Review
Mining and biodiversity offsets: A transparent and science-based approach to measure “no-net-loss”

https://doi.org/10.1016/j.jenvman.2014.03.027Get rights and content

Highlights

  • Leading biodiversity offset initiatives suffer from weak biodiversity accounting.

  • Estimation of counterfactual scenarios, effectiveness, and risks are needed.

  • Measurements of parameters need to be applied to each biodiversity attribute.

  • We present a new formula incorporating these attributes and parameters.

  • These parameters will help offset design and measurements of “no-net-loss”.

Abstract

Mining and associated infrastructure developments can present themselves as economic opportunities that are difficult to forego for developing and industrialised countries alike. Almost inevitably, however, they lead to biodiversity loss. This trade-off can be greatest in economically poor but highly biodiverse regions. Biodiversity offsets have, therefore, increasingly been promoted as a mechanism to help achieve both the aims of development and biodiversity conservation. Accordingly, this mechanism is emerging as a key tool for multinational mining companies to demonstrate good environmental stewardship. Relying on offsets to achieve “no-net-loss” of biodiversity, however, requires certainty in their ecological integrity where they are used to sanction habitat destruction.

Here, we discuss real-world practices in biodiversity offsetting by assessing how well some leading initiatives internationally integrate critical aspects of biodiversity attributes, net loss accounting and project management. With the aim of improving, rather than merely critiquing the approach, we analyse different aspects of biodiversity offsetting. Further, we analyse the potential pitfalls of developing counterfactual scenarios of biodiversity loss or gains in a project's absence. In this, we draw on insights from experience with carbon offsetting. This informs our discussion of realistic projections of project effectiveness and permanence of benefits to ensure no net losses, and the risk of displacing, rather than avoiding biodiversity losses (“leakage”). We show that the most prominent existing biodiversity offset initiatives employ broad and somewhat arbitrary parameters to measure habitat value and do not sufficiently consider real-world challenges in compensating losses in an effective and lasting manner. We propose a more transparent and science-based approach, supported with a new formula, to help design biodiversity offsets to realise their potential in enabling more responsible mining that better balances economic development opportunities for mining and biodiversity conservation.

Introduction

The perceived conflict between economically profitable ventures such as mining and natural heritage is becoming increasingly acute as the material needs of a growing global population compete with shrinking habitats harbouring the world's remaining biodiversity. Mining and associated large infrastructure developments create economic opportunities that may seem too significant to forego, even where they threaten to destroy valuable habitat. This is true for developing and industrialised countries alike, although the dilemma can be greatest in the poorest developing countries and regions harbouring globally unique biodiversity, such as shrinking areas of tropical rainforests.

Biodiversity offsets have been promoted as a mechanism that promises the possibility of reconciling both the aims of development and conservation. The mechanism has become a key tool for multinational mining companies to demonstrate good environmental stewardship and manage regulatory risks (BBOP, 2009, BBOP, 2013, McKenney and Kiesecker, 2010, ICMM and IUCN, 2013). The basic approach is to quantify biodiversity losses that will be caused by development or extension of a mining project that occur even after implementing primary impact mitigation measures, and then to generate biodiversity benefits through compensatory activities that “offset” such residual impacts. Offsetting measures are designed to achieve “no-net-loss” or “net-gain”, compared to a realistic counterfactual scenario (also known as “business-as-usual” scenario) for the site. This could include, for example, protection of comparable forests under threat or active restoration and recreation of habitat that is lost. Offset activities should ideally create or preserve “like-for-like” habitat (ecologically equivalent to the impacted area), although some proponents argue that “out-of-kind” offsets (not ecologically equivalent to the impacted area) can be acceptable where offsets ensure biodiversity conservation of sites with more significant biodiversity components than the impacted area, ideally at the landscape level (Gardner et al., 2013).

The mining industry internationally is spearheading the development of biodiversity offsets, not only to conform with national or state regulations, but also to reduce reputational risks and to maintain “social licence to operate” (ICMM and IUCN, 2013). There is also an increasing trend for biodiversity offsets to become an integral part of corporate social responsibility programs. For example, the mining giant Rio Tinto has pledged that its activities will create a “net positive impact” on biodiversity, and offsets are expected to play an important role in meeting this objective (Rio Tinto, 2008). Meanwhile, several major investors (e.g. International Finance Corporation) have also incorporated “no-net-loss” principles for biodiversity into their investment safeguards policies (ICMM and IUCN, 2013).

Relying on offsets to avoid net biodiversity loss, however, requires a high level of certainty in their ecological integrity where they are used to “sanction” the loss of valuable habitat or rare species. Given the complexity of the concept and the importance of “getting it right” from a scientific perspective, it is not surprising that a number of criticisms have been levelled at biodiversity offsetting. These concerns have included the absence of clear guidance for biodiversity accounting frameworks (Gardner et al., 2013), lack of evidence of actual effectiveness (Gibbons and Lindenmayer, 2007), insufficient governance support to ensure offsets do not undermine crucial prior steps in the mitigation hierarchy, and ensuring risks are fully taken into account (Gardner et al., 2013). Thus, how to ensure that critical factors of risk, effectiveness and permanence of biodiversity gains are adequately taken into account in a biodiversity accounting framework, still remains a challenge, and without properly accounting for these parameters, it is difficult to measure the “no-net-loss” principle.

In this paper, we discuss real-world practices in biodiversity offsetting. We do not aim to merely present a critique of shortcomings of current biodiversity offset initiatives, but rather to contribute to a scientifically grounded debate about ways to improve this innovative mechanism while remaining practical within the constraints of real-world application. Our aim is to propose a transparent and science-based approach to the measurement of “no-net-loss”.

Section snippets

Material and methods

We used real-world practice in biodiversity offsetting from Australia, Madagascar, Ghana and South Africa to assess how well some internationally leading initiatives integrate critical aspects of biodiversity attributes, net loss accounting and project management (Table A.1). In particular, we focussed on the case for open-cast mining of ilmenite by Rio Tinto-QMM in the littoral forest, Southeast Madagascar. This case study is critical because it is perceived as one of the first global

Defining a unit for biodiversity

Biologists have found it virtually impossible to quantify biodiversity, and no one single measure is ideally suited for all purposes (The Royal Society, 2003, Scholes and Biggs, 2005, Biggs et al., 2006), yet this is specifically what those implementing biodiversity offsets attempt to do. The central importance of defining a “unit” of biodiversity lies in the fact that the composite negative impact of, e.g., a mining project needs to be able to be quantified and compared to the composite

Discussion

Widely accepted aspects of good practice for biodiversity offsets, defined by BBOP (2013) include considerations of: 1) equity; 2) irreplaceability and vulnerability; 3) long-term conservation outcomes; 4) transparency; and 5) good science. Our analysis based on comprehensive ecological science and real-world experience from the conceptually similar field of carbon offsets indicates that the former principles are not well incorporated in several existing and highly promoted voluntary

Conclusions

Given the magnitude of global growth in demand for mineral resources and plans for large-scale mining and associated infrastructure developments, the role of biodiversity offsets looks set to increase. If designed and implemented well, they have the potential to help balance economic development with more responsible environmental stewardship. However, a more transparent and science-based approach is needed if this innovative mechanism is to realise its full potential in working towards a more

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