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Habitat Banking: compliance markets for biodiversity and ecosystem services

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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  1. Habitat Banking: compliance markets forbiodiversity and ecosystem services

  2. Mutli-disciplinary work • Led by: • eftec • IEEP • With: • Stratus Consulting • IUCN • Technical University Berlin • Pels Rijcken Droogleever Fortuijn • BBOP experts

  3. Outline of Presentation • What is Habitat Banking? • Design of Habitat Banking (in the EU?) • Issues for Discussion

  4. 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

  5. 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”.

  6. 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

  7. Market Design • Balancing the need for: • Liquidity in a market, with • Constraints of regulation necessary to ensure outcomes

  8. 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

  9. 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

  10. 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

  11. 3 Levels for Habitat Banking

  12. 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

  13. 3 Levels for Habitat Banking

  14. Market Design to Control Risks • Market driven by regulation: • Land use planning system • Mitigation Hierarchy • Biodiversity priorities • Governance • Transparency • Stronger Regulation – New Mechanism

  15. 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

  16. 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

  17. 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)

  18. Level IV – Simplified System?

  19. 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

  20. 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)

  21. 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

  22. Habitat Banking: compliance markets forbiodiversity and ecosystem services

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