Guidance Note 6 Biodiversity Conservation and the Sustainable Management of Ecosystem Services and Living Resources

Transcription

1 Guidance Note 6 corresponds to Performance Standard 6. Please also refer to Performance Standards 1 5 and 7 8 as well as their corresponding Guidance Notes for additional information. Bibliographical information on all referenced materials appearing in the text of this Guidance Note can be found in the References section at the end. Introduction 1. Performance Standard 6 recognizes that protecting and conserving biodiversity, the maintenance of ecosystem services, and the sustainable management of natural resources are fundamental to sustainable development. Biodiversity, as defined in the Convention on Biological Diversity, is the variability among living organisms from all sources including, terrestrial, marine, and other aquatic ecosystems and the ecological complexes of which they are a part. This includes diversity within species, between species, and of ecosystems. This Performance Standard reflects the objectives of the Convention on Biological Diversity to conserve biological diversity and promote the use of renewable natural resources in a sustainable manner. This Performance Standard addresses how clients can avoid, reduce, restore, and offset impacts on biodiversity arising from their operations as well as sustainably manage renewable natural resources and ecosystem services. 1 1 Ecosystem services are defined as provisioning services (such as food, freshwater, shelter, and timber), regulating services (such as surface water purification, carbon storage and sequestration, climate regulation, and protection from natural hazards), and natural cultural services (such as cultural heritage and sacred sites), which are linked to biodiversity. G1. Biological diversity or biodiversity is recognized as an integrating concept that includes the ecosystems within which the people of the world live, as well as the multitude of species that are used by humankind for food, fiber, medicines, clothing and shelter. Protecting this global biodiversity from damage and conserving it for future generations is recognized as being vitally important in the Convention on Biological Diversity. G2. In pursuing these aims, IFC is guided by and supports the implementation of applicable international law and conventions including: Convention on Biological Diversity and its protocols. Convention on Wetlands of International Importance Especially as Waterfowl Habitat. Convention on the Conservation of Migratory Species of Wild Animals (Bonn Convention). G3. Ecosystem services are the benefits that people obtain from ecosystems, and include provisioning services (such as food, fiber, fresh water, fuel wood, biochemicals, genetic resources); regulating services (such as climate regulation, disease regulation, water regulation, water purification, degradation of pollutants, carbon sequestration and storage, nutrient cycling); and cultural services (spiritual and religious aspects, recreation and ecotourism, aesthetics, inspiration, educational values, sense of place, cultural heritage). G13-G24 of this Guidance Notes provides further information on ecosystem services. Objectives To protect and conserve biodiversity To ensure the continuance of benefits arising from ecosystem services 125

2 To promote the sustainable management of natural resources through the adoption of practices that integrate conservation needs and development priorities G4. The objectives of Performance Standard 6 are derived from elements of the Convention on Biological Diversity and the Millennium Ecosystem Assessment and the recognition of the important role that the private sector can play in protecting and conserving biodiversity for future generations and promoting the sustainable management of living natural resources. The sustainable management of living resources by the private sector should be achieved by balancing conservation and development priorities, and recognizing that this may require tradeoffs on each side. Scope of Application 2. The applicability of this Performance Standard is established during the social and environmental risks and impacts identification process, while the implementation of the actions necessary to meet the requirements of this Performance Standard is managed through the client s social and environmental management system. The assessment and management system requirements are outlined in Performance Standard Based on the risks and impacts identification process on the biodiversity and natural resources present, the requirements of this Performance Standard are applied to projects (i) located in all habitats, regardless of whether those habitats have been modified 2 or not, or whether they are legally protected or designated areas or not; (ii) in areas providing critical ecosystem services 3 to Affected Stakeholders and/or to the project; and (iii) whose objective includes the extraction of natural resources (e.g., forestry, fisheries). 2 As a general rule, modified habitat does not include urban areas, industrial, and other brownfield sites. 3 Critical ecosystem services are defined as those provisioning services necessary for sustaining the project or the survival, sustenance, livelihood, or primary income source of Affected Stakeholders. Requirements General 4. In order to avoid, and if avoidance is not possible then to reduce and restore adverse impacts to biodiversity and ecosystem services (see Performance Standard 1) the client will assess the significance of project impacts on biodiversity and ecosystem services as an integral part of the social and environmental risks and impacts identification process. The risks and impacts identification process should consider direct and indirect project-related impacts on biodiversity and ecosystem services and identify residual impacts. 5. The risks and impacts identification process will focus on the major threats to biodiversity and priority ecosystem services, such as habitat loss, degradation and fragmentation, invasive alien species, overexploitation, water scarcity, nutrient loading, pollution, and climate change. The risks and impacts identification process will take into account the differing values attached to biodiversity and ecosystem services by specific stakeholders. Where paragraphs of this Performance Standard are applicable, the client will retain qualified and experienced external experts to assist in conducting the risks and impacts identification process, which should consider project-related impacts across the potentially affected landscape or seascape. G5. As specified in Performance Standard 1, all projects will perform a social and environmental risks and impacts identification process. Issues regarding biodiversity and 126

3 ecosystem services form an integral part of the process. The risks and identification process should consider project-related impacts on biodiversity and ecosystem services in the project s area of influence, including areas containing associated facilities or areas impacted by supply chains or other third party relationships. G6. Where biodiversity is a key focus, clients should refer to internationally recognized good practice guidelines on integrating biodiversity into impact assessment, which include: Voluntary Guidelines on Biodiversity-inclusive Environmental Impact Assessment (Contained in the CBD Decision VIII/28 from COP8 in 2006). Biodiversity in Impact Assessment (IAIA Special Publication Series No. 3). Various products of The Energy and Biodiversity Initiative. G7. As part of the Assessment process, the client should determine the vulnerability (degree of threat) and irreplaceablity (rarity or uniqueness) 1 of the biodiversity attributes in question and/or the ecosystem service. Regarding vulnerability, the client should determine if such threats, as listed in paragraph 7 in PS6, are pre-existing and/or the extent to which the project will exacerbate or further them. Regarding irreplaceability, the client should describe the uniqueness of the biodiversity attribute, the ecosystem service and/or the areas in which these resource/services occur on a regional level. G8. Projects that are likely to have a significant impact on biodiversity and/or on ecosystem services should be subject to more detailed assessment, analysis and/or specific studies. Such further assessment / analysis should be undertaken by qualified and experienced professionals and should fully account for the project s direct and indirect impacts, including those outside the fence of the project s immediate boundaries. When paragraphs 11 and 16 [natural and critical habitats] of this Performance Standard applies, the risk and identification process should also consider cumulative impacts, especially those on habitat connectivity and/or on downstream catchment areas. G9. In sectors that rely on natural resources as raw materials (such as furniture manufacturing and food processing), the impacts on biodiversity may also occur at several points in the supply chain. In such situations, the client should identify any impacts caused by their commercial partners or suppliers and address them in a manner commensurate to their degree of control and influence. Additional information regarding supply chain management is provided in Performance Standard 1 and its accompanying Guidance Note. G10. Assessment of biodiversity impacts can inform decisions on project alternatives. Alternatives may include variations in the layout of the project site, alternative engineering processes and construction practices, the selection of different sites or routing of linear facilities, and screening of suppliers to select those with appropriate environmental/social risk management systems. G11. In projects with significant biodiversity issues (e.g., sensitive habitats or endangered species), a Biodiversity Action Plan and/or Biodiversity Management should be prepared to highlight these issues and illustrate how they will be addressed. The Biodiversity Action Plan should identify specific measures and timelines for addressing biodiversity issues, and disclosed 1 As paraphrased from Margules, C.R. and R. L. Pressey, Systematic Conservation Planning. Nature 405, (11 May 2000), irreplaceability is the extent to which the loss of the area will compromise regional conservation targets, and vulnerability is the risk of the area being transformed by extractive uses. Areas with high values for both should receive priority for conservation action. 127

4 and implemented through the client s Social and Environmental Management system consistent with the requirements of Performance Standard 1. Depending on the nature and scope of project and/or on the vulnerability/irreplaceability of the biodiversity attribute in question, some actions will likely need to be undertaken before project financing. Details on the preparation of a Biodiversity Action Plan and a Biodiversity Management Plan are presented in Annex A. G12. Given the importance of biodiversity in not only environmental but also economic, social, cultural and scientific terms, the various components of biodiversity can have different values to different stakeholders, and these different values should be clarified during consultation and taken into account in the biodiversity Assessment. 6. Where there is a loss or diminution of an ecosystem service upon which the project depends, or where the company s project-related impacts are likely to negatively impact the availability of an ecosystem service to Affected Stakeholders, 4 the client will identify and prioritize those services as part of the risks and impacts identification process. Adverse impacts on priority ecosystem services should be avoided, and if these impacts are unavoidable, the client will meet the following requirements: Reduce adverse impacts and implement restoration measures that aim to maintain the value and functionality of such services Where the loss or diminution of a critical provisioning service is experienced by Affected Stakeholders as a result of project implementation, that loss/diminution will be addressed through Performance Standards 1 and 5 Where the loss or diminution of a critical cultural service is experienced by Affected Stakeholders, that loss/diminution will be addressed under Performance Standard 8 4 Security of tenure means that resettled individuals or communities are resettled to a site that they can legally occupy and from which they are protected from the risk of eviction. G13. PS6 has identifies how clients and projects should Assess, Manage and Monitor their interaction with ecosystems. Ecosystems are defined as a functional unit that consists of a dynamic complex of living organisms and their interaction with the nonliving environment. 2 The role and importance of human intervention and influence is explicit. G14. Ecosystem services are defined as the benefits that people obtain from ecosystems. Ecosystem services are grouped into four major categories: 3 Provisioning ecosystem services are those most directly associated with production functions of private enterprises including (i) food crops, seafood and game, wild crops and ethnobotanicals (ii) water for drinking, irrigation and hydropower (iii) forests areas which provide the basis for many biopharmaceuticals, construction materials, and biomass for renewable energy Regulating ecosystem services include functions which buffer anthropogenicallyinduced stress on natural ecosystems and determine the resiliency of ecosystems to human-induced change and include (i) climate regulation and carbon sequestration (ii) waste decomposition and detoxification (iii) purification of water and air and (iv) control of pests, disease and pollination 2 Millennium Ecosystems Assessment, See Millennium Ecosystem Assessment - see 128

5 Supporting services include functions that are less frequently encountered by clients or their projects, including (i) nutrient capture and recycling (ii) primary production (iii) flyways, migratory corridors and (iv) pathways for genetic exchange G15. Cultural services including (i) recreational experiences such as eco-tourism and sport (ii) cultural and intellectual motivation (iii) scientific exploration and education. G16. Ecosystems services have historically been included implicitly in environmental review procedures, often within the discussion of a project s cumulative impacts. Improvements in natural and social science and geographic information capabilities have made the delineation of ecosystems and services more practical. G17. Numerous regional ecosystem mapping efforts have been completed (e.g., academic and governmental institutions, NGOs and intergovernmental organizations (e.g., The Nature Conservancy, NatureServe Terrestrial Ecosystems Map for South America, Global Forest Watch, Conservation International, FAO Forest Assessments, etc.), and many additional efforts are currently underway (e.g., the GEO GEOSS Africa ecosystem mapping project). These classifications and maps can be applied directly for the environmental assessment of development projects, landscape integrity and conservation assessments, resource development and management analyses, ecosystem services valuations, documentation and prediction of environmental trends. G18. Degradation of ecosystem services can pose operational, financial and reputational risks to project sustainability. The extent of such threats, and the ecosystem s resiliency, should be considered during the risks and identification process.monitoring plans should include ecosystem services to the extent they are identified. The directness or dependence 4 of the company on the continued flow of ecosystem services should be identified. G19. Ecosystems are increasingly recognized and protected by laws and regulations at various levels. Several countries have included ecosystem services within recent legislation at national and provincial levels and enforcement of legal ecosystem rights is being pursued in many places. Thus elements of ecosystem services are increasingly important for regulatory purposes with which the client should have demonstrated familiarity and be in possession of current and proposed regulations which may affect their operations and reputation. G20. Management practices which identify and mitigate ecosystem impacts are well established in forest and agriculture. Ecosystem impacts are explicitly included in several current and emerging voluntary standards (Natural Resources Management, below) which have adopted the High Conservation Value Network s designation system. G21. IFC is particularly concerned with water use within wetland ecosystems and watersheds where human pressure and competition for use is often extreme and increasing. The use of ecosystem-based permissibility regulations which recognize receiving media conditions, such as Total Maximum Daily Load factors (TMDLs 5 ) for watersheds should be considered whenever possible by the client. 4 The extent to which a company is dependent on ecosystem services for raw materials or security of supply and the extent to which its operation gives rise to environmental externalities. 5 Total Maximum Daily Load (TMDL) is the maximum amount of pollution that a waterbody can assimilate without violating specified water quality standards. 129

6 G22. During the risks and identification process (see PS 1) the client will conduct an Ecosystem Services Review (ESR) to: Review the nature and extent of ecosystem services in the project area; Identify the condition, trends and external (non-project) threats to such services; Distinguish the beneficiaries of such services within the project s area of influence; Assess the extent to which the project depends upon or may impact identified services; Identify the associated key operational, financial, regulatory and reputational risks; Identify courses of action and mitigation measures which can reduce identified risks. G23. The conduct of an ESR complements but does not replace other Assessment requirements. The inclusion of an ESR will improve identification of a clients dependence and vulnerability on ecosystem services. To the extent feasible, within the limits of available information, the ESR should be quantitative. However, the qualitative nature of the project s interactions with identified ecosystem services and other beneficiaries is equally important. G24. An example TOR for an ESR is included in Annex B (Ecosystem Services Review). Numerous toolkits for improving the assessment of ecosystem services have been developed and consensus on combining need with practicality is emerging. Information on industry-specific ecosystem services are available through the following publications: The Corporate Ecosystem Services Review: Guidelines for Identifying Business Risks & Opportunities Arising from Ecosystem Change WRI and Meridian Institute. ( The Ecosystem Services Benchmark. A guidance document Fauna & Flora International, UNEP Ecosystems and Human Well-being: Opportunities and Challenges for Business and Industry in the Millennium Ecosystem Assessment RSB Ecosystem and conservation specialist study guidelines RSB ( Protection and Conservation of Biodiversity General 7. Habitat is defined as a terrestrial, freshwater, or marine geographical unit or an airway passage that supports complexities of living organisms and their interactions with the nonliving environment. For the purposes of implementation of this Performance Standard, habitats are divided into modified, natural, and critical. 8. For protection and conservation of the biodiversity, the mitigation hierarchy 5 includes biodiversity offsets. 6 5 As defined in Performance Standard 1, the mitigation hierarchy is to avoid adverse impacts, reduce significant impacts when avoidance is not possible, restore significant impacts when both avoidance and minimization is not possible, and offset significant residual impacts as a last resort. 6 Biodiversity offsets are measurable conservation outcomes resulting from actions designed to compensate for significant adverse biodiversity impacts arising from project development and persisting after appropriate avoidance, minimization and restoration measures have been taken. Generally, these are not within the project site. 130

7 G25. Performance Standard 6 recognizes the need to consider impacts on biodiversity in both natural and modified habitats as modified habitats can also have significant biodiversity value, often in managed agricultural landscapes. It is in modified habitats that much private sector development takes place. G26. In practice, natural and modified habitats exist on a continuum that ranges from completely undisturbed, pristine natural habitats at one end of the scale, through habitats with some degree of human impact, to modified habitats that are intensively managed and have a non-native assemblage of plants and animals. The identification of an area as either a natural or a modified habitat can therefore be complex, especially as project sites will often contain a mosaic of habitats. G27. The delineation of natural or modified habitats will be determined based on the biodiversity attributes on the site (e.g., extent of anthropogenic modification, spread of invasive species, degree of pollution, the extent of habitat fragmentation, the viability of existing naturally-occurring species assemblages, the resemblance of existing ecosystem functionality and structure to historical conditions, the degree of other types of habitat degradation etc.). This type of technical analysis should take place as part of the risks and impact identification process as described in Performance Standard 1. In recognizing and delineating natural or modified habitats, clients will need to consult suitably qualified professionals for advice. Clients must retain qualified and experienced external experts when dealing with critical habitat and legally protected areas. G28. In addition to the above analysis, when identifying either modified and natural habitats, and as part of the Assessment process, the client should also establish the differing values attached to particular biodiversity resources by relevant local, national and international stakeholder groups. These values may be intrinsic (valued in and of itself) or human derived (associated with a human benefit). Biodiversity values will be viewed differently depending on the stakeholders, and will vary from place to place. Stakeholder groups with whom to consult include affected stakeholders within the immediate vicinity of the project, governmental officials, academic institutions, technical specialists and international conservation NGOs. G29. For all projects, but especially those in natural and critical habitats, the client should be especially diligent in designing measures to adequately mitigate for indirect impacts. Some of the most pervasive indirect impacts are caused by invasive species and induced access by third parties (including project staff and local communities) into previously undisturbed or largely inaccessible wilderness areas. Induced access control measures include limits or prohibitions on the construction of new access roads or patrolling the use of existing or newly constructed access roads. Access control measures are essential for linear infrastructure developments, especially through intact wilderness areas, in areas susceptible to poaching or in areas with the presence of species listed on Appendix 1 or 2 of Convention on International Trade in Endangered Species (CITES). G30. Habitat degradation is one of the most significant potential threats to biodiversity and ecosystem services associated with projects involving significant land development, including mining, plantations or certain energy and industrial projects (e.g., oil and gas developments, construction material extraction, for instance in cement manufacturing). Habitat alteration and degradation may occur during different stages of projects: while oil and gas projects may have the greatest potential for temporary or permanent alteration of terrestrial and aquatic habitats occurring during construction, with mining and quarrying projects the greatest potential is 131

8 typically associated with the operational activities. Additionally, exploration activities in both the mining and oil and gas sectors often require the development of access routes, transportation corridors, seismic tracks, temporary facilities (such as storage material storage yards, workshops, airstrips and helipads, equipment staging areas), construction material extraction sites (including borrow pits and quarries), and temporary camps to house workers which may all result in varying degrees of land-clearing and population in- migration. The client should adopt the principle of footprint minimization through all project life cycles, and develop and implement appropriate ecological restoration strategies, including physical reinstatement (or restoration) and revegetation (or biorestoration) planning and methods, at the earliest possible stage in the project planning. The basic principles should include: (i) protection of topsoil and restoration of vegetation cover as quickly as possible after construction or disturbance, (ii) reestablishment of original habitat retuning the project footprints to their preconstruction / predisturbance conditions, (iii) where native species (especially protected species) cannot be retained in situ, consideration of conservation techniques such as translocation / relocation. Modified Habitat 9. Modified habitats are those that may contain a large proportion of plant and/or animal species of non-native origin, or where human activity has substantially modified the area s primary ecological functions. 7 Modified habitats include agricultural areas, forest plantations, reclaimed coastal zones, and wetlands. 10. In areas of modified habitat, the client will exercise care to reduce any additional conversion or degradation of such habitat. 7 This excludes habitat that has been converted in anticipation of the project. G31. Definitions for modified habitats or degraded lands vary dramatically, and as previously mentioned, project sites will often be located on mosaics of modified and natural habitats. Given the range of habitats in which IFC invests, there is no prescriptive set of metrics for determining if an area is to be considered modified or not. The risks and identification process should determine the level to which human-derived activities (excluding traditional uses by indigenous peoples) have modified the ecological structure and functions of that habitat and its native biodiversity. G32. Regardless of a modified designation, the client should determine if there are existing biodiversity attributes of particular importance to conservation and the degree to which such attributes are valued by relevant stakeholders, particularly local stakeholders and international conservation NGOs. Mitigation measures should be designed to maintain such attributes either on-site or within the landscape/seascape. As mentioned previously, some modified habitats may also contain biodiversity attributes that trigger a critical habitat designation. For example, highly modified habitats, such as ancient hedges in European agricultural landscapes or tembawang rubber plantations in Kalimantan, might have very high biodiversity value, triggering a critical habitat designation. G33. Clients should locate project activities on modified, rather than natural habitats; however, those natural habitats that have been converted or degraded by the client or by recent unsustainable landuse practices before IFC s investment will not be considered modified. Natural Habitat 11. Natural habitats are those (i) composed of viable assemblages of plant and/or animal species of largely native origin, and/or (ii) where human activity has not essentially modified the area s primary ecological functions 132

9 12. In areas of natural habitat, the client will not significantly covert or degrade 8 such habitat, unless the following could be demonstrated: No other viable alternatives within the region exist for development of the project on modified habitat Adequate conservation measures will be implemented within the project site, which may include the identification and protection of set-asides 9 Any conversion or degradation is mitigated according to the mitigation hierarchy 13. Mitigation measures will be designed to achieve no net loss of biodiversity where feasible, and may include a combination of actions, such as: Post-operation restoration of habitats Implementation of biodiversity offsets, such as the creation of ecologically comparable areas that are managed for biodiversity 10 Investment in a relevant and credible offset banking scheme Implementation of measures to reduce habitat fragmentation, such as biodiversity corridors 8 Significant conversion or degradation is (i) the elimination or severe diminution of the integrity of a habitat caused by a major, long-term change in land or water use; or (ii) modification of a habitat that substantially reduces the habitat s ability to maintain viable population of its native species. 9 Set-asides are land areas within the project site that are excluded from development and are targeted for the implementation of conservation enhancement measures. Set-asides will likely contain biodiversity attributes and/or provide ecosystem services of significance at the national and/or regional level. 10 During offset development, clients will respect the ongoing usage of proposed offset sites by Indigenous Peoples or traditional communities G34. As mentioned for modified habitats, there are no prescribed set of metrics available to identity what is a natural habitat. The determination of natural habitat will be made using credible scientific analysis and best available information. An assessment and comparison of current and historic conditions should be conducted, and local knowledge and experience should be utilized. Natural habitats are not to be interpreted as untouched or pristine habitats. It is assumed that the majority of habitats designated as natural will indeed have undergone some degree of historic or recent anthropogenic impact. The question is the degree of impact. If the habitat still largely contains the principal characteristic and key elements of its native ecosystem(s), such as complexity, structure and diversity, than it should be considered a natural habitat regardless of the presence of some invasive species, secondary forest or other humaninduced alteration. G35. The first bullet point is especially relevant to agribusiness projects where it might be feasible in some cases to site the plantation on heavily modified and degraded lands rather than on recently deforested areas or on other forms of natural habitat. In these cases, a welldeveloped locations alternative analysis should be conducted to explore potential viable options for development on modified habitat. The term viable includes, but is not limited to, technical and financial feasible alternatives. In addition, all reasonable attempts must be made to conserve the remaining biodiversity attributes of importance on the site where significant conversion and degradation is to take place. Such conservation measures may take the form of set-asides, such as those prescribed by governments or by voluntary standards, such as the Forest Stewardship Council (FSC) and the Roundtable for Sustainable Oil Palm (RSPO). G36. If a project has the potential to result in a significant conversion or degradation of natural habitats, relevant stakeholder groups must be engaged as part of a rigorous, fair and balanced 133

10 multi-stakeholder dialogue. Stakeholders should include a diverse set of opinions, including scientific and technical experts, members of the international conservation NGO community in addition to affected stakeholders. The stakeholder engagement is intended to further inform the technical analysis as described in paragraph G34 of this Guidance Note. Outcomes of this stakeholder process will shed light on the particular biodiversity attributes of interest and the values of such attributes and the types of mitigation and other conservation measures to consider, including biodiversity offsets. G37. Mitigation measures in natural habitat should be adequately supported by financial resources from the client and, if necessary, supplemented by other financial sources, such as donor funds. The client should identify roles and responsibilities for itself and any third party for mitigation monitoring arrangements. G38. In areas of natural habitat, the client should design mitigation measures to achieve no net loss through the application of various on-site and offset mitigation measures. The types of measures to establish no net loss will vary from site to site as will the biodiversity attributes of each site that require specific attention. The above mentioned technical analysis and stakeholder engagement will be essential in identifying which attributes the client should focus on in striving to obtain no net loss. All natural habitat is not the same, and the biodiversity attributes and values of such attributes will vary from place to place. The methods to achieve no net loss in Brazilian grasslands will differ considerably from those in the Saharan Desert or in tracts of larch in Siberia. G39. Regarding offsets, the client should adhere to the latest thinking on this topic, which has been put forward by the Business and Biodiversity Offset Program (BBOP). 6 For example, BBOP has developed a set of Offset Principles and emphasizes that offsets must achieve conservation outcomes on-the-ground. 7 The creation of an ecologically comparable area is one example of the many types of offsets that could be developed by the client. Nevertheless, offsets in natural habitats should strive to achieve like for like or better. In some cases, it might be more effective for the client to invest in existing offset banking schemes, but IFC would expect the client to demonstrate the credibility and long-term viability of such initiatives. G40. Habitat fragmentation is one of the most pervasive impacts to biodiversity in natural habitats and often leads to long-term habitat degradation due to edge effects, increased human access into previously undisturbed areas, and sometimes genetic isolation of fauna and flora populations. When a project is located in an expansive intact wilderness, the client should seek to define mitigation measures to limit fragmentation such as the design of wildlife corridors or other measures to help ensure connectivity between habitats or existing metapopulations. The client should also consider developing strategic frameworks with other companies and/or with the government, where possible, in an effort to mitigate cumulative impacts through the design of joint mitigation measures. These types of initiatives must be identified with the assistance of qualified specialists. Depending on the scale and nature of the project, and especially relevant to the extractive industries, the client should establish a reclamation funding mechanism for project s located in natural habitats. The costs associated with reclamation and/or with post-decommissioning activities, should be included in business feasibility analyses during the planning and design Offset Principles: No net loss, adherence to mitigation hierarchy, landscape context, stakeholder participation, equity, long-term success and transparency. 134

11 stages. Minimum considerations should include the availability of all necessary funds, by appropriate financial instruments, to cover the cost of reclamation and project closure at any stage in the project's lifetime, including provision for early, or temporary reclamation or closure. Critical Habitat 14. Critical habitat is a subset of both natural and modified habitat that deserves particular attention. Critical habitat includes areas with high biodiversity value, including areas with the following criteria: (i) habitat of significant importance to Critically Endangered and/or Endangered species, endemic and/or restricted-range species, and globally significant concentrations of migratory species, and/or congregatory species; (ii) areas with regionally unique and/or highly threatened ecosystems; and (iii) areas which are associated with key evolutionary processes. 15. In areas of critical habitat, the client will not implement any project activities unless the following requirements are met: There are no measurable adverse impacts on the criteria for which the critical habitat was designated and on the ecological processes supporting that criteria The project is not anticipated to lead to a net reduction in the global or national/regional population of any Critically Endangered or Endangered species over time The client has implemented a robust biodiversity monitoring program All other impacts are mitigated in accordance with the mitigation hierarchy 16. In areas of critical habitat, biodiversity offsets will be designed to achieve net positive gain of the relevant criteria described in paragraph 14 of this Performance Standard. G41. The critical habitat definition presented in paragraph 14 of PS6 is in line with criteria captured from a wide range of definitions of priority habitat for biodiversity conservation in use by the conservation community and contained in governmental legislation and regulations on nature conservation. As stated in paragraph 14 of PS6 both natural and modified habitats may contain high biodiversity values, thereby qualifying as critical habitat. The extent of humaninduced alteration of the habitat is therefore not necessarily an indicator of its biodiversity value. G42. Considering the breadth of ecosystems (e.g., forests, grasslands, deserts, freshwater and marine habitats), the various forms of critical habitat (e.g., habitats required for the survival of threatened and migratory species, containing unique evolutionary processes, biodiversity of cultural importance to local communities) and the range of species (e.g., benthos, plants, insects, birds, reptiles/amphibians, wide-ranging megafauna) covered under PS6, specific methods for the assessment of biodiversity will inherently be project and site-specific. Guidance Note 6 therefore does not provide specific methods for conducting biodiversity assessments. G43. It is especially important to emphasize that relatively broad landscape and seascape units might qualify as critical habitat. The scale of the critical habitat assessment therefore depends on the biodiversity attributes particular to the habitat in question and the ecological processes required to maintain them. A critical habitat assessment therefore must not solely focus on the project area. Whilst it often may not be feasible to conduct an actual field survey outside the fence of the project site, the client should be prepared to conduct desktop assessments and/or consult with experts and other relevant stakeholders to obtain an understanding of the relative importance or uniqueness of the site with respect to the regional and even global scale. 135

12 G44. The designation of critical habitat and the determination of what a client may or may not do in critical habitat is not a black and white issue. There are gradients of critical habitat or a continuum of degrees of biodiversity value associated with critical habitats based on the relative vulnerability (degree of threat) and irreplaceablity (rarity or uniqueness) 8 of the site. This gradient or continuum of criticality is true for all criteria as listed in the critical habitat definition. Even within a single site designated as critical habitat there might be habitats or habitat features of higher or lower biodiversity value. G45. In order to facilitate internal decision-making, and as presented in the forthcoming paragraphs, IFC employs a tiered approach for the first three critical habitat criteria (i.e., Critically Endangered and Endangered species; endemic and restricted-range species; migratory and congregatory species). The tiers provided in GN6 are based on globally standardized numerical thresholds published by the International Union for Conservation of Nature (IUCN) as Best Practice Protected Area Guidelines. 9,10 It should be emphasized that both the thresholds and associated tiers are indicative and serve as a guideline for decisionmaking only. There is no universally accepted or automatic formula for making determinations on critical habitat. The involvement of relevant experts and project-specific assessments is critical, especially when data are limited as will often be the case. G46. Both a Tier 1 or a Tier 2 habitat would qualify as critical but the likelihood of project investment in a Tier 1 habitat is generally considered to be substantially lower than in a Tier 2 habitat. Note that GN6 does not outline the particularities of when an investment is or is not a suitable one for IFC in terms of the presence of critical habitat. IFC s decision to invest in a development in or near a Tier 1 or Tier 2 critical habitat, or in a habitat with particularly high biodiversity values that trigger Criteria 4 and 5, is determinant on the client s ability to comply with paragraphs 15 and 16, of PS6 over the long-term. Given the sensitivity of Tier 1 habitats however, if a development is located in a Tier 1 habitat, or the like for the non-tiered criteria, it is considered unlikely that the client will be able to comply with paragraphs 15 and 16 in the majority of cases. G47. Although numerical thresholds are not appropriate for the latter three criteria, best available scientific information and expert opinion would be used to guide the decision-making with respect to the relative criticality of a habitat triggered by these criteria. It is emphasized however that in the critical habitat determination process, all criteria are equally weighed in terms of potential compliance with paragraphs 15 and 16 of PS6. There is no one criterion that is more important than another for making critical habitat designations or for determining compliance with PS6. Tiered (Criteria 1 through 3) and non-tiered (Criteria 4 and 5) criteria are equally important in this regard. G48. The client is expected to fully consult the current version of the IUCN Red List of Threatened Species and best available scientific data. 11 Given the paucity of scientific data available for species in many places around the world, especially for invertebrates and freshwater and marine species, expert opinion and professional judgment will often be 8 As paraphrased from Margules, C.R. and R. L. Pressey, Systematic Conservation Planning. Nature 405, (11 May 2000), irreplaceability is the extent to which the loss of the area will compromise regional conservation targets, and vulnerability is the risk of the area being transformed by extractive uses. Areas with high values for both should receive priority for conservation action. 9 See Langhammer, P.F. et al Identification and Gap Analysis of Key Biodiversity Areas: Targets for Comprehensive Protected Area Systems. Best Practice Protected Area Guideline Series No. 15. IUCN, Gland, Switzerland. 10 Key Biodiversity Areas are nationally mapped sites of global significance for biodiversity conservation that have been selected using globally standard criteria and thresholds based on the framework of vulnerability and irreplaceability widely used in systematic conservation planning. 11 Available at 136

13 necessary to make final determinations with respect to the thresholds. The client will be required to consult with recognized species specialists who are qualified to make determinations on species occurrences. G49. Critical habitat determinations should also be made in alignment with existing landscape prioritization schemes for biodiversity conservation as established by the existing in-country network of conservation organizations, global conservation groups, academic institutions and/or the local/national government. Therefore, a substantive literature search and consultation with established conservation organizations or other relevant authorities in the area of interest is essential in determining critical habitat. Note that systematic conservation assessments and plans, which are recognized by national or provincial governments, should be consulted for guidance on threatened ecosystems, vegetation types and land classes. Critical Habitat Criteria G50. Critical habitats are areas of high biodiversity value that can be identified through the presence of one or more of the following five values or criteria specified in paragraph 14 of PS6. These are as follows and should form the basis of any critical habitat assessment: Criterion 1: Critically Endangered and/or Endangered Species Criterion 2: Endemic and/or Restricted-range Species Criterion 3: Migratory and/or Congregatory Species Criterion 4: Regionally unique and/or highly threatened ecosystems Criterion 5: Key Evolutionary Processes G51. The above mentioned criteria encompass a number of other types of biodiversity attributes that are also of high value but that are not spelt out in paragraph 14 of PS6. For example, the following attributes would fall under the PS6 critical habitat criteria as shown below: Areas of high scientific value such as those containing concentrations of species new and/or little known to science (Criterion 1). Areas required for the reintroduction of CR and EN species and refuge sites for highly threatened species (habitat used during periods of stress [e.g. flood, drought or fire]) (Criteria 1 and 5) Landscape and ecological processes (e.g., water catchments, areas critical to erosion control, disturbance regimes [e.g., fire, flood]) required for maintaining critical habitat (Regionally unique and/or highly threatened ecosystems) (Criterion 4). Areas of primary / old-growth / undisturbed forests or other landscapes (Criterion 4). Habitat critical for the survival of keystone species (Criterion 4). Ecosystems that are of high importance to species for climate adaptation purposes (Criterion 5) G52. In general, and as also referenced in paragraph 17 of PS6, internationally and/or nationally recognized areas of high biodiversity value will likely qualify as critical habitat; examples include the following: Areas that meet the criteria of the IUCN s Protected Area Management Categories Ia, Ib and II

14 The majority of KBAs, which encompass inter alia Ramsar Sites, Important Bird Areas (IBA), Important Plant Areas [IPA] and Alliance for Zero Extinction Sites [AZE]. Areas identified by the client as High Conservation Value (HCV) using internationally recognized standards, where criteria used to designate such areas is consistent with the biodiversity values listed paragraph Criterion 1: Critically Endangered and Endangered Species G53. Species threatened with global extinction and listed as Critically Endangered (CR) and Endangered (EN) on the IUCN Red List of Threatened Species shall be considered as part of Criterion 1. Critically Endangered species face an extremely high risk of extinction in the wild. Endangered species face a very high risk of extinction in the wild. G54. The inclusion of species in Criterion 1 that are listed nationally / regionally as CR or EN, in countries that have adhered to IUCN guidance, shall be determined on a project by project basis 14,15. The same is true in instances where nationally or regionally listed species categorizations do not correspond well to those of the IUCN (e.g., some countries more generally list species as protected or restricted ), although in these cases an assessment might be conducted on the rationale and purpose of the listing. In either case, this decisionmaking would take place in consultation with recognized species specialists. G55. As previously mentioned, IFC is employing a tiered approach for the first three critical habitat criteria in order to facilitate internal decision-making. Both tiers would qualify a habitat as critical although the likelihood of project investment in a Tier 1 habitat is generally considered to be substantially lower than in a Tier 2 habitat. G56. The client should determine if the project site is located in a Tier 1 or Tier 2 critical habitat with respect to Criterion 1. G57. Tier 1 sub-criteria for Criterion 1 are defined as follows: Habitat required to sustain 10 percent of the global population of an IUCN Redlisted CR or EN species where there are known, regular occurrences of the species and where that habitat could be considered a discrete management unit for that species. 16,17,18 13 The HCV Framework was established by the Forest Stewardship Council s Principles and Criteria for Responsible Forest Management (FSC P&C) in See for further information. 14 IUCN (2003). Guidelines for Application of IUCN Red List Criteria at Regional Levels: Version 3.0. IUCN Species Survival Commission. IUCN, Gland, Switzerland and Cambridge, UK. IUCN See 16 Regular Occurrence: Occurring continuously in the habitat (e.g. physical residence), seasonally or cyclically (e.g., migratory sites) or episodic (e.g., temporary wetlands). Regular occurrence does not include vagrancies, marginal occurrence and historical records or unconfirmed anecdotal evidence, while it does include migratory species in transit. Adapted from definition of regularly occurs in Langhammer et al. (2007). 17 Discrete Management Unit: An area with a definable boundary within which the character of biological communities and/or management issues have more in common with each other than they do with those in adjacent areas (Adapted from the definition of discreteness by the Alliance for Zero Extinction). A discrete, management unit may or may not have an actual management boundary (e.g., legally protected areas, World Heritage sites, KBAs, IBAs, community reserves) but could also be defined by some other sensible ecologically definable boundary (e.g., watershed, interfluvial zone, intact forest patch within patchy modified habitat, seagrass habitat, a coral reef, a concentrated upwelling area, etc.). The delineation of the management unit will depend on the species (and, at times, subspecies) of concern. 18 Note that all Alliance for Zero Extinction (AZE) sites would automatically qualify as Tier 1 critical habitat per Criterion 1 as the AZE threshold is set at 95 percent of CR and EN species (in a discrete management unit). See Ricketts, T.H., et al Pinpointing and Preventing Imminent Extinctions. Proceedings of the National Academy of Sciences - US. 51: