Habitat banking compliance markets for biodiversity and ecosystem services
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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?

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Habitat Banking: compliance markets for biodiversity and ecosystem services

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Habitat banking compliance markets for biodiversity and ecosystem services

Habitat Banking: compliance markets forbiodiversity and ecosystem services


Mutli disciplinary work

Mutli-disciplinary work

  • Led by:

    • eftec

    • IEEP

  • With:

    • Stratus Consulting

    • IUCN

    • Technical University Berlin

    • Pels Rijcken Droogleever Fortuijn

    • BBOP experts


Outline of presentation

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

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

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 banking1

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

Market Design

  • Balancing the need for:

    • Liquidity in a market, with

    • Constraints of regulation necessary to ensure outcomes


Design

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


Design1

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


Habitat banking compliance markets for biodiversity and ecosystem services

None, irreplcable and protected

Compensation inappropriate / unfeasible: avoid impacts

Like-for-like compensation usually most appropriate

Options for compensation

Few

Simple compensation measures with trading up

Many

Widespread, non-threatened & substitutable

Scarce, declining & degraded

Threatened / unique

Status of impacted biodiversity

Source: Adapted from BBOP 2009


3 levels for habitat banking

3 Levels for Habitat Banking


Market design1

Market Design

  • Flexible habitat banking framework in terms of:

    • Compensation under different laws and policies

    • Different equivalence approaches

    • Regulate individual offsets and more complex trades

  • Clear and strong rules


3 levels for habitat banking1

3 Levels for Habitat Banking


Market design to control risks

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

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


Habitat banking compliance markets for biodiversity and ecosystem services

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

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

Level IV – Simplified System?


Simplified system in lieu fees

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

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

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 for biodiversity and ecosystem services1

Habitat Banking: compliance markets forbiodiversity and ecosystem services


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