habitat banking: compliance markets for biodiversity and ecosystem services
DESCRIPTION
Habitat Banking: compliance markets for biodiversity and ecosystem services. Mutli-disciplinary work. Led by: eftec IEEP With: Stratus Consulting IUCN Technical University Berlin Pels Rijcken Droogleever Fortuijn BBOP experts. Outline of Presentation. What is Habitat Banking? - PowerPoint PPT PresentationTRANSCRIPT
Habitat Banking: compliance markets forbiodiversity and ecosystem services
Ian Dickie, eftec [email protected]
Policy Mechanisms for Ecosystem Services Delivery, LSE, 5th May 2011.
Mutli-disciplinary work Led by:
eftec IEEP
With:Stratus Consulting IUCNTechnical University BerlinPels Rijcken Droogleever FortuijnBBOP experts
Outline of Presentation
What is Habitat Banking? Design of Habitat Banking (in the EU?) Issues for Discussion
Turning offsets into an asset traded in a market mechanism
Offsets rely on credits being equivalent to debits.
With more offsets, equivalence makes use of standardised metrics (in many cases)
Project delays costly Produce credits in anticipation that
damage will happen that causes debits in the future
What is habitat banking?
“a market where the credits from actions with beneficial biodiversity outcomes can be purchased to offset the debit from environmental damage. Credits can be produced in advance of, and without ex-ante links to, the debits they compensate for, and stored over time”.
What is habitat banking?
Biodiversity credits = both habitats and species. Credits can be purchased:
ex ante for planned projects; and can also be used to compensate (ex-post) for accidental
damage to biodiversity (ELD).
Create credits by additional actions (the requirement that the outcome would not have occurred otherwise): restoration or creation of habitats; measures that enhance the viability of species populations (e.g.
removal of alien predators); Averted risk - protection of valuable habitats that are at risk of
loss or degradation
Market Design
Balancing the need for: Liquidity in a market, with Constraints of regulation necessary to ensure
outcomes
Design
Habitat Banking should be an additional policy instrument for No Net Loss of biodiversity
European framework for habitat banking? – providing consistency: In conservation actions, and Across the single market
Policy objectives to: Reduce damage to biodiversity Ensure compensation for residual damage
Design
Principles: Polluter Pays (the damager compensates) Mitigation Hierarchy Precautionary Principle Market established by regulation Public-sector oversight of the market Transparent information (e.g. all documents on web) Mainly outside designated sites Different approaches for different biodiversity
Status of impacted biodiversity
Opt
ions
for
com
pens
atio
nN
on
e,
irre
plc
ab
le a
nd
p
rote
cte
dF
ew
Ma
ny
Widespread, non-threatened & substitutable
Scarce, declining & degraded
Threatened / unique
Compensation inappropriate /
unfeasible: avoid impacts
Like-for-like compensation usually most appropriate
Simple compensation measures with
trading up
Source: Adapted from BBOP 2009
3 Levels for Habitat Banking I. Critical
II. Strictly protected
(A)
III. Less protected
(B)
IV. Widespread
(C)
Legal status EU Laws & Directives National policy priorities
Limited
Compensation driver
- n/ a
Habitats & other Directives - Guidance
Weak - planning laws None
New mechanism required to ensure no net loss
Potential market None for debits Small
Currently small, but potentially large
Equivalence approach? - Detailed, case by case
Simple checklist, possible fee
Equivalence like for like?
Trading up to credits Strict Strong Weaker (trade up)
No substitution of damage to lower
categories
from lower categories allowed/encouragedTrading up
I. Critical
II. Strictly protected
(A)
III. Less protected
(B)
IV. Widespread
(C)
Legal status
Compensation driver
Habitats & other Directives - Guidance
New mechanism required to ensure no net loss
Potential market
Equivalence approach? Detailed, case by case
Equivalence like for like?
Trading up to credits
Strict Strong Weaker (trade up)
Market Design
Flexible habitat banking framework in terms of:Compensation under different laws and policiesDifferent equivalence approachesRegulate individual offsets and more complex
trades Clear and strong rules
3 Levels for Habitat Banking I. Critical
II. Strictly protected
(A)
III. Less protected
(B)
IV. Widespread
(C)
Legal status EU Laws & Directives National policy priorities
Limited
Compensation driver
- n/ a
Habitats & other Directives - Guidance
Weak - planning laws None
New mechanism required to ensure no net loss
Potential market None for debits Small
Currently small, but potentially large
Equivalence approach? - Detailed, case by case
Simple checklist, possible fee
Equivalence like for like?
Trading up to credits Strict Strong Weaker (trade up)
No substitution of damage to lower
categories
from lower categories allowed/encouragedTrading up
Market Design to Control Risks
Market driven by regulation: Land use planning system Mitigation Hierarchy Biodiversity priorities Governance Transparency
Stronger Regulation – New Mechanism
Market Assurance - Standards
Offset level Equivalence, local consultation
Developer level ~ company policies Implement mitigation heirarchy
System Level (market) Separate governance of developments and offsets Knowledge of biodiversity resources & strategic
priorities
Cost?
Global Markets estimated at $2bn per year (ecosystem marketplace)
Cost to economy? Land development/construction sectors?
No net loss of biodiversity is not free
Issues for Discussion
Is viable market possible? that balances: Biodiversity needs (regulations/constraints) Market liquidity
Sufficient ecological information to reduce transactions costs
In lieu fee (development/damage tax)
Level IV – Simplified System?
I. Critical
II. Strictly protected
(A)
III. Less protected
(B)
IV. Widespread
(C)
Legal status EU Laws & Directives National policy priorities
Limited
Compensation driver
- n/ a
Habitats & other Directives - Guidance
Weak - planning laws None
New mechanism required to ensure no net loss
Potential market
None for debits Small Currently small, but potentially large
Equivalence approach? - Detailed, case by case
Simple checklist,
possible fee
Equivalence like for like?
Trading up to credits Strict Strong Weaker (trade up)
Simplified System - In Lieu Fees?
For instrument to cover as much biodiversity as possible: For simplified (low transaction cost) debit/credit/
equivalence calculation Fees paid to single independent fund (Trust?) Legal requirements on fund Fund would have strategic view of biodiversity needs
– influence habitat banking market, deliver own projects to create credits
Market Design Questions
Maximizing biodiversity gain through trading up and building strategic goals into the system
Issues: viable market possible? (regulation vs liquidity) Ecological information available? In lieu fee (development/damage tax)
Offsetting Ecosystem Services
Offsets for biodiversity or its ecosystem services? Adds incentives for conservation NOT restrospective (as not additional). Merging markets for biodiversity and ecosystem
services could dilute NNL E.g. local amenity and biodiversity provision conflict
Habitat Banking: compliance markets forbiodiversity and ecosystem services
Ian Dickie, eftec [email protected]
Policy Mechanisms for Ecosystem Services Delivery, LSE, 5th May 2011.