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Session 5-2-kerry-ten-kate-the-challenges-of-compensating-for-impacts-on-ecosystems-biodiversity-1474


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The challenges of compensating for ecosystem and biodiversity loss in oil palm agriculture.

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Session 5-2-kerry-ten-kate-the-challenges-of-compensating-for-impacts-on-ecosystems-biodiversity-1474

  1. 1. Palmoil:The challenges of compensating for impacts on ecosystems & biodiversity Kerry ten Kate Director, BBOP
  2. 2. No net loss: Why bother? Terrestrial species Aggregated by Class All spec ies 1.20 Birds 500 Mammals N values 1.00 400 0.80 300Index Value N 0.60 200 0.40 100 0.20 0.00 0 1970 1975 1980 1985 1990 1995 2000 2005 YearSources: MEA, IPCC, UNEP-WCMC, IUCN, WWF, Mace
  3. 3. The challenge• Aichi Target 5 (Convention on Biological Diversity) By 2020, the rate of loss of all natural habitats, including forests, is at least halved and where feasible brought close to zero, and degradation and fragmentation is significantly reduced.• Given continuing loss of habitat, how can we achieve this Target without biodiversity offsets?
  4. 4. New solutions needed
  5. 5. Challenges for compensation• What is a biodiversity offset? What is compensation?• Technical challenges• Political challenges• Possible solutions for palmoil: a first sketch
  6. 6. The mitigation hierarchy and biodiversity offsets Net Positive Impact, NPI + ve ACA Ofs OfsBiodiversity Value PI PI PI PI Rs Residual Impact Mt Mt PI = Predicted Impact Av = Avoidance Mt = Mitigation - ve Av Av Av Rs = Restoration Ofs = Offsets Elements of NPI ACA = Additional Conservation Actions Source: Rio Tinto and Govt of Australia
  7. 7. Definition of biodiversity offsets DefinitionBiodiversity offsets are measurableconservation outcomes resulting from actionsdesigned to compensate for significant residualadverse biodiversity impacts arising from projectdevelopment after appropriate prevention andmitigation measures have been taken.The goal of biodiversity offsets is to achieveno net loss and preferably a net gain ofbiodiversity on the ground with respect to speciescomposition, habitat structure, ecosystem functionand people’s use and cultural values associatedwith biodiversity.
  8. 8. Principles for biodiversity offsets Principles for biodiversity offsets agreed by all the BBOP members1. No net loss2. Additional conservation outcomes3. Adherence to the mitigation hierarchy4. Limits to what can be offset5. Landscape Context6. Stakeholder participation7. Equity8. Long-term outcomes9. Transparency10. Science and traditional knowledge
  9. 9. Compensation compared withgoals Two options for policy offsetsA biodiversity offset : Designed to achieve no net loss, according to the BBOP PrinciplesCompensatory conservation : Doesn’t meet the principles for biodiversity offsets, e.g.: – Not planned to achieve no net loss – Doesn’t quantify loss/gain – Not established for long term implementation – Impossible to offset the impacts (too severe or pre-impact data lacking) – Financial payment, not biodiversity result
  10. 10. RSPO and compensationPlantations established between Nov 2005 and Nov 2007:“Where the high conservation value (HCV) status of theland is unknown and/or disputed, are currently excludedfrom the RSPO certification programme, until anacceptable solution for HCV compensation has beendeveloped.”
  11. 11. Challenges for compensation• What is a biodiversity offset? What is compensation?• Technical challenges• Political challenges• Possible solutions for palmoil: a first sketch
  12. 12. Technical challenges with compensation• Quantifying biodiversity impacts, losses and gains: measures, currency, accounting model, spatial info, retrospective.• Non-offsetable impacts• Quantifying ecosystem services• Designing a ‘fair’ and workable system that enjoys support
  13. 13. Political challenges• Business case and corporate will for offset/compensation• Designing a ‘fair’ and workable system• Multi-stakeholder support – including government• Integration with policy drivers (govt regs, IFC-PS6)
  14. 14. Challenges for compensation• What is a biodiversity offset? What is compensation?• Technical challenges• Political challenges• Possible solutions for palmoil: a first sketch
  15. 15. BBOP’scurrent priorities BBOP work 2009-2011: • STANDARD: Draft standard (July 2012) on biodiversity offsets, with auditing protocols. Improved through broader company experience & internationally agreed by ? July 2015. • PILOTS: More & varied pilots (sectors, countries) • GUIDELINES: Improved guidelines on offset design and implementation. • POLICY: Country-level partnerships, advice on offset policy development, land-use /bioregional planning, aggregated offsets, conservation banking. • TRAINING: Training & capacity building • COMMUNICATIONS: Communications and BBOP’s work as a global forum
  16. 16. Possible solutions for palmoilA system with 3 components:• Compensation scheme for 2005-7 Indonesia and Malaysia• Compensation scheme for 2008+ Clearer requirements International, avoiding perverse incentives• ‘No net loss’/ ‘Net gain’ (offsets) for future clearing of non-HCV from (?) 2013 onwards integrated into RSPO PCI.
  17. 17. From compensation to offsets for palmoilCompensation • Can’t meet ‘offset’ standard ,as unknown impacts and retrospectivescheme • But scheme designed in sympathy with BBOP offset principles • ‘Like for like or better’2005-7 • Simple area x condition metrics that would deliver NNL if biodiversity(Indonesia and knownMalaysia) • Focus on conservation rather than socioeconomic and cultural values? • Implementation, including through bioregional conservation banking. A range of different stakeholders could set up such conservation banks.Compensation • AS ABOVE PLUS:scheme • Ensure no perverse incentive to continue to clear in breach of RSPO 7.32008+ then compensate for less than the commercial gains of clearing • Factor biodiversity livelihood and cultural losses into ‘compensation’?(International) • Offsets following BBOP Principles and Standard.NNL offsets • Emphasis on landscape level planning.(?) 2013 + • Companies follow mitigation hierarchy and RSPO guidance and do not clear HCV biodiversity.future clearing • Companies quantify the loss of biodiversity from residual impacts of non-of non-HCV HCV biodiversity and undertake offset activities to achieve NNL/NG • Implementation as above.
  18. 18. Outline methodCompile best available spatial and non-spatial data at landscape-scale, for impact sites andpotential offset sites / conservation banks • landscape-scale eco- / bio- regions using contextual and biodiversity data • pre-impact biodiversity at impact sites and neighboring proxy sites [incl. livelihoods] • info at potential offset/conservation banking sites [incl. livelihoods]Assess pre-impact biodiversity at impact sites (and/or neighbouring proxy sites)Precautionary application of mitigation hierarchy (eg set aside areas, avoid fragmentation)Define basis & criteria for like-for-like or better exchanges and metrics for compensation systemIdentify offset / banking sites that meet like-for-like or better criteria for specific impacts. (Useinfo on: threats, potential conservation gain activities, tenure, interaction with localcommunities, historical rate of forest loss.)Calculate residual biodiversity losses incurred at impact sites (area x condition basis).Characterise biodiversity baseline at potential offset / banking sites. Explore conservationactivities that can provide biodiversity gains.Define precise activities required at offset/banking sites to deliver the gains required. Establishadditionality tests and permanence requirements.Establish compensation ratios and provide justification.Cost the required activities and establish a credit pricing for offset providers.Supporting brokerage system, performance standards/management contracts, auditing.
  19. 19. Thanks for listening!www.forest– contact:
  20. 20. Biodiversity Offsets SPARE SLIDES
  21. 21. BBOP structure BBOP: Structure Learning Network ≥1000 members Advisory Group ~ 60 members Country Pilot Partner Pilot 7 ExComm: Company Company 1 1 2 2 companies, 1 govt, 2 NGOs,Country Executive Country 1 bank, 1Partner Committee Partner Secretariat 2 Secretariat 4 Pilot Country Pilot Company Partner Company 2 Secretariat: 4 3 3
  22. 22. BBOP Advisory GroupAngloGold Ashanti, Ambatovy Project, Arup, Cemex, CDC Biodiversité, Environmental Banc& Exchange, Golder Associates, Inmet Mining, Markit Environmental Registry, New BritainGroup, Newcrest, Newmont, New Forests, Nollen Group, Rio Tinto, Response Ability, Inc.,SLR Consulting, Solid Energy New Zealand, Sveaskog, Wildlands Inc., Winstone Aggregates;Citi; European Bank for Reconstruction and Development; Global Environment Fund; Inter-American Development Bank; International Finance Corporation ; KfW Bankengruppe;Mizuho Corporate BankDept of Conservation, New Zealand; Dept of Sustainability & Environment, Government ofVictoria, Australia; Defra, UK; Forestry Commission, Government of Ghana; Forestry Dept,Sabah, Malaysia; International Union for the Conservation of Nature (IUCN); Ministry ofAgricultural and Rural Development (MARD), Viet Nam Directorate of Forestry; Ministry ofEcology, Energy, Sustainable Development, and Spatial Planning, France; Ministry ofEnvironment and Tourism, Government of Namibia; Ministry of Housing, Spatial Planning,and the Environment, The Netherlands; Ministry of Mines and Energy, Namibia; Ministry ofNatural Resources and the Environment (MONRE), Government of Viet Nam; Ministry ofNature, Environment and Tourism, Government of Mongolia; National Ecology Institute,Mexico; National Environment Management Authority, Uganda; Ramsar Convention onWetlands; South African National Biodiversity Institute; United Nations DevelopmentProgramme (Footprint Neutral Initiative); United Nations Environment Programme – WorldConservation Monitoring Centre; United States Agency for International DevelopmentBirdLife International; Biodiversity Neutral Initiative; Brazilian Biodiversity Fund (FUNBIO);Centre for Research-Information-Action for Development in Africa; ConservationInternational; Ecoagriculture Partners; EcoTopia Science Institute Nagoya University; Fauna& Flora International; Forest Trends; International Institute of Environment & Development;Rainforest Alliance; Royal Botanic Gardens, Kew; The Nature Conservancy; Tulalip Tribes,US; Wildlife Conservation Society; WWF-UK; Zoological Society of London
  23. 23. What is BBOP? Aim:Working collaboratively, to develop best practice in biodiversity offset design and implementation based on agreed principles and on-the-ground experience.
  24. 24. Products from Phase 1: Available guidance:
  25. 25. Benefits of offsets for society Benefits for government and society• Balance economic development with biodiversity protection• Support national conservation goals and targets.• ‘No net loss’ is a better conservation outcome than typically results from EIA.• 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 achieving conservation goals.• New and additional financial investments in conservation.• Livelihood options for local people, who will support development projects.
  26. 26. Why should companies implement biodiversity offsets ?1. Legal requirements: • Law requiring offsets (e.g. 30+ countries, including US, EU, Brazil, Australia) • Law enabling offsets (e.g. EIA, planning law)2. The business case3. Investor Requirements
  27. 27. Elements of the Business Case Biodiversity Offsets e.g. Rio Tinto Maintaining Access to Land and Resources is a key driver in the Biodiversity Strategy Business case• Access to land, sea and related natural resources (directly, or through 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
  28. 28. New lender requirements Revisions to IFC Performance Standard 6EquatorPrinciples Natural habitat:67 Banks & • Avoid (no viable alternatives within region on modified habitat),Financial minimise, restore, then no net loss through habitat restorationInstitutions and implementation of biodiversity offsets.Operating Critical habitat:in 100 • No project unless client demonstrates net positive gains ofCountries biodiversity values for which critical habitat was designated. • Mitigation strategy (described in Biodiversity Action Plan) must90% of demonstrate:global • No measurable adverse impacts on biodiversity values forproject which critical habitat was designated, and supportingfinance ecological processes; • No net reduction in global and/or national/regional populationProject of any Critically Endangered or Endangered species; andfinance • Long-term biodiversity monitoring program.over $10m
  29. 29. What is an aggregated offset? A co-ordinated set of offset activities undertaken in one or more locations to compensate for the combined, cumulative impacts of more than one development project in a specific area.Ecological advantages:• Greater ecological value• Strategic placement• Avoid temporal loss of habitat• Turns a liability into an assetAdministrative advantages:• Easier ecological monitoring• Reduces offset costs• Transfer of legal liability• Reduces permitting time Overlap between Galba Gobi IBA and exploration & mining licenses Source: World Bank, 2009
  30. 30. Phase 1 1 BBOP pilot projects Phase BBOP pilot projects• Shell International, GTL project, Qatar• Newmont Ghana Gold, Ghana• Anglo American platinum mine, South Africa• Sherritt Int’nal nickel mine, Madagascar• Residential construction, USA• Solid Energy coal mine, New Zealand Ntronang Akyem Deposit
  31. 31. How do you design a biodiversity offset? Key steps:Review project scope and activities (understand impacts) in context of regional or landscape-level assessment)Review the policy framework and context for the offsetInitiate stakeholder participationFollow the mitigation hierarchy and identify the residual adverse effectsDecide 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 achieveCalculate 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
  32. 32. Three ways to implement offsets or compensatory conservation:• Developer and/or partners (NGO, consultant, multi-stakeholder group) undertake the offset• Payment to a government authority ‘in lieu’• Developer buys sufficient ‘credits’ from a landowner or conservation bank to offset its impacts.
  33. 33. COP10 Decision X/21 "Business Engagement”• Invites Parties "to identify a range of options for incorporating biodiversity into business practices that take into account existing developments under various forums, including relevant institutions and non-governmental organizations, such as BBOP".• Encourages businesses and the private sector "to adopt commitments to support the achievement of the three objectives of the Convention, for instance, through the approaches set out in the Jakarta Charter and other initiatives at both national and global levels".• The Jakarta Charter states: "The concept of no-net-loss of biodiversity and net- positive impact, as articulated by the Business and Biodiversity Offsets Programme, is a practical framework for assessing efforts to implement the Convention on Biological Diversity".• Requests the Executive Secretary "to encourage the development and application of tools and mechanisms that can further facilitate the engagement of businesses in integrating biodiversity concerns into their work, such as, consistent and in harmony with the Convention and other relevant international obligations, certification, verification, the valuation of biodiversity and ecosystem services, incentive measures, biodiversity offsets, etc".
  34. 34. An example: Ambatovy project, Madagascar• Large-tonnage nickel project• Shareholders: Sherritt Incorporated, Sumitomo Incorporated, Kores, SNC Lavalin• Components: – Mine site (approx 1,336 ha) – 218km largely buried slurry pipeline – Industrial complex: processing plant 2.6km2, refinery, tailings 14km2, harbour 300m pier• Construction began early 2007. Expected life-cycle 27(+) years/• Proposed composite offset: • Off-site at Ankerana (endangered forest ecologically equivalent to mine site); • Improve conservation status of two forest conservation areas within mine lease; • Conserve forest area around mine footprint; • Establish forest corridor between mine area forests and nearby corridor; • Support implementation of management plan of the neighbouring wetland.
  35. 35. Direct and indirect impacts Indirect Impacts Unplanned settlement Mine Road Road Primary impacts Direct impactsPlanned townPlanned town Factory Factory Access to new Access to new Expanded Expanded land e.g. forest land e.g. forest Town Town
  36. 36. Offsets compared with Environmental Can’t EIA take care of it? 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’!
  37. 37. Drivers of biodiversity offsetsTrends:• More governments introducing or exploring policy on biodiversity offsets;• More companies undertaking offsets voluntarily for business reasons;• More banks and investors requiring biodiversity offsets as a condition for access to credit or investment;• More NGOs and civil society groups encouraging developers to undertake biodiversity offsets; and• BBOP set up to develop, share and encourage the use of best practiceMotivation: Business case:1. Legal requirements in 30-50 • Access to land, sea and related natural countries and EIA/planning law resources (directly, or through supply in many more chains) • Legal and social (functional) license to2. The business case operate3. Investor Requirements • Access to capital and insurance • Access to markets for products (old & new) • Access to human capital • A seat at policy development table
  38. 38. How to measure loss and gain? Metrics (‘Amount’)Even within ‘like for like’, not all hectares are equal! Area alone is not a good measure of ‘amount’ of biodiversity
  39. 39. Why you generally need a Why you generally need a bigger area for the offset bigger area for the offsetArea of residual impact: 80 hectaresCondition before project: 90% of potential Condition before offset: 60% Each hectare: LOSS: 90% GAIN: 20%Condition after project: 0% Condition after offset: 80%Loss = 90% x 80 ha Area needed for offset == 72 habitat hectares 72 habitat hectares ÷ 20% = 360 hectares
  40. 40. Thresholds for offsets Thresholds High Impacts too severe to be offsetSeverity of impact on biodiversity What is the threshold? Impacts can and should be offset Impacts too small to be Low worth offsetting What is the threshold?
  41. 41. Offsets and Landscape level planning: Landscape Vital! Planning Level• Landscape level planning is one of the BBOP Principles.• Important for understanding the significance of areas affected by impacts.• Important for understanding how to apply the mitigation hierarchy.• Underpins offset site selection.• Supports aggregated offsets and conservation banking.
  42. 42. How to obtain conservation How can offset ‘gain’ be delivered? gains Benefit-sharing possibilities….• New or upgraded protected areas• Community protected areas and contracts with landholders (including payments for ecosystem services)• Change in land-use (national or local level) Benefit-sharing with local communities: a good way to improve conservation on land outside protected areas!
  43. 43. Offsetting in Victoria: Overview Offsetting in Victoria: Overview Developers Native Vegetation Credit Register Planning authoritiessmall impacts – ratios ─ local govt BushBrokerlarger impacts – full metrics ─ state agencyLandowners Offset Banks
  44. 44. Key issuesHow to establish whether and when an offset is appropriate? Go/No Go Offsetable/Not Offsetable Values Mitigation HierarchyMetrics: how to quantify impact losses and offset gains? Structure & Composition Ecological Process and Function Socioeconomic and Cultural aspectsOffset activities and location Landscape level planning Delivery Out of kind and trading upImplementation: how to make an offset succeed in practice? Roles & responsibilities Legal structures, institutional arrangements Financial assurance Monitoring, enforcement
  45. 45. Some impacts cannot be offset Vulnerable: High rate of loss, Little loss, Imminent threat degradation, degradation, of extinction fragmentation fragmentation Irreplaceable: No options for conservation Like-for-like or ‘in kind’ offset Limited extent,highly localised, onlyfew/ no options Trading up may be Relatively appropriate widespread, many options
  46. 46. ( ) (I z J c − K c = O z P c − Qc ) Thresholds for offsets Metrics • Biodiversity counts and measures (what - is being exchanged, or lost and gained) • A currency constructed from these data (how much of what is being exchanged) • An accounting model defining offset specifications (how much of what is needed) • Spatial information to identify potential offset locations (where) Need equity in type, space and time Lots of loss/gain methods and measures, e.g.: • direct or proxy (surrogate) measures • site-level or context-dependent measures • aggregated or disaggregated measures.
  47. 47. Benchmark approach: an illustrative example Component Max. Value (%) Large Trees 10 1 Tree Canopy Cover 5 Understorey 25Site Lack of Weeds 15Condition Regeneration (woody) 10 2Component Organic Litter 5 Logs 5Landscape Context Component 25 3 Total 1001: Benchmark site 2: Pre-impact site3: Post-impact site 4: Post-offset site 4