Defra report: Lessons learned from biodiversity offsetting markets
This study (Duke and ten Kate 2014, published in 2016) was commissioned by Defra to assist with the development of policy on biodiversity offsetting, in particular to support more detailed economic appraisal of the policy options identified in the 2013 Green Paper on Biodiversity Offsetting in England.
In particular, Defra wishes to understand costs and
benefits to developers arising from various policy options. A uniform (i.e.
mandatory) approach was advocated by the private sector Ecosystem Markets Task
Force (EMTF 2013), which suggested this would enable the development of a
large, liquid market, optimizing both benefits to business and outcomes for
nature (Duke et al. 2013). Government, however, expressed in the Green
Paper a preference to take a voluntary approach, citing insufficient evidence
to demonstrate, with sufficient confidence, that mandatory offsetting would not
increase regulatory burden on business in general and on house builders in
particular (a key government commitment). This report sought to address the
evidence gap by reviewing established offsetting markets in the US and
Australia. The terms of reference requested the authors to explore: (1) the
range and extent of costs and benefits to developers arising from
offsetting regimes, (2) the effects of market design on offset prices,
and, to a lesser extent, (3) conservation outcomes of offsetting,
and (4) broader economic outcomes of offsetting.
the conclusions of the report include:
- Time-to-permit savings
and savings arising from transfer of liability are the major drivers of
developer demand for 3rd party offsets. They make 3rd
party offsets the most economically advantageous, and therefore preferred
option for developers.
compensation performs considerably better than on-site. Third party
mitigation banking offers ecological advantages of greater aggregation and
reduced temporal losses. Anecdotally, the raising of performance
standards and consequent costs of mitigation is encouraging developers to
move back up the mitigation hierarchy, delivering more avoidance and
minimization, and hence improved conservation outcomes.
banking offers economies of scale (by creating aggregated offsets),
including reduction of fixed costs by 30-40%.
- In the US, broad
economic benefits derive from bringing forward $60 - $102 billion in
development projects by an average of 5 months. A US study suggests
that every $1 spent on mitigation delivers between 7 and 40 jobs, many in
-Report: Lessons learned from Biodiversity Offsetting Markets
-Paper: 2013 Green Paper on Biodiversity Offsetting in
Tags: Ecosystem valuation | Biodiversity policy
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