Principles, standards, the mitigation hierarchy and no net loss. 06 November, Sebastian Winkler Forest Trends

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1 Principles, standards, the mitigation hierarchy and no net loss 06 November, 2013 Sebastian Winkler Forest Trends

2 Definition Contents (i) Why BBOP & Why Principles (ii) The Standard (iii) Mitigation hierarchy (iv) Experience from countries around the world (v) Key lessons learned

3 Why was BBOP set up? Changing societal expectations about biodiversity mitigation. Company risk and opportunity. Companies need partnerships. Expertise Land-use planning Company statements not taken at face value Interviews by Insight Investment and IUCN showed need for: Multistakeholder, international forum Pilot projects Methodologies and guidance Enabling policy framework

4 Results of Phase 1: Principles Pilot projects Handbooks Case studies biodiversityoffsetprogram

5 Principles for biodiversity offsets Principles for biodiversity offsets agreed by all the BBOP members 1. Adherence to the mitigation hierarchy 2. Limits to what can be offset 3. Landscape context 4. No net loss 5. Additional conservation outcomes 6. Stakeholder participation 7. Equity 8. Long-term outcomes 9. Transparency 10. Science and traditional knowledge

6 Principles 1. Adherence to the mitigation hierarchy: A biodiversity offset is a commitment to compensate for significant residual adverse impacts on biodiversity identified after appropriate avoidance, minimization and onsite rehabilitation measures have been taken according to the mitigation hierarchy. 2. Limits to what can be offset: There are situations where residual impacts cannot be fully compensated for by a biodiversity offset because of the irreplaceability or vulnerability of the biodiversity affected.

7 Landscape Context Principles 3. Landscape context: A biodiversity offset should be designed and implemented in a landscape context. This is to achieve the expected measurable conservation outcomes, taking into account available information on the full range of biological, social and cultural values of biodiversity and supporting an ecosystem approach. Early, individual offsets Developed Preserved Unplanned development Sources: 2004: Insight/IUCN; White; Maze Landscape-level planning Developed Preserved

8 Principles 4. No net loss: A biodiversity offset should be designed and implemented to achieve in situ, measurable conservation outcomes that can reasonably be expected to result in no net loss and preferably a net gain of biodiversity. 5. Additional conservation outcomes: A biodiversity offset should achieve conservation outcomes above and beyond results that would have occurred if the offset had not taken place. Offset design and implementation should avoid displacing activities harmful to biodiversity to other locations.

9 Principles 6. Stakeholder participation: In areas affected by the project and by the biodiversity offset, the effective participation of stakeholders should be ensured in decision-making about biodiversity offsets, including their evaluation, selection, design, implementation and monitoring. 7. Equity: A biodiversity offset should be designed and implemented in an equitable manner, which means the sharing among stakeholders of the rights and responsibilities, risks and rewards associated with a project and offset in a fair and balanced way, respecting legal and customary arrangements. Special consideration should be given to respecting both internationally and nationally recognised rights of indigenous peoples and local communities.

10 Principles 8. Long-term outcomes: The design and implementation of a biodiversity offset should be based on an adaptive management approach, incorporating monitoring and evaluation, with the objective of securing outcomes that last at least as long as the project s impacts and preferably in perpetuity.

11 Principles 9. Transparency: The design and implementation of a biodiversity offset, and communication of their results to the public, should be undertaken in a transparent and timely manner. 10. Science and traditional knowledge: The design and implementation of a biodiversity offset should be a documented process informed by sound science, including an appropriate consideration of traditional knowledge.

12 Definition Contents (i) Why BBOP & Why Principles (ii) The Standard (iii) Mitigation hierarchy (iv) Experience from countries around the world (v) Key lessons learned

13 Results of Phase 2: Standard, Guidance Notes & Resource Papers

14 BBOP Standard on Biodiversity Offsets To help auditors assess conformance with the BBOP standard. To help companies design & implement offsets. Principles: Criteria: Indicators: Fundamental statements about a desired outcome. The conditions that need to be met to comply with a Principle. Measurable states to tell whether or not a particular Criterion has been met. Guidance Notes: Interpretation of Indicator Key questions Conformance requirements Possible causes of non-conformance. Explains terms, concepts. What assessor needs to answer. To meet the standard. Examples of not meeting the standard

15 Definition Contents (i) Why BBOP & Why Principles (ii) The Standard (iii) Mitigation hierarchy (iv) Experience from countries around the world (v) Key lessons learned

16 Biodiversity Value The mitigation hierarchy, including biodiversity offsets + ve Net Positive Impact, NPI ACA No Net Loss, NNL Offset Offset No Net Loss PI PI PI PI Offset Offset R Residual Impact PI = Predicted Impact Av = Avoidance Min = Minimisation - ve Min Min R = Rehabilitation/Restoration C = Compensation Offset = Offset Av Av Av ACA = Additional Conservation Actions (not related to footprint) Adapted from Rio Tinto & Govt of Australia

17 Avoid the mitigation myth Benefits for government and society Look hard for opportunities for avoidance and minimisation (often less costly than offsetting residual impacts) Ensure all mitigation measures (avoid, minimise, restore, offset) are realistic and grounded in experience Base on restoration ecology Avoidance & Mitigation: the practice Source: Alex Rankin, Govt of Australia Source: WWF-Mongolia

18 Example: some mitigation measures at the Ambatovy Project Protection of Ankerana Forest Restoration along the pipeline Conservation setaside at mine site Rerouting pipeline around specific forest patches

19 Definition Contents (i) Why BBOP & Why Principles (ii) The Standard (iii) Mitigation hierarchy (iv) Experience from countries around the world (v) Key lessons learned

20 Trends: More governments regulating offsets/compensation * The Biodiversity Consultancy

21 Trends: More companies adopting no net loss type commitment * The Biodiversity Consultancy

22 Headlines about offsets internationally Biodiversity Offsets 45 compensatory mitigation programmes (banks and offsets) and over 30 in development. Global annual market size min. US$ billion. Likely much more (80% of programs not transparent enough to estimate market size). North America dominates: US$ bn. >15,000 ha annually. 0.5m ha cumulatively. US mitigation banking still increasing: 1,044 active and sold-out wetland, stream and conservation banks. Europe: Germany banking. UK, France, Sweden initial steps. Africa: South Africa state and national level under development. Namibia: integration into SEA. Gabon, Mozambique, Guinea, etc. Asia: Vietnam, Japan, Mongolia. Latin America: Peru, Colombia, Chile. Australia & NZ: Federal and several states (NSW, Victoria, Northern Territories, Queensland, Western Australia). NZ underway. Madsen et al Ecosystem Marketplace June 2011

23 IFC-Performance Standard 6 Natural Habitat: Critical Habitat: no net loss, where feasible net gains PS 6 on Biodiversity Offsets: Measurable conservation outcomes reasonably expected to result in no net loss and preferably a net gain of biodiversity. Net gain is required in critical habitats. The design of a biodiversity offset must adhere to the like-for-like or better principle. Must be carried out in alignment with best available information and current practices. External experts with knowledge in offset design and implementation must be involved. Guidance Note 6 references the BBOP Principles as an internationally recognized standard in biodiversity offset design.

24 Revision of IFC-PS and Equator Principles Equator banks to update project finance standards by March 2012 The Equator Principles are based on the International Finance Corporation (IFC) Performance Standards (PS). Since June 2003, 73 banks and financial institutions operating in 27 countries have adopted the Equator Principles, embracing the IFC Performance Standards. This accounts for 70% of international project finance debt in emerging markets. Clients of Equator Bank and IFC clients seeking total project capital costs of over $10 million must comply with loan conditions, including environmental and social performance standards (PS). The revised PS takes effect for Equator Principle Association members from 1 Jan (New PS apply for ESIAs commissioned on/after 1 Jan 2012.; Old 2006 PS can be applied when the borrower commissioned an ESIA before 1 January 2012 if it is completed by 30 June 2012; after June 30, all projects must apply the new PS.)

25 Definition Contents (i) Why BBOP & Why Principles (ii) The Standard (iii) Mitigation hierarchy (iv) Experience from countries around the world (v) Key lessons learned

26 Successes we can emulate Definition & improve upon More rigour in the mitigation hierarchy Good science: Better metrics, thresholds, baseline data Landscape level planning Conservation where it matters, done by experts Quantified outcomes Performance standards third party verifiable and auditable Trust funds, conservation covenants and enforcement

27 Benefits for government and society Clear, streamlined requirements: certainty & avoid delays Without a clear, regulated requirement for no net loss (or net gain): Demand: Supply: Top two lessons Developers face uncertainty and delay. Few developers will deliver NNL results. Developers face delay, uncertainty and expense in sourcing offsets. Insufficient motivation for farmers, conservation bankers and others to invest in long-term offset activities to meet developers needs. Adequate performance monitoring and enforcement

28 Thank you Benefits for government and society Clear, streamlined guidance for certainty & to avoid delays Adequate performance monitoring and enforcement Improve the application of the mitigation hierarchy Avoid methods that don t deliver NNL (eg poor metrics) Have clear principles and standards Keep options for implementation open, provided the Standard is met. Remove perverse incentives and help the parties find each other Prepare for implementation during policy development and have multi-year strategy Clarify roles of national, state and local government: approach proportionate to scale of impact Develop good baseline data and landscape level planning swinkler@forest-trends.org

29 Benefits for government and society NNL: What s in it for government and society? Balance economic development with biodiversity protection. CBD COP10 commitment (Oct 2010) to Take effective and urgent action to halt the loss of biodiversity in order to ensure that by 2020 ecosystems are resilient and continue to provide essential services, thereby securing the planet s variety of life, and contributing to human well-being, and poverty eradication ; Support national conservation goals and targets. Better conservation outcomes than typically result from project planning/eia: no net loss. Help with land-use planning. Business takes responsibility for its impacts. Developers clear on what is expected of them: legal certainty, efficiency and cost savings. Flexibility in how to achieve agreed conservation goals. New and additional financial investments in conservation. Local people benefit from development projects and support rather than block them.

30 Why should companies demonstrate no net loss? 1. Legal requirements: Law requiring offsets (e.g. 40+ countries, incl. US, EU, Brazil, Australia) Law enabling offsets (e.g. EIA, planning law) 2. The business case Access to land, sea & natural resources (directly & supply chains) Legal and social (functional) license to operate Access to capital and insurance Access to markets for products (old & new) Access to human capital A seat at policy development table 3. Investor Requirements IFC PS6 no net loss for natural habitat IFC PS6 net positive gains for critical habitat

31 Offsets Can t EIA compared take care with of biodiversity? Environmental Impact Assessment (EIA) EIA rarely planned to achieve no net loss. Typically only requires avoidance/minimisation for some impacts. Usually does not address residual impacts. Does not address all components of biodiversity affected. Often very site specific, without proper landscape scale. Often fails to address indirect and cumulative impacts. HOWEVER an offset can be integrated with the EIA process to deliver no net loss!

32 No net loss planning can and has been done. See: Offset Design Handbook on Review project scope and activities (understand impacts) in context of regional or landscape-level assessment) Review the policy framework and context for the offset Initiate stakeholder participation Follow the mitigation hierarchy and identify the residual adverse effects Decide on metrics and quantify the residual losses * Within the context of a regional or landscape level plan, assess potential offset locations and activities and the biodiversity gains they could achieve Calculate offset gains and select appropriate offset locations and activities (whether individual or aggregate) * Finalise and record the offset design (who, where, what) and move into offset implementation

33 Main reasons Definition for offset failure Ambiguous requirements and perverse incentives from government Inadequate monitoring & enforcement Lack of capacity Poor methodologies: Thresholds (esp. cumulative impacts) Metrics Institutional barriers within banks TOO BIG TO FAIL! Challenges for the NGO and scientific communities

34 About IFC-PS6 Objectives: Protect and conserve biodiversity Maintain the benefits from Environmental Services (ES) Promote sustainable management of Natural Resources For projects: Located in modified, natural or critical habitats Which potentially impact on or are dependent on ES over which client has direct management control or significant influence Including production of living natural resources (eg agriculture, husbandry, fisheries, forests)