Voluntary Biodiversity Offsets

Beyond government regulation, numerous companies have begun to set up biodiversity offsets voluntarily in places like Qatar, Madagascar, and Ghana because they think it makes good business sense to do so. Like the voluntary carbon markets described in Chapter 7, the number and investment in such offsets is presently modest. But they are likely to become much more widely used as a part of standard business practice. Some observers believe that they could serve as the precursors to larger, more broad-based biodiversity markets in the long term. Essentially, they demonstrate that there can be a business case for investing in biodiversity conservation.

To understand whether, when, how, and where voluntary biodiversity offsets should be


undertaken, the Washington-based nongovernmental group Forest Trends established the Business and Biodiversity Offsets Program (BBOP). This is a partnership of over 50 companies, governments, conservation experts, and financial institutions from many different countries and led by Forest Trends and Conservation International. The BBOP partners believe that biodiversity offsets may help achieve significantly more, better, and more cost-effective conservation outcomes than normally occur in the context of infrastructure development. The program aims to demonstrate conservation and livelihood outcomes in a portfolio of biodiversity offset pilot projects; to develop, test, and disseminate best practice on biodiversity offsets; and to contribute to policy and corporate developments on biodiversity offsets so they meet conservation and business objectives.33 Companies undertake biodiversity offsets for one or more of three reasons: they are required to by national legislation (as in the United States, with wetland mitigation banking and conservation banking), they are encouraged to or facilitated by Environmental Impact Assessment legislation or other planning procedures, or they find a legitimate business case to get involved. BBOP staff have identified numerous benefits for companies in doing this; namely, voluntary offsets can help companies:

• ensure continued access to land and capital and to the license to operate;

• bring competitive advantage or favored status as a partner;

• increase investor confidence and access to capital;

• reduce risks and liabilities;

• ensure strong and supportive relationships with local communities, government regulators, environmental groups, and other important stakeholders;

• influence emerging environmental regula tion and policy;

• assure "first mover" advantage for innovative companies; and

• maximize strategic economic opportunities in emerging markets (for instance, establishing companies to implement offsets).34

Currently BBOP is working with partners on projects in a variety of countries, including Ghana, Kenya, Madagascar, Qatar, South Africa, and the United States, and is exploring projects in Argentina, China, Mexico, and New Zealand. Some of the companies the program is working with or in discussions with include Newmont Mining, Rio Tinto, Shell, and AngloAmerican.35

As these experiences mount up, and as case studies become available on best-practice biodiversity offsets, it is likely that both the supply and demand for these offsets will grow. Countries that establish clear policies may improve land use planning and use market mechanisms to create aggregated offset areas that achieve significant conservation outcomes in high biodiversity-value areas.

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