Biodiversity offsets and credits: “ecological impacts, land dispossession, loss of livelihoods and systematic violations of individual and collective rights of the affected communities”

A neoliberal market that commodifies nature and delays action on the loss of biodiversity globally. What’s not to like?

Earlier this year, more than 200 civil society organisations signed on to a statement opposing biodiversity offsets and credits. Among the organisations that signed on were Third World Network, African Centre for Biodiversity, Alianza Biodiversidad en América Latina, Focus on the Global South, Friends of the Earth International, Global Forest Coalition, and World Rainforest Movement.

The statement expressed “grave concerns about biodiversity crediting, offsetting, and related trading schemes”. It described biodiversity markets as the “wrong answer to the wrong question”, and suggests instead implementing “other proven forms of biodiversity protection”. These include the legal designation of Indigenous Peoples’ territories and environmental regulation and enforcement.

“Biodiversity markets are being modeled on the carbon markets, which have serious failings,” the statement notes, and adds that,

Just as carbon offsetting delays climate ambition, biodiversity offsetting will only delay urgent action on addressing the root causes of biodiversity loss.

COP16, Colombia

The Conference of the Parties (COP16) to the Convention on Biological Diversity is currently taking place in Cali, Colombia.

Biodiversity offsets and credits were included in target 19 of the 2022 Kunming-Montreal Global Biodiversity Framework and will promoted by corporations, governments, financial institutions, and big conservation organisations at COP16.

Frédéric Hache of the Green Finance Observatory describes biodiversity offsets as “infinitely worse” than carbon offsets. A key reason is the sheer complexity of biodiversity, with millions of species living in ecosystems — many of which are not even known to science.

“This is a system which oversimplifies and standardises millions of species into a few liquid tradable assets,” Hache tells the Latin America Bureau.

PHOTO Credit: Glencore’s massively destructive Cerrejón Coal Mine — which bought 1.2 million carbon credits in 2019 with the help of Conservation International and USAID.

The myth of “no net loss”

Global Forest Coalition released a report earlier this month titled, “Biodiversity Offsetting: A corporate social license to perpetuate biodiversity destruction and gender inequality”. Written by Souparna Lahiri and Valentina Figuera Martínez, the report highlights the myth of “no net loss”:

Biodiversity offsetting essentially allows a mining company that destroys a littoral forest in Madagascar, a tropical rainforest in the Democratic Republic of Congo, or an Amazonian biome in Brazil, to “protect” another forest elsewhere in exchange for the one it has destroyed. This mechanism facilitates a double land grab: one for extracting minerals, oil, or gas, building a dam, or creating space for monoculture plantations; the other under the guise of biodiversity conservation.

Conservation organisations including IUCN, Conservation International, the Wildlife Conservation Society, and BirdLife International (among others) are teaming up with destructive mining and fossil fuel companies to develop biodiversity offsetting projects.

Governments are also in on the act. In June 2023, the UK and France launched the Global Biodiversity Credits Roadmap. The Roadmap aims to “support companies to contribute to nature recovery”.

Lahiri and Martínez quote from a 2009 paper in Conservation Letters, that points out that biodiversity trading “to date has facilitated development while perpetuating biodiversity loss”. That remains true 15 years later.

Made in the USA

The concept of biodiversity offsetting originated in 1970 with the US National Environmental Policy Act. The law required federal agencies to consider mitigation measures before allowing any development that could have negative environmental impacts.

The 1972 Clean Water Act and the 1973 Endangered Species Act rule that developments should follow a sequence of avoidance, minimisation, and compensatory mitigation (otherwise known as offsetting).

President George H. W. Bush introduced the goal of “no net loss” of wetlands during his 1988 presidential campaign. As if to illustrate that neoliberalism knows no political boundaries, President Bill Clinton embraced and expanded the goal.

While “no net loss” might sound good, it failed to address the destruction of wetlands in the USA. A 2004 report by the National Wildlife Federation was titled, “Nowhere Near No-Net-Loss” and concluded that “wetlands are perhaps more endangered today than they have been for decades”.

Australia also has a long history of biodiversity offsetting. But as the Latin America Bureau notes, the “track record is dire”.

A report by the Nature Conservation Council found that in 75 per cent of cases, “offsets resulted in ‘Poor’ or ‘Disastrous’ outcomes for wildlife and bushland in Australia, while only 25 per cent resulted in ‘Adequate’ outcomes. None resulted in ‘Good’ outcomes for nature.”

Lahiri and Martínez write about India’s compensatory afforestation provisions under the 1980 Forest Conservation Act. Compensatory afforestation means that when forest land is cleared, and equivalent area has to planted with trees.

The authors note that deforestation often takes place without respecting the rights of Indigenous Peoples and local communities. They add that,

CA [Compensatory afforestation] is also used as a tool to forcibly relocate communities from protected areas. This mechanism thus facilitates the dispossession of land from communities, concentrating it in the hands of corporations and the Forest Department.

Meanwhile, establishing monoculture tree plantations on community lands has often involved destroying food crops and evicting communities from their traditional lands. This is green grabbing.

Problems, problems

The idea underlying biodiversity offsets and credits is that a price can, and should, be put on nature. Lahiri and Martínez point out that this idea is fundamentally flawed:

Assigning monetary value to nature, however, does not always promote the conservation of biodiversity and, in fact, can lead to the opposite effect. Such a narrative risks creating a ”dangerous and misleading illusion of the substitutability” of critical and irreplaceable ecosystem services. Within the conservation field, mitigation approaches have historically been seen as more development-friendly alternatives to strict environmental regulations, allowing development to proceed when environmental laws might otherwise prevent it.

As Lahiri and Martínez write,

The concept of “no net loss” has profound implications for the rights and livelihoods of Indigenous Peoples, women in all their diversities, youth, and structurally underserved local communities. Biodiversity offsetting, although often promoted as a conservation tool, frequently fails to contribute to biodiversity conservation, and instead has significant negative social and cultural impacts, disproportionately harming women.

Then there’s the problem of measuring biodiversity.

In 2012, the Business and Biodiversity Offsets programme — an alliance of companies, governments, conservationists, and financial institutions, and a long-time proponent of offsets — acknowledged that, “there is no single, best way to measure losses or gains in biodiversity”.

The Business and Biodiversity Offsets programme argued instead that “it is necessary to choose from a suite of measure which are a suitable PROXY or SURROGATE for biodiversity overall”. From there it moved swiftly on to measuring “no net loss”.

There is still no agreed methodology for measuring biodiversity.

Rather than devoting all this time, money, and expertise on creating a neoliberal market that commodifies nature and delays action on the loss of biodiversity globally, wouldn’t it be better to look at ways of stopping the destruction?

Lahiri and Martínez conclude that,

Biodiversity offsetting, in reality, does more to allow extractive and destructive corporations to perpetuate and maximise their business empires and profits at the expense of biodiversity than it does to close the finance gap.

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