The new brochure of the Global Nature Fund (GNF) and the German Environmental Aid (DUH) reveals the possibilities and limits of two models for compensating environmental impacts: Biodiversity-Offsets and Payments for Ecosystem Services (PES).
In their just published brochure, GNF and DUH show how the protection and sustainable use of nature can be optimized by considering nature also as an economic factor – as "natural capital”.
Man constantly intervenes in nature and landscapes and thereby destroys diverse habitats. Currently the international community contributes to the preservation of biodiversity in the amount of 52 Billion US-Dollar per year. But to enable adequate funding for the protection of biodiversity, at least four times of the amount is needed. Natural capital markets have high potential to cover this financial gap by involving the private sector.
1. Biodiversity-Offsets (compensation measures)
are measures required by law to compensate or substitute impacts on nature and landscapes. In Germany Biodiversity-Offsets are legally fixed via the Federal Act for the Protection of Nature.
2. Payments for Ecosystem Services (PES)
by contrast, are based on the principle of voluntariness. The basic idea is that the beneficiaries of PES pay a direct contractual sum to the "provider” of ecosystem services (e.g. landowners). Those, in turn, implement measures that guarantee the conservation or restoration of ecosystem services.
The aim of this brochure is to draw attention on how Biodiversity-Offsets and Payments for Ecosystem Services can be used in practice. In addition, the study points out the limits of the applicability of both models and provides recommendations for how the private sector, financial institutions and NGOs can participate.
With regards to Biodiversity-Offsets, both organizations underline that it is insufficient just to restore the lost habitats for plants and animals. Rather, the central goal should be to extend the habitats and to achieve a net gain.
Only additional investments and measures can result in a gain of biodiversity. However, additional funds will be required that can only be archived by voluntarily compensatory payments.
Considerable potential is offered by PES. Even though the private sector signals growing interest in getting engaged in natural capital markets, only a few actually did so yet.
The German Federal Agency for Nature Conservation supports the project "Natural Capital Markets” with funding from the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety.
Similarly, recommendations for policy makers have been developed and can be downloaded here:Natural Capital Markets (official website)