It's offsetting time again

In an interview with The Times this weekend, the Environment Secretary, Owen Paterson, revealed his interest in establishing a scheme to offer planners the power to “offset” large infrastructure projects that harm wildlife populations.  This is by no means a new idea, but is obviously attractive to Mr Paterson as he looks to reconcile his twin objectives of supporting rural growth while improving the natural environment.  The prospect of exploring new ways to finance conservation projects is to be welcomed, but I thought I should offer a few words of caution. 

Interest in conservation credits/biodiversity offsetting/habitat banking has grown in recent years. In 2009, the then Shadow Environment Secretary, Nick Herbert proposed a system of conservation credits. This proposal was backed by David Cameron and following the election it was one of the eye-catching proposals in the Natural Environment White Paper.  Six pilot projects have since been established to explore the concept.

This surge in interest is unsurprising.  The economic crisis and political desire for economic growth has forced policy makers to explore new ways of enabling development and funding nature conservation. 

Yet, at its heart, the principle of creating compensatory habitat for damage caused elsewhere has been around for decades.  It is even enshrined in law through the EU Nature Directives.  If developers are able to pass the tests set out in the directives (showing that where a development adversely affects a protected site/species, there are no alternative more environmentally benign ways of meeting the project's objective and that there are imperative reasons of overriding public interest for the development to proceed) then the developer is obliged to provide compensatory habitat to cover the damage that has been caused.  Experience suggests that between 3 and 10 times the amount of habitat lost is required to replace extent and functional quality.  Current guidance is that this new habitat needs to be in place prior to the development taking place.

In our 2010 report on how we would finance nature conservation in an age of austerity, we dedicated a chapter to the principle of offsetting.  We recognised that there was then no system for offsetting damage to sites or species which were not covered by the EU Nature Directives and we were supportive of the principle of piloting the concept.  Our conclusion was that "A strong biodiversity offset market has the potential to reduce environmental damage from development, simplify the planning system and increase funding for conservation. Likely funding raised is £53 million a year."

Yet, all the experience from similar schemes around the world suggests that we shall need a well regulated, mandatory national system with national standards which apply only to non-designated land.  Without clear rules the obvious danger is that while enabling damaging development to take place you risk deteriorating the overall stock of wildlife.

When we wrote our report in 2010, there were over 600 offset banks worldwide and a conservative estimate of the global annual market size was $1.8-$2.9 billion.  This has doubtless grown since then.  What I do not know is whether there has been a net gain in biodiversity where these schemes have been operating. 

So, my message to Mr Paterson is let the six pilots run their course and learn the lessons before rolling out any new scheme nationally.

What do you think about the idea and practice of biodiversity offsetting?

It would be great to hear your views.