversity and the ecosystem services it provides?

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Working Summary

Influencing the Development of Compensation Policy

Billions of dollars are spent in compensating for the negative impacts of industrial development on nature and local communities every year. More than 80 nations now have, or are developing, specific compensatory mechanisms such as offset and no net loss policies. Now is the time to influence the development of compensation policy for the better. The Compensatory Conservation Working Group is developing criteria, linked to sectoral and in-country circumstances, for identifying the type of compensatory approach most likely to deliver equitable conservation benefits across a range of objectives, and take advantage of current activities to test and illustrate biodiversity and ecosystem service outcomes from alternative compensatory approaches.

The Challenge

Balancing Conservation and Development

The need to balance conservation and development is increasingly urgent. While avoiding and minimizing impacts where possible are crucial steps, serious declines in biodiversity are still happening, and unavoidable development impacts are likely to continue to drive losses. This negatively impacts nature, ecosystem services and livelihoods.

Compensatory conservation approaches, including biodiversity offsets, in-lieu fees and out-of-kind conservation actions, internalize negative externalities associated with development. As such, they can potentially provide strong economic incentives for developers to follow the mitigation hierarchy, as well as achieving better and more socially-acceptable conservation outcomes.

Biodiversity offsetting is perhaps the most well-known compensatory conservation approach, but it is not the only one, nor is it necessarily the most appropriate in a given context. While offsetting – if done well – represents a very strict standard, with trading restricted to within narrow categories of biota and a goal of at least ‘no net loss’ of biodiversity, the most effective type of compensation will depend on a large range of factors.

Context is important. No net loss outcomes in many cases may be incompatible with essential development, strict like-for-like requirements may mean that opportunities for better outcomes for higher conservation priorities are missed, and different approaches to trading biodiversity losses for gains have different implications for local communities affected by both sides of the exchange.

An IUCN policy on offsets has been adopted at 2016’s World Conservation Congress (available here). Industry increasingly is recognizing the potential to generate license-to-operate using offsets and other compensatory approaches, and lending organisations such as the International Finance Corporation and major commercial banks now often require compensation for unavoidable biodiversity impacts.

How can people learn from existing experiences to create and provide better guidance and approaches that result in the desired conservation outcomes?

Inquiry Activities & Updates

Supporting the Development of Robust Compensatory Conservation Guidance

The Compensatory Conservation Working Group brings together experts in socioecological compensation from conservation agencies and consultancies engaged directly with industry in implementing compensatory approaches, researchers engaged in developing national and international offset policy, and contributors from industry and international lending agencies.

Through a series of interdisciplinary local and national scale case studies combining qualitative and quantitative approaches, the working group will explore scenarios illustrating the outcomes of alternative compensation models (ranging from strict like-for-like offsets through out-of-kind compensation, biodiversity banks and contributions to strategic funds for new or existing programs such as protected area expansion management) in different country level contexts for conservation and local communities.

By leveraging working group members’ strong links to government, major industry, and relevant international organisations (e.g. World Bank (particularly the International Finance Corporation), UNEP, IUCN), the group seeks to:

  • shape policy on and achieve better outcomes from compensation and offsetting, for both nature and the people who depend upon it, within case-study countries; and
  • from this work, develop a framework that sets out criteria for best practice compensatory conservation under different in-country circumstances and seek to embed it globally through avenues such as international lending standards, CBD strategic plans and future CBD targets.

This work will support the development of robust guidance for a transition process from a controlled net loss scenario in early stages of a region’s development, potentially focused primarily on funding the establishment of an effective protected area system, to a robust net gain approach as an end point to biodiversity loss.

The working group’s long-term objective is to influence development of compensation and offsetting approaches globally, such that development that causes environmental damage increasingly proceeds in accordance with a global standard of compensation, and eventually, only when an equitable, no net loss outcome for biodiversity and ecosystem services can be achieved.

The Team

Compensatory Conservation