Biodiversity Offsets: A User Guide October 2016 Biodiversity Offsets A User Guide OCTOBER 2016  i Contents Acknowledgements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v 1. Why this User Guide?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Biodiversity Loss Crisis.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Purpose of this User Guide.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. What are Biodiversity Offsets?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Definition.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Intended Conservation Outcomes:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 What is Distinctive about Offsets?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Biodiversity Offsets and Ecosystem Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3. When to Consider Using Biodiversity Offsets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Importance of the Mitigation Hierarchy.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Types of Projects that Could Use Biodiversity Offsets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4. Core Principles for Biodiversity Offsets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Additionality.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Equivalence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Permanence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5. Limits to What Can Be Offset. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Conservation-related Concerns about Biodiversity Offsets. . . . . . . . . . . . . . . . . . . . . . . . . . 13 Caution Flags for High-Risk Situations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 6. Preparing and Implementing Biodiversity Offsets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Step 1—Estimate Residual Biodiversity Losses from the Original Project. . . . . . . . 17 Step 2—Select the Offset Activities and Conservation Site(s). . . . . . . . . . . . . . . . . . . . . . . 19 Step 3—Prepare the Biodiversity Offset Project Component.. . . . . . . . . . . . . . . . . . . . . . . 23 Monitor Implementation of the Biodiversity Offset Activities and Results. . . . . . . 28 7. Financial Sustainability of Biodiversity Offsets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 8. Scaling-up Biodiversity Offsets through Aggregation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Aggregated Biodiversity Offsets: An Idea Whose Time Has Come?. . . . . . . . . . . . . . . . 35 Developing National Biodiversity Offsets Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Contents 9. Final Considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 The Potential and Limitations of Biodiversity Offsets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Overview of the Case Studies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Annex 1. Case Study: Liberia Nimba Western Range Iron Ore.. . . . . . . . . . . . . . . . . . . . . . . . 45 Annex 2. Case Study: Madagascar Ambatovy Minerals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Annex 3. Case Study: Cameroon Lom Pangar Hydropower. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Biodiversity Offsets: A User Guide Acknowledgements This User Guide was prepared by George C. Ledec (Lead Ecologist, World Bank) and Sally Johnson (Consultant, World Bank), under the guidance of Magda Lovei (Practice Manager, World Bank). Christopher J. Warner (Senior Technical Specialist, World Bank) and Guy Parker (Wychwood Biodiversity) prepared most of the Case Study material. People from within and outside the World Bank Group provided useful com- ments, edits, and other inputs that have improved the User Guide. They include Agi Kiss, Lori A. Conzo, Conrad Savy, Leanne Farrell, Anupam Joshi, Kirsten Hund, Douglas J. Graham, Sean Nazerali, Peter Bechtel, Werner Kornexl, Laura Ivers, Catherine C. Ledec, and John Fraser Stewart. Funding for preparing this User Guide was provided by the World Bank’s Program for Forests (PROFOR). Acknowledgements v 1 Rapid deforestation and other habitat loss continue in many biodiversity hotspots such as Mindanao in the Philippines. Why this User Guide? The Biodiversity Loss Crisis be at risk. Many natural ecosystems are under severe pressure from agricultural expansion, Biodiversity represents the variety of life on extractive industries, and large-scale infrastruc- Earth, including the full range of ecosystems, ture projects. The world’s human population is species, and genes. Natural ecosystems and wild still increasing, as are the aspirations of most species sustain human society in numerous and people for improved well-being, including often irreplaceable ways. Nonetheless, much of greater material wealth. Making the transition our planet’s biodiversity is today under severe to a more densely populated and prosperous pressure from human activities, with alarmingly world, while adequately conserving biodiversity, high numbers of animal and plant species now is an enormous challenge, requiring the effec- at risk of extinction. Worldwide, the single great- tive application of a wide range of tools. One est threat today to biodiversity is the rapid loss type of conservation tool which—when appro- and degradation of many natural habitats. Other priately used—could help to scale-up needed major threats include the human-facilitated conservation efforts is biodiversity offsets. spread of non-native invasive species, along with Under the right circumstances, biodiversity off- the overharvesting and incidental take of many sets can (i) improve the conservation outcomes native species; there are also the newly emerg- from large-scale development projects and (ii) ing threats of human-induced climate change provide much-needed funding for protected and ocean acidification. Biodiversity loss is today areas and similar conservation efforts. widely regarded as a global environmental crisis because of its scale and irreversibility—species extinctions are forever. Purpose of this User Guide This User Guide provides introductory guidance Biodiversity conservation efforts to date have on whether, when, and how to prepare and achieved a great deal to help secure the contin- implement biodiversity offsets for large-scale, ued functioning of many threatened ecosystems private and public sector development projects. and the survival of numerous species. However, It also explores some of the opportunities that these efforts have often not been sufficient; may exist for developing national biodiversity numerous species and ecosystems continue to offset systems. A number of detailed technical Why this User Guide? 1 references on biodiversity offsets have recently guidance on whether, when, and how to pre- been produced by organizations such as the pare and implement biodiversity offsets, with Business and Biodiversity Offsets Program the expectation that project planners will always (BBOP), International Council on Mining and consult the specific requirements applicable to Metals (ICMM), and World Conservation Union each country and financing source. (IUCN); these reports are listed below, in the “Further Resources” sections at the end of The intended audience for this User Guide is a Chapter 2 and other, thematically correspond- broad range of conservation and development ing, User Guide chapters. While generally less practitioners, including staff and consultants for detailed than these other documents, this User the World Bank Group and other development Guide is intended to serve mainly as an intro- organizations, government agencies, extractive duction to different types of biodiversity offsets industries and other firms, conservation NGOs, and how to use them effectively. environmental impact assessment specialists, and anyone else with an interest in develop- This User Guide is intended to be a technical ment projects and biodiversity conservation. document, rather than a policy document for the World Bank Group (WBG). Specific WBG FURTHER RESOURCES ON WHY THIS USER policy requirements related to biodiversity con- GUIDE? servation—including the use of offsets among other mitigation measures—are provided in: (i) IFC. 2012. IFC Sustainability Framework: Policy For the World Bank, the current Natural Habitats and Performance Standards on Environmental Operational Policy (OP) 4.04 and Forests OP and Social Sustainability (includes 4.36, to be superseded in 2018 by the recently Performance Standard 6, “Biodiversity approved Environmental and Social Standard Conservation and Sustainable Management 6 on Biodiversity Conservation and Sustainable of Living Natural Resources”). Washington: Management of Living Natural Resources (ESS6) International Finance Corporation. and (ii) for the International Finance Corporation (IFC) and Multilateral Investment Guarantee IFC. 2013. Guidance Notes to IFC Performance Agency (MIGA), the existing Performance Standards on Environmental and Social Standard 6 (PS6) on Biodiversity Conservation Sustainability (includes “Guidance Note 6: and Sustainable Management of Living Natural Biodiversity Conservation and Sustainable Resources. A detailed Guidance Note 6 exists Management of Living Natural Resources”). to provide further guidance in applying the Washington: International Finance requirements of PS6 (IFC 2013); a parallel Corporation. Guidance Note is also under preparation for the World Bank. 2001. Operational Policy 4.04: new ESS6. Many countries also have environ- Natural Habitats. Washington: The World Bank. mental assessment and conservation laws that encourage, or even require, the use of biodi- World Bank. 2002. Operational Policy 4.36: versity offsets in particular circumstances (see Forests. Washington: The World Bank. Chapter 8). This User Guide is not intended to World Bank. 2016. Environmental and Social specifically interpret any of the requirements Framework (includes Environmental and Social of OP 4.04, OP 4.36, PS6, ESS6, or any other Standard 6, “ Biodiversity Conservation and existing or proposed WBG standards or national Sustainable Management of Living Natural legal requirements. Rather, it provides generic Resources”). Washington: The World Bank. 2 Biodiversity Offsets: A User Guide 1 2 Through a partnership between the South African power utility Eskom and conservation NGOs, the Ingula Pumped Storage Scheme is conserving grassland and wetland habitats important for globally threatened birds such as the Wattled Crane Bugeranus carunculatus, White-winged Flufftail Sarothrura ayresi, and Rudd’s Lark Heteromirafra ruddi. Photo: Ingula Visitors Centre (Eskom Holdings SOC Ltd) What are Biodiversity Offsets? Definition Intended Conservation Outcomes: “Biodiversity offsets are measurable conserva- The goal of many biodiversity offsets is to tion outcomes resulting from actions designed achieve No Net Loss and preferably a Net Gain to compensate for significant residual adverse of biodiversity on the ground (or in the water), biodiversity impacts arising from project in comparison to the baseline situation before development and persisting after appropri- the original project is implemented. No Net ate avoidance, minimization, and restoration Loss or Net Gain are typically assessed in terms measures have been taken.” This definition, of the area conserved and its species compo- from the International Finance Corporation sition, habitat types, ecosystem functions, and (IFC) Performance Standard 6 on Biodiversity people’s use and cultural values associated with Conservation and Sustainable Management the biodiversity (adapted from BBOP 2009). of Living Natural Resources (PS6), is similar to Some offsets are, in effect, partial, in that they the definitions used by other conservation achieve “reduced net loss” rather than No Net and development organizations that focus on Loss—either intentionally (due to less ambitious offsets, including the Business and Biodiversity offset design), or as the de facto outcome of Offsets Program (BBOP), International Council some unintended deficiency in offset design or on Mining and Metals (ICMM), and World implementation. Conservation Union (IUCN)—see Further Resources, below, for details. In simple terms, Biodiversity offsets can include securing or set- biodiversity offsets can be regarded as addi- ting aside land or water areas for conservation, tional conservation activities intended to com- enhanced management of habitats or species, pensate for the otherwise inevitable damage to and other defined activities. They can be used to species or ecosystems resulting from a develop- (1) create, expand or buffer existing protected ment project. areas; (2) enhance, link or restore habitats and (3) protect or manage species of conservation interest (either within a designated conserva- tion area or more broadly across the landscape What are Biodiversity Offsets? 3 or aquatic habitat where the species occurs). habitat or a population reduction in one or Irrespective of the specific focus of the offset more species of conservation interest. activities, measurable (or at least verifiable)1 2. Focus on No Net Loss or Net Gain. conservation outcomes should be achieved. Biodiversity offsets are normally expected Biodiversity offsets can be implemented in to fully compensate for specified adverse terrestrial, freshwater, or marine ecosystems, residual impacts (to the level of No Net although to date most have been land-based. Loss or preferably Net Gain) in a way that is measurable or verifiable, long-term, and Restoration offsets involve deliberate actions additional to any other (ongoing or planned) to restore an ecosystem, habitat, or species conservation measures. As such, offsets are population (outside the footprint of the original a more structured and consistent approach development project) and thereby improve its to mitigating biodiversity loss than certain biodiversity conservation status or value. An other approaches, such as (i) habitat set- example might be improving the ecological asides2 (where a portion of the project area is functioning and biodiversity value of a wet- intentionally left undeveloped) to reduce the land by increasing its available water supply. residual adverse impact on biodiversity or (ii) Preservation offsets (aka protection or averted various conservation enhancement activities loss offsets) involve intentionally protecting that might be of great value, but are not set an ecosystem, habitat, or species population up to compensate for the specific adverse (outside the original project’s footprint) that impacts resulting from the original develop- is already in good condition or otherwise of ment project. high biodiversity value, but that lacks sufficient legal or on-the-ground protection. Preservation offsets are based on the assumption that the Biodiversity Offsets and Ecosystem designated offset area (or species of concern) would eventually be diminished, degraded, or Services lost if it were not explicitly protected through Conserving biodiversity also typically means the conservation support provided by the biodi- conserving ecosystem services, which are the versity offset. benefits that people derive from ecosystems. Ecosystem services are often of tremendous— What is Distinctive about Offsets? and under-appreciated—value in sustaining livelihoods and human well-being. Ecosystem Biodiversity offsets differ from other kinds of services can be grouped into four types conservation activities in two main ways: (adapted from PS6): (i) Provisioning services, which are the products people obtain from 1. Link to Damage from another Project. Unlike ecosystems such as fish and other wild foods, “free standing” conservation projects, biodi- fresh water, wood and other fibers, and medici- versity offsets are explicitly linked to one or nal plants; (ii) regulating services, such as water more development projects that are causing purification, protection from floods and other some loss of biodiversity, such as the elimi- nation or degradation of a patch of natural 2 As used here, a set-aside refers to habitat within the original project area that is explicitly and intentionally left undeveloped, 1 In certain cases, it might not be feasible to quantitatively thereby minimizing the project’s adverse biodiversity impacts. By measure a conservation outcome, butit could be verified in yes/ contrast, an offset involves habitat outside the original project area no terms. For example, some species of conservation concern that is incorporated within the project in order to compensate for might be too uncommon or difficult to detect for a change in their its adverse biodiversity impacts, ideally enough to achieve No Net population to be reliably measured, but their continued presence Loss or Net Gain. For this reason, offsets are typically “off-site” in or absence from a site could be verified through monitoring. terms of the location of the original development project. 4 Biodiversity Offsets: A User Guide natural hazards, erosion control, and climate BBOP. 2012a. Biodiversity Offset Design Handbook regulation; (iii) cultural services, including and Appendices. Washington: Forest Trends, sacred sites, recreation, and aesthetic enjoy- Business and Biodiversity Offsets Program. ment; and (iv) supporting services, which are www.forest-trends.org/documents/files/ the natural processes that maintain the other doc_3101.pdf services and include pollination, soil formation, BBOP. 2012b. Standard on Biodiversity Offsets. nutrient cycling, and primary production. Washington: Business and Biodiversity Offsets Program. Biodiversity offsets are focused on the conserva- www.forest-trends.org/documents/files/ tion of species and ecosystems, in an area that is doc_3078.pdf typically separate and distinct from the original project area. Accordingly, biodiversity offsets Gardner et al. 2013. “Biodiversity Offsets and might not be an appropriate or effective tool to the Challenge of Achieving No-Net-Loss.” compensate for the local loss of certain ecosys- Conservation Biology 27(6): 1254–1264. tem services. Based on their location, biodiver- IUCN. 2014. Biodiversity Offsets Technical Study sity offsets will sometimes serve to maintain the Paper. Gland, Switzerland: International same ecosystem services found in the original Union for Conservation of Nature, 65p. project area. However, many site-specific ecosys- Link: http://cmsdata.iucn.org/ tem services might not be sustained or replaced downloads/final_biodiversity_offsets_ by an off-site biodiversity offset, due to a variety paper__9nov2014_1.pdf of factors (such as physical distance from the original project area or more stringent resource ICMM and IUCN. 2013. Independent Report on use restrictions within the offset area). For this Biodiversity Offsets. International Council on reason, the loss of ecosystem services per se Mining and Metals. will often need to be mitigated through means http://www.icmm.com/document/4934 other than a biodiversity offset. For example, an Pilgrim, J.D. and Ekstrom, J.M. 2014. Technical irrigation, mining, or other development project Conditions for Positive Outcomes from that cuts off a community’s access to a local fresh Biodiversity Offsets: An Input Paper for the water source might need to assist the affected IUCN Technical Study Group on Biodiversity community by developing an alternative water Offsets. Gland, Switzerland: International supply, rather than through conserving a similar Union for Conservation of Nature, 46p. ecosystem through a biodiversity offset. https://portals.iucn.org/library/sites/library/ files/documents/2014-027.pdf FURTHER RESOURCES ON WHAT ARE BIODIVERSITY OFFSETS? BBOP. 2009. Biodiversity Offset Cost-Benefit Handbook. Washington: Forest Trends, Business and Biodiversity Offsets Program. www.forest-trends.org/documents/files/ doc_3094.pdf What are Biodiversity Offsets? 5 6 Biodiversity Offsets: A User Guide 1 3 Wind power projects may be suitable for biodiversity offsets when they adversely affect birds, bats, or natural habitats. When to Consider Using Biodiversity Offsets Importance of the Mitigation mitigation measure. Such avoidance can often be achieved by (1) locating the project area Hierarchy away from sites of high biodiversity conserva- tion value; (2) carefully locating infrastructure Application of the mitigation hierarchy to the within the designated project area; (3) avoiding original development project means that biodi- the use of certain technologies or techniques; versity offsets are viewed as a last resort when or (4) avoiding or curtailing certain types of considering different mitigation options. The problematic activities during specific times of mitigation hierarchy—as typically interpreted by year—such as during the migration or breeding environmental assessment professionals world- periods of species of conservation interest. wide—states that development project plan- ners should (1) first seek to avoid damaging any Other Mitigation Measures. When adverse biodiversity; (2) then seek to minimize any such impacts cannot be completely avoided, they can damage; (3) then consider how to restore sites still be minimized by applying the above-men- or species populations damaged by the project; tioned approaches used for avoidance, or and (4) then—if adverse biodiversity impacts through other adjustments in project con- still remain—compensate through specific struction or operation. Certain sites or species actions (not merely cash) comprising a biodi- can often be restored within the project area. versity offset. The mitigation hierarchy places However, restoration (aka rehabilitation) might emphasis on designing out risk to the maximum not be feasible for certain ecosystems that are extent possible (through avoidance and minimi- inherently difficult to restore; it also might not zation), and only then implementing corrective be cost-effective in comparison with preserving measures as needed (through restoration and intact ecosystems elsewhere. Thus, for many then compensation, including offsets). projects, all feasible efforts to avoid or minimize biodiversity losses, or to restore biodiversity Avoiding Adverse Impacts. The old adage on-site, will not be enough to prevent signifi- that “prevention is better than cure” holds true cant adverse impacts upon biodiversity. In such in the case of biodiversity offsets. Avoidance of cases, the remaining significant residual impacts biodiversity losses is the ideal and most effective can sometimes be effectively compensated When to Consider Using Biodiversity Offsets 7 FIGURE 3.1  Goal of Biodiversity Offsets: No Net Loss Current value of biodiversity Negative impact Positive impact on biodiversity on biodiversity Potential Impact Avoid Potential Impact Avoid Minimize Potential Impact Potential Avoid Minimize Restore Impact Compensate/ Offset No Net Loss Net Gain Source: Adapted from the BBOP—Biodiversity Offsets Handbook through well-designed and properly imple- Depending on project location and design, mented biodiversity offsets. these could include (among others): 1. Electric Power: All types of utility-scale gen- Figure 3.1 illustrates the application of the mit- eration that can affect natural habitats and igation hierarchy to a typical case where a bio- biodiversity, including fossil-fuel thermal, diversity offset can compensate for the adverse nuclear, and renewables such as hydropower, residual biodiversity impact (shown in red), to wind, solar, and geothermal; also transmis- the point of achieving No Net Loss or (ideally) a sion and distribution lines. positive Net Gain. 2. Transport: Roads that pass through natural habitats; large ports and airports. Types of Projects that Could Use 3. Water supply dams and large transmission Biodiversity Offsets canals. To date, biodiversity offsets have been used in a 4. Extractive Industries: Mining; oil and gas variety of large-scale public infrastructure proj- development, including pipelines. ects, including but not limited to hydroelectric 5. Forestry plantations that convert natural dams. In the private sector, biodiversity offsets habitats. are most typically proposed for use by large- scale extractive industries, notably oil, gas, and 6. Agriculture: Large-scale schemes—irrigated mining. and rain-fed—that convert natural habitats (oil palm, soybeans, sugar cane, etc.). As a practical matter, biodiversity offsets could 7. Urban Expansion: Housing developments, be effectively used to mitigate the adverse shopping malls, sports complexes, golf residual biodiversity impacts of a wide range courses, landfills, and other large facilities of development projects, public and private. that convert natural habitats. 8 Biodiversity Offsets: A User Guide FURTHER RESOURCES ON WHEN TO DEFRA. 2012. Technical Paper: The Metric for CONSIDER USING BIODIVERSITY OFFSETS the Biodiversity Offsetting Pilot in England. London, U.K.: Department for Food, CSBI. 2014. Biodiversity Data Collection Guidance. Environment, and Rural Affairs. Cross-Sector Biodiversity Initiative. https://www.gov.uk/government/ www.csbi.org.uk/workstreams/ publications/technical-paper-the-metric-for- biodiversity-data-collection the-biodiversity-offsetting-pilot-in-england CSBI. 2015. A Cross-sector Guide for Implementing the Mitigation Hierarchy. Cross-Sector Biodiversity Initiative. http://www.csbi.org.uk/tools-and-guidance/ mitigation-hierarchy/ When to Consider Using Biodiversity Offsets 9 10 Biodiversity Offsets: A User Guide 1 4 Proposed biodiversity offsets in Mozambique may fund the improved on-the-ground protection needed by sensitive beach-nesting species such as the endangered Green Sea Turtle Chelonia mydas. Core Principles for Biodiversity Offsets A number of basic, good practice principles unlikely to be suitable for biodiversity offsets apply to virtually all types of conservation and because it would be hard to demonstrate much related development projects. These include additionality. On the other hand, protected (i) using a “landscape approach” that takes into areas that exist on paper but are clearly under- account the relevant habitats and species of funded, lack adequate on-the-ground manage- interest within the broader landscape, beyond ment, and face significant threats may benefit the boundaries of any one protected area; (ii) substantially from the additional support pro- applying sound science as well as traditional vided by offsets. knowledge; (iii) diligent project supervision; (iv) effective institutional capacity building; (v) Another concern related to additionality is the addressing livelihood concerns (see Chapter risk of cost-shifting, in which a government 6); and (vi) robust stakeholder engagement might reduce its budgetary allocation to pro- (Chapter 6), among others. However, the follow- tected areas, in response to the increased rev- ing three core principles are particularly relevant enues from biodiversity offset payments made to achieving successful biodiversity offsets. by a (private or public sector) project developer. Various strategies are available to prevent or minimize this risk, such as (1) earmarking Additionality the biodiversity offset support for separate investments or activities that are not govern- For any offset to be real, it must be additional. ment-funded or (2) providing matching grants In other words, biodiversity offsets must deliver that would continue only when the government conservation gains beyond those that would be continues to pay its “baseline” share. achieved by ongoing or planned activities that are not part of the offset. Equivalence For offsets that intend to strengthen the pro- tection and management of existing protected In general, biodiversity offsets should conserve areas, the question of additionality is particularly the same biodiversity values (species, habitats, relevant. For example, existing protected areas ecosystems, or ecological functions) as those with low threat levels and adequate funding are lost to the original project, following a principle Core Principles for Biodiversity Offsets 11 known as like-for-like. In special cases, the ecosystems and species, biodiversity offset biodiversity offset area might be ecologically designers should seek to ensure that the follow- quite different from the original project area, but ing key features of successful long-term conser- with an ecosystem type or species composition vation are in place: that is widely acknowledged to be of higher 1. Formal legal protection of the land, water conservation priority (perhaps in greater overall area, or species involved, as needed for a need of protection) than the biodiversity to be successful conservation outcome. This legal lost under the original project; this approach to protection might be by (1) national, sub-na- offsetting is known as trading-up. Chapter 6 of tional, or local governments, through laws this User Guide discusses some of the available and regulations; (2) organized communities, measurment techniques (metrics) for estimating through their by-laws or similar instruments; whether a proposed biodiversity offset would, if or (3) private landholders (individual or successful, provide a like-for-like or better con- corporate), through easements, long-term servation outcome. concession agreements, or other binding legal mechanisms. Permanence 2. On-the-ground protection and manage- ment, which may involve using tools such as Biodiversity offsets are normally expected to physical demarcation; management plans; persist for at least as long as the adverse biodi- zoning maps of allowed and prohibited versity impacts from the original project; in prac- uses; co-management agreements; physical tical terms, this often means in perpetuity. Like presence of conservation staff including other conservation projects, biodiversity offsets trained volunteers; protected area infrastruc- are ideally designed to last over the very long ture (headquarters, outposts, staff housing, term. Lasting conservation outcomes will ulti- access roads, trails, docks, etc.); office and mately depend upon the actions of future gen- field equipment; adequate law enforcement; erations as well as present-day decision-makers. and/or conservation incentive payments to Thus, project proponents often cannot credibly landholders (a type of payment for environ- promise that a biodiversity offset will be main- mental services, PES). tained “forever”, but it should be for at least the operating life of the original project and ideally 3. Financial sustainability to the extent feasi- longer. To provide at least a promising founda- ble, taking into account up-front as well as tion for the long-term survival of their target recurrent costs (see Chapter 7). 12 Biodiversity Offsets: A User Guide 1 5 The critically endangered Streseman’s Bristlefront Merulaxis stresemanni is known from only one small site in Bahia, Brazil with a total of about 15 birds; this is an example of an irreplaceable habitat that could not be “traded away” in a biodiversity offset. Photo: Ciro Albano/American Bird Conservancy Limits to What Can Be Offset Biodiversity offsets themselves are typically con- of environmentally highly damaging projects. servation projects that are, on their own, usually However, biodiversity offsets are intended to very positive from an environmental standpoint. improve the net biodiversity outcomes from Nonetheless, biodiversity offsets are often contro- development projects that are considered to be versial—typically not because of the conservation more or less inevitable, and where the mitiga- activities themselves, but because of the adverse tion hierarchy (avoid, minimize, restore, and impacts from the original development project. then offset any significant remaining damage) has already been applied. In such cases, the real question might not be whether the project will Conservation-related Concerns be built, but how, when, and with which financ- about Biodiversity Offsets ing. As a conservation tool, biodiversity offsets would not appropriately be used to facilitate Inadequate Offsets. In some cases, the pro- habitat losses or harm to species that otherwise posed offset might be regarded as too small in would likely not take place at all. size, legally uncertain, financially unsustainable, or otherwise inadequate as compensation for Damages that Cannot Be Offset. Another key the expected biodiversity damage from the concern is whether the biodiversity damage original development project. This type of prob- from the original project might be so great lem can sometimes be solved by scaling-up the that it simply cannot be offset. Certain adverse size of the offset investment, or by taking the residual impacts cannot feasibly be offset, par- measures needed to ensure a greater likelihood ticularly if the affected area is unique or irre- of success—such as stricter legal protection, placeable from a biodiversity standpoint. In such strengthening of the organization responsible cases, the only effective way to avoid severe bio- for offset area management, or better long-term diversity loss would be not to proceed with the funding of protection and management costs. original project (as designed). This is because a biodiversity offset area, even if outstanding in Enabling Destructive Projects? Biodiversity its own right, could not suitably compensate for offsets are sometimes viewed with skepticism the loss of a particularly unique and irreplace- because of concerns that they may provide a able area. “license to destroy” by facilitating the approval Limits to What Can Be Offset 13 Project Acceptability. The question of whether Net Loss or Net Gain) might be reasonably good, a project is or is not acceptable because of the but the overall project (including the offset) extent of adverse residual impacts on biodiver- might remain highly controversial. sity or associated ecosystem services is ulti- mately one for governments and their citizens Flag 1: Original development project would to address. International financing organizations affect an area that is known or likely (i) to con- have environmental standards that can help to tain highly threatened ecosystems or species; guide this decision making. For example, the (ii) to be important to the survival of endemic IFC’s Performance Standard 6 allows projects to or restricted range species; or (iii) to provide affect areas defined as Critical Habitat only to habitat for nationally or globally significant the extent that they do not lead to measurable numbers of migratory or congregatory spe- adverse impacts on those biodiversity values cies. High irreplaceability or high vulnerability for which the Critical Habitat was designated, means high risk for offsetting because (i) finding nor to a net reduction in the population of suitable offset sites of adequate size and quality any endangered species, among other criteria. might prove impossible; (ii) adverse impacts on Determining exactly when the residual damage threatened ecosystems or species could result in to biodiversity from a proposed development further declines or even extinction; and (iii) lack project would be too severe to be feasibly offset of information, such as on the distribution or requires careful interpretation of laws, policies, population size of certain species, might make it and treaties; analysis of (often highly incom- difficult to understand the significance of proj- plete) scientific data; and a dose of good judg- ect impact or to design an adequate offset. ment that also takes stakeholder concerns into account. If the residual adverse impacts from a Flag 2: Original development project would proposed project were found to be unaccept- affect a legally protected area (existing or ably large and could not adequately be offset proposed) or an internationally recognized or otherwise compensated, then the logical important site. Protected areas that are desig- decision would be to substantially redesign or nated at a national or sub-national level—along shelve the project. with internationally recognized sites such as Key Biodiversity Areas and Ramsar Wetlands—sup- port important biodiversity features that are Caution Flags for High-Risk often difficult to find elsewhere. Designation of Situations these sites by governments and/or the interna- tional community reflects the great significance Certain situations pose a high risk that the of these sites for biodiversity conservation. The proposed biodiversity offset will not succeed promise of an offset should not be inappro- in achieving No Net Loss, or even more modest priately used to justify development projects conservation targets. In such circumstances, bio- that would significantly damage these special diversity offsets need to be assessed very care- sites. At the same time, if certain development fully before being planned and implemented. In (such as oil extraction) within a protected area some cases, the low probability of a successful is considered inevitable for political reasons, a biodiversity offset, coupled with high adverse well-funded offset (leading to greatly improved residual impacts, would argue for not proceed- on-the-ground protection) might serve to ing with the original project. In other cases, the reduce concurrent threats (such as agricultural prospects for a successful offset (in terms of No encroachment) to the same protected area. 14 Biodiversity Offsets: A User Guide Flag 3: Proposed offset area has poor prospects EBRD. 2014. Performance Requirement 6: for long-term conservation. Even if adequate Biodiversity Conservation and Sustainable natural habitats, similar to those that would be Management of Living Natural Resources. lost to the original project, seem to be available London: European Bank for Reconstruction as offset areas, closer examination might find and Development. that establishing a viable compensatory pro- www.ebrd.com tected area of suitable size might not be feasible IFC. 2012a. Performance Standard 6: Biodiversity due to land tenure, socio-economic, political, Conservation and Sustainable Management or security constraints (see Chapter 6, Step 2 of Living Natural Resources. Washington: regarding Implementation Risk Assessment). International Finance Corporation. www.ifc.org/wps/wcm/connect/ FURTHER RESOURCES ON LIMITS TO bff0a28049a790d6b835faa8c6a8312a/PS6_ WHAT CAN BE OFFSET English_2012.pdf?MOD=AJPERES African Development Bank. 2013. Operational IFC. 2012b. Guidance Note 6: Biodiversity Safeguard 3: Biodiversity and Ecosystem Conservation and Sustainable Management Services. of Living Natural Resources. Washington: http://www.afdb.org/fileadmin/uploads/ International Finance Corporation, 69p. afdb/Documents/Policy-Documents/ World Bank. 2016. Environmental and Social December_2013_-_AfDB%E2%80%99S_ Standard 6: Biodiversity Conservation and Integrated_Safeguards_System__-_Policy_ Sustainable Management of Living Natural Statement_and_Operational_Safeguards.pdf Resources. Washington: The World Bank. Limits to What Can Be Offset 15 16 Biodiversity Offsets: A User Guide 1 6 Among the many types of conservation actions that biodiversity offsets can support is training in alternative agricultural techniques that reduce deforestation, as shown here near Liberia's East Nimba Nature Reserve. Photo: Wing Crawley Preparing and Implementing Biodiversity Offsets Biodiversity offsets can involve a diverse range important factor in decision-making for biodi- of activities for enhancing the conservation versity offsets. of habitats and species, off-site from the orig- inal project area. Nonetheless, most of the Biodiversity Information Needed. For projects actions needed to establish a successful off- with potentially significant biodiversity impacts, set—whether for a public or private sector the ESIA should provide biodiversity informa- development project—fall within the following tion that is important for decision-making. four main steps to preparing and implementing Accordingly, the ESIA terms of reference (TOR) biodiversity offsets. should specify the need for information such as: 1. Ecosystem Types Affected. The ESIA should Step 1—Estimate Residual estimate the total area—in hectares and per- centage terms—of each habitat type that is Biodiversity Losses from the expected to be converted (lost) or modified Original Project (including degraded) as a direct or induced (indirect) impact of the original development ESIA as a Key Tool. To know what should or project. Each potentially affected habitat could be offset, it is necessary first to estimate type should be described and suitably the likely biodiversity losses if the original mapped, including terrestrial and aquatic infrastructure, extractive, or other development ecosystems and modified as well as natural project were to proceed as planned (taking into habitats. The existing quality of the habitat account other available measures in the mit- (in terms of its suitability for species of con- igation hierarchy). The main instrument used servation interest and/or in comparison to its by most governments as well as international original “pristine” condition) should also be financing institutions for assessing biodiversity described. impacts is the Environmental and Social Impact 2. Species of Conservation Interest. The ESIA Assessment (ESIA), aka Environmental Impact should indicate which species of global or Assessment (EIA) or other names (depending national conservation interest—including on the country and institution). The quality those classified as Critically Endangered, and integrity of the ESIA process is a critically Endangered, Vulnerable, or Near Threatened Preparing and Implementing Biodiversity Offsets 17 under international Red List criteria, and any 5. Site Ownership and Control. For the entire others with small global ranges—are likely proposed project area, the ESIA should to be adversely affected and to what extent indicate (i) which individual, corporation, (relative to their existing populations). In community, government, or other entity addition to species threatened with extinc- legally owns the land and/or water rights tion, the ESIA should indicate the proposed and (ii) which such entity has legal or de facto project’s impact on other species of special management control over the area and its management interest; these include high- natural resources. value species from a commercial, human 6. Baseline Threats. The ESIA should seek to consumption, or cultural/spiritual stand- quantify ongoing, baseline rates of habitat point, along with “keystone” species that help loss or degradation (if any) within the proj- maintain desired ecosystem conditions. ect area. It should also describe existing and 3. Special Biodiversity Values. Aside from indi- likely future threats (other than the proposed cating the species of conservation interest, project) to the area’s biodiversity. the ESIA should describe the other ways 7. Significance of Residual Adverse Impacts. The in which project area might be of biodi- ESIA should assess and explain the signifi- versity interest. For example, the project cance of the proposed project’s expected area might (i) harbor overall high species residual impacts on biodiversity, includ- or habitat diversity; (ii) support significant ing both direct and indirect (aka induced) concentrations of one or more migratory or impacts. It should also take into account congregatory species; (iii) otherwise qualify the likely cumulative impacts from nearby, as an Important Bird Area, Key Biodiversity upstream or downstream, associated, fol- Area, Critical Habitat (as per IFC Performance low-up, or repeater projects. Establishing Standard 6), or other special conservation the significance of the expected adverse designation; (iv) have existing or pro- biodiversity impacts is a key input to decid- posed recognition as a Ramsar Wetland of ing whether a biodiversity offset might be International Importance, UNESCO Biosphere needed: If the adverse impacts are truly Reserve, World Heritage Natural Site, or other insignificant, further mitigation measures special international or national status; or (v) (including offsets) might not be required, sustain or enhance the biodiversity values of although they might still be recommended if nearby or downstream sites of conservation the project seeks to achieve a Net Gain from interest, for example as part of a biological a biodiversity standpoint. corridor or as a water source. 8. Precautionary Principle. Where scientific 4. Protection Status. The ESIA should indicate data may be inadequate (despite the ESIA’s whether the project area has any kind of pro- best efforts to obtain baseline information), tected status, whether as (i) any category of it is advisable to consider the Precautionary formal protected area (National Park, Wildlife Principle: When in doubt, project planners Reserve, etc.); (ii) other protection under should err on the side of caution with respect national or local laws or regulations (such as to protecting biodiversity from possibly irre- blanket restrictions on forest clearing or wet- versible, harmful changes (including poten- land conversion), or (iii) formal or informal tial species extinctions). In practice, applying protection by local communities or tradi- a precautionary approach requires careful tional authorities (such as community forests judgment, since the available biodiversity or grazing lands, or sacred natural sites). information on any site is always incomplete 18 Biodiversity Offsets: A User Guide (particularly when insects and other inverte- feasible, it is important to answer the following brates are considered). A very strict, legalistic two questions: interpretation of the Precautionary Principle 1. Could the damage from the original project might be unworkable, since it could preclude be feasibly offset? Certain adverse residual virtually all large-scale development projects impacts cannot feasibly be offset (i) if the affecting natural habitats. On the other hand, affected area is considered unique or irre- sufficient biodiversity information should placeable from a biodiversity standpoint be obtained to give development planners (Chapter 5) or (ii) if suitable offset sites with adequate confidence that the proposed adequate additionality, equivalence, and/ project (with all available mitigation mea- or permanence (Chapter 4) simply are not sures, including offsets) would avoid causing available. significant, irreversible harm. For example, information on the species of conservation 2. Could the proposed conservation off- concern that are known or likely to occur set activities feasibly be implemented? within the project development and offset Notwithstanding a demonstrated need, a areas needs to take into account seasonality suitable biodiversity offset might not be and annual variation: Some species are only feasible to implement—or might have a low evident during a particular time of year and, likelihood of success—due to land tenure, in some ecosystems (notably drylands), cer- political, socio-economic, security, or other tain species are only evident during particu- constraints. lar years (for example, unusually wet ones). Apply the Mitigation Hierarchy. As per the Step 2—Select the Offset Activities Mitigation Hierarchy (Chapter 3), biodiversity and Conservation Site(s) offsets are considered a last resort, after the other mitigation approaches (avoid, minimize, Biodiversity Offset Activities. Depending on and restore) have all been feasibly applied. The the local context, expected biodiversity impacts, need for a biodiversity offset is based on the and desired conservation outcomes (such as No type and severity of adverse residual impacts Net Loss or ideally a Net Gain), a variety of suit- that would still remain after using the other able offset activities might be chosen, including mitigation approaches. To help ensure that sig- combinations of the following options: nificant pre-offset residual impacts are indeed 1. New or Expanded Protected Areas. Protected minimized, the “Analysis of Alternatives” section areas—broadly defined here to include of the ESIA needs to explain in detail how and governmental, community, and private con- why any alternative project locations or designs servation areas under different categories (with potentially lower adverse impacts) were of management and allowed human uses— identified, considered, and ultimately rejected. could be created or expanded to offset the biodiversity losses from the original project. Assess the Feasibility of Offsetting. If full application of the pre-offset Mitigation 2. Improved Management or Habitat Hierarchy (avoid, minimize, restore) still leaves Enhancement. The on-the-ground manage- significant adverse residual impacts, then a bio- ment of existing protected areas could be diversity offset might indeed be the best solu- strengthened, if additionality (Chapter 5) can tion—assuming that the offset itself is feasible. be demonstrated. To assess whether a biodiversity offset would be Preparing and Implementing Biodiversity Offsets 19 3. Habitat Restoration or Enhancement. separate, individual offset from scratch (see Specific habitats could be established, Chapter 8). A key consideration in such cases restored, or enhanced, particularly in areas is ensuring (through monitoring) that the with some degree of long-term protection. offset payments made result in verifiable on-the-ground conservation gains. 4. Livelihood or Community Support. Biodiversity offsets normally should include Offset Area Site Selection. The site(s) selected support for addressing livelihood or com- for conservation offset activities should take munity development issues in the vicinity into account the core principle of equivalence, of conservation areas, to help build local seeking to achieve like-for-like or trading-up support as well as to mitigate any nega- conservation outcomes (Chapter 5). The site(s) tive socio-economic impacts from newly selected should also take into account the land- restricted access to natural resources. scape context—such as the size of remaining The World Bank’s existing Involuntary patches of natural vegetation, and connectivity Resettlement Policy (OP 4.12) and newly-ap- to nearby areas of similar habitat—as well as proved Environmental and Social Standard the feasibility of establishing a successful and 5 "Land Acquisition, Restrictions on Land sustainable conservation offset in that area. Use, and Involuntary Resettlement," along with IFC’s Land Acquisition and Involuntary Implementation Risk Assessment. It is import- Resettlement Performance Standard 5, ant to assess a variety of implementation risks, provide for livelihood restoration measures both (i) when considering whether a biodiver- when needed to mitigate the impacts of new sity offset is feasible at all and (ii) when planning restrictions on access to natural resources the offset so as to maximize the prospects of within project-supported protected areas. a successful outcome. Implementation risks 5. Species-specific Interventions. To compensate for biodiversity offsets (as well as other types for project-related reductions in the popula- of conservation projects) might involve, for tion of some species of conservation interest, example (i) land tenure, where the individual biodiversity offsets can support measures to or community landowners might not be willing reduce other (non-project) threats to the same to manage the land for conservation, nor to species. As an example, to offset the antici- sell the land to a conservation-oriented buyer pated incidental mortality of Hawaiian Petrels (government or NGO) at an acceptable price; Pterodroma sandwichensis through collisions (ii) socio-economic realities, such as where the with wind turbines, a wind power project was local human population is engaged in natural required to support the removal of predatory, resource use practices that are incompatible non-native mammals from the petrels’ nesting with biodiversity conservation, and timely areas (USFWS 2016). change in such practices is not considered likely; (iii) political will, where the government 6. Financial Support. All types of biodiversity is considered unlikely to enact the legislation or offset activities require some level of fund- regulations needed to establish a protected area ing. However, in some cases the sponsor of or otherwise implement an offset or, conversely, the original project might simply provide the government might be committed to devel- additional support to an aggregate, large- oping an incompatible form of land or water scale conservation offset—or even a con- use—such as a new dam, agricultural planta- servation trust fund—that was designed to tion, or port facility—within (or too close to) the compensate for the cumulative impact of proposed offset area; (iv) institutional failure, multiple projects, rather than designing a 20 Biodiversity Offsets: A User Guide where an NGO or other entity charged with information sharing can deter harmful specu- offset implementation might be found unwilling lation about the offset as well as the original or unable to carry out its commitments; or (v) project; it can also encourage stakeholders to major security concerns, such as the presence share what they know and sometimes to col- of dangerous armed groups (rebels, warlords, laborate further. Information disclosure is most terrorists, bandits, or drug cartels) that would useful when the information is presented in a inhibit the effective implementation of biodiver- readily understandable manner: For example, sity offset activities. “raw” project outcome monitoring data should be publicly disclosed, but ideally accompanied Stakeholder Engagement. Effective stake- by some concise explanation of its significance. holder engagement is needed to help ensure The biodiversity offset information that should the success of all types of development and normally be fully disclosed includes (i) all the conservation projects, including biodiversity expected biodiversity and other impacts; (ii) offsets. Robust stakeholder engagement begins the offset area location, design, and alternatives sufficiently early and continues as needed to considered; (iii) implementation and outcome obtain stakeholder feedback during all key monitoring arrangements; (iv) budget and fund- stages of offset planning and implementation, ing sources; and (v) the entities responsible for including (i) the assessment of biodiversity and offset implementation, along with any partners. other project impacts (and their significance The World Bank Policy on Access to Information to stakeholders); (ii) planning of offset location specifies that all project-related information is and design, including consideration of alter- expected to be publicly disclosed except for natives; (iii) participation in project monitoring certain specified categories, including informa- and (where applicable) benefits sharing; and (iv) tion that is deliberative (such as internal drafts), if and when major changes are needed or key personal, or security-related. For biodiversity new findings arise during implementation. It is offsets and conservation projects in general, a important to consult with the full range of stake- few special exceptions to the general principle holders—even those who might not be sup- of fully transparent information disclosure might portive of the project or offset proposal (at least include: not initially)—to help ensure that the project 1. Private Land Acquisition. For biodiversity details, impacts, and responsibilities are clearly offsets involving voluntary land acquisition understood and to help build trust between the (rather than government expropriation or parties. The World Bank’s existing Environmental forced sale), the conservation land might be Assessment Policy (OP 4.01) sets out minimum acquired more economically by involving standards for public consultation on Bank- local NGOs and local people in the price supported projects. The newly approved World negotiations, since the visible presence of Bank Environmental and Social Standard 10, outsiders (especially large companies or for- "Stakeholder Engagement and Information eigners) could drive up the sale price. Disclosure", provides more detailed guidance on stakeholder engagement, including the use of 2. Precise Locations of Vulnerable Resources. It a grievance mechanism to address complaints is usually inadvisable to publicly disclose the during project implementation. precise geographic location of rare plants, bird nests or animal dens, inadequately pro- Information Sharing. A key part of successful tected archaeological sites, or other vulner- stakeholder engagement is highly transparent able natural or cultural resources that could information disclosure. Timely and thorough easily be damaged or removed. Preparing and Implementing Biodiversity Offsets 21 Metrics for Biodiversity Offsets: How Much type and should be developed in consul- Conservation Area is Enough? If the desired tation with knowledgeable botanists. In a conservation outcome is No Net Loss or Net simple application of this approach, 100 ha Gain, it is necessary to calculate the minimum of a particular forest type in pristine condi- size of the biodiversity offset area that would tion would count as 100 Habitat Hectares provide adequate compensation for the damage (100 ha × 100% quality = 100 HH), whereas from the original project. A variety of accounting 100 ha of partially degraded forest estimated methods have been proposed for this purpose, to be 50% quality would be expressed as 50 ranging from very simple to complex, multi-vari- Habitat Hectares. able approaches. Each approach has its partic- 3. Conservation Significance. Some ecosys- ular advantages and limitations. Rather than tem types within the project area might be prescribing one specific method, this User Guide regarded as more significant that others briefly describes the simplified versions of sev- from a conservation standpoint, based on eral workable approaches. Offset designers gen- factors such as species richness, ecosystem erally use one or a combination of these basic rarity, or degree of threat (at an international, approaches or innovate further, as appropriate. national, or local level). Ecosystems that are 1. Surface Area. This simplest of metrics com- assessed as vulnerable, endangered, or crit- pares the surface area (hectares, ha) of ically endangered could score more highly habitat lost, without reference to further than those that are more common and not details such as habitat quality. Because of under threat. differences in habitat quality and various 4. Species-level Information. There are situa- uncertainties (noted below), a simple 1-for-1 tions where measures of habitat area and formula (ha protected under the offset, in quality are not a good substitute for losses exchange for ha lost under the original proj- at the species level. It is therefore necessary ect) is often not sufficient to achieve a goal to carry out species-specific assessments of No Net Loss. It may be preferable to have for key species, particularly where these are an offset of inadequate size (which achieves highly threatened or otherwise valued. This some conservation results) than to have no can be done qualitatively, by ensuring that offset at all (if the original project proceeds those species that are lost are included at in any case), but No Net Loss should not the offset sites; alternatively, a more quan- be claimed under such circumstances. The titative assessment can be carried out. For Argentina-Paraguay Yacyreta Hydroelectric some species, there might be information Project followed a 1-1 biodiversity offset on population density estimates which allow formula for the total land surface area, but comparisons to be made between impacted with habitat representativeness taken into areas and offset sites. The mining company account (Quintero 2007). Rio Tinto-QMM approached the question of 2. Habitat Quality. This approach uses Habitat species conservation significance by devel- Hectares (HH), based on area of habitat lost oping a Unit of Global Distribution metric for to the project multiplied by the quality of the high priority species, which are either highly lost habitat. The HH score reflects the quality range-restricted (found in only a small area) of the habitat relative to the benchmark for or internationally classified as Endangered that ecosystem type in an undisturbed state. or Critically Endangered (Temple et al. For land-based offsets, the criteria that make 2012). In their application, a Unit of Global up “quality” will depend on the vegetation Distribution is equivalent to 1% of the total 22 Biodiversity Offsets: A User Guide global population of a species (or 1% of its IFC), this approach remains somewhat con- existing global range, if population data are troversial because longer-term assumptions unavailable). The Oyu Tolgoi mining project about the baseline habitat loss are inherently in Mongolia produced a Net Positive Impact uncertain and could be overly pessimistic. forecast based on its biodiversity offset and For example, project proponents might find other mitigation measures that combined it convenient to argue that the habitat at the the project’s expected impacts (positive and project site will soon disappear anyway, even negative) on the species and ecosystem without the project. On the other hand, a types known to be of high conservation con- high expected rate of habitat loss might well cern (Oyu Tolgoi 2016). be realistic; it would also strengthen the case that a proposed preservation offset would 5. Multipliers. In response to uncertainty, some indeed provide true additionality. If coun- biodiversity offset schemes use simple mul- terfactuals are used, the offset proposal will tipliers. Multipliers can be used to address appear more credible if the project documen- various forms of uncertainty including (1) tation is highly transparent regarding the induced impacts that may be hard to mea- actual and projected rates of baseline habitat sure directly; (2) implementation risk that the loss, along with the data and assumptions offset might fail or only partially succeed; (3) that were used to underpin the projections. spatial risk that the offset location will turn out to be of lower quality or conservation Figure 6.1 illustrates how these variables might significance than the site affected by the be combined to develop offsets metrics, recog- original project; and (4) temporal lags where nizing that other permutations are also possible. habitat restoration at the offset site may take The selection of appropriate biodiversity offset a long time. For example, a biodiversity offset metrics should take into account sound conser- plan might suitably assume a sub-optimal vation science, while ensuring that the approach success rate and compensate for this by selected is pragmatic and workable. placing a larger area of habitat under protec- tion. Among the largest obligatory multipli- ers are in South Africa’s Western Cape offset Step 3—Prepare the Biodiversity policy, which can require up to 30 ha of land to be offset for every hectare legally cleared Offset Project Component in endangered habitats (DEADP, 2007). In At its core, a biodiversity offset is a conservation this case, the multipliers used in are based project (an integrated set of conservation activ- on a Regional Conservation Plan and stated ities), even though it is linked to one or more objectives for habitat targets. In many other original projects that damage biodiversity to cases, multipliers are based on less precise some extent. Accordingly, project-specific biodi- “guesstimates” or “rules of thumb”, with or versity offsets should typically be prepared as a without scientific underpinning. component of the corresponding original proj- 6. Counterfactuals. Counterfactuals (in this con- ect. (For aggregated biodiversity offsets, where text, “what would happen otherwise, even one large offset might be used to compensate without the project”) are sometimes applied for multiple original projects, see Chapter 8 on to offsets by assessing what the background National Frameworks for Biodiversity Offsets.) rate of habitat loss is in an area, and then sub- tracting anticipated losses from the area to Basic Requirements for Conservation be offset. Although widely used (including by Projects, including Biodiversity Offsets. If they are to be more than empty promises, Preparing and Implementing Biodiversity Offsets 23 FIGURE 6.1  Possible Combinations of Variables in Designing Offset Metrics Habitat Quality Conservation Significance Surface Species-level Area Information Multipliers Counterfactuals biodiversity offsets need to address the same local infrastructure, or small grants); incen- considerations as other conservation or devel- tive payments to landholders conditioned opment projects. Certain key “nuts and bolts” upon conservation results (aka payments for provisions are needed to make a biodiversity environmental services, PES); or species-spe- offset a reality, rather than just a vaguely-stated cific management interventions. recommendation in the ESIA for the original 2. Institutional Responsibilities. The offset development project. These key provisions— project documents should clearly define the which need to be adequately documented in responsibilities of different organizations, project technical and legal documents—typi- whether government agencies, private firms, cally include: organized communities, NGO partners, or 1. Specific Activities and Inputs. If the bio- other any entities with implementation diversity offset is to be measured as one responsibilities. Since the organization lead- or more conservation outcomes (ideally ing the implementation of the biodiversity involving a net gain from a biodiversity offset is often different from the sponsor of standpoint), what are the inputs that the the original development project (particu- project will provide in an effort to achieve larly in the public sector), inter-institutional these outcomes? Such inputs could cover, coordination mechanisms need to be clearly for example, on-the-ground investments in defined. This is especially important for a new or upgraded protected area (such as defining smooth flow-of-funds procedures physical demarcation, park infrastructure, between the original project entity (such as vehicles and equipment, rangers or other a roads agency) and the biodiversity offset personnel, or management plan); habitat entity (such as a protected areas agency). restoration or enhancement measures (such 3. Implementation Schedule. The time frames as skilled personnel, planting materials, or for implementing each biodiversity off- water control structures); community sup- set investment or action should be clearly port (such as training or inputs for alternative defined, including the expected start date livelihoods, new water or electricity supplies, and (if not recurrent) the target completion 24 Biodiversity Offsets: A User Guide date for each planned activity. The timing of 2. Verify the Land Tenure, Socioeconomic, biodiversity offset activities may need to take and Political Feasibility. The offset proposal into account the implementation schedule should provide land tenure and socioeco- for civil works under the original develop- nomic information that clearly indicates (i) ment project. who owns and/or claims all the land (and associated water area) comprising the 4. Budget. Effective implementation of any bio- potential new or expanded protected area; diversity offset requires an adequate budget, (ii) who has any concessions, leases, or other both for up-front investment costs and long- legally recognized use rights; and (iii) who term recurrent costs. is currently occupying or using the land or 5. Funding Sources. Up-front investment costs natural resources in any way (whether or normally should be met as a defined part of not they have the legal rights to do so). The the original project’s investment costs, since offset proposal should also describe any the original project provides the basis for official policies and land use plans that might doing the biodiversity offset in the first place. be incompatible with the proposed pro- Securing the funding for long-term recurrent tected area (such as a new dam, agricultural costs is often a challenge; various options development pole, or large port facility). should be considered (see Chapter 7). Understanding the legal land tenure, de facto human uses, and official policies and plans Procedures for Establishing or Upgrading will help to determine the feasibility of estab- Protected Areas. Many biodiversity offsets lishing or enlarging the proposed protected involve protected area establishment, enlarge- area. ment, or upgrading of legal status or manage- 3. Select the Management Category. The ment category (such as from Forest Reserve offset proposal should indicate the planned to National Park). In such cases, the process management category of the proposed pro- that needs to be used typically involves some tected area, taking into account its size and variation of the following steps. Additional steps key conservation objectives as well as the are needed in particular cases, such as if land existing and planned human uses. Protected acquisition is involved (through purchase, lease, area management categories vary in terms conservation concession, easement, etc.). of their emphasis on different conservation 1. Verify the Conservation Value. The biodi- and management objectives, along with the versity offset proposal should document extent and types of allowed human uses.3 that the proposed protected area (or any biodiversity offset area) is indeed of high 3 The World Conservation Union (IUCN) protected area conservation value—adequate to meet the categories are a standardized classification system for similar No Net Loss or other offset criteria—taking types of protected areas that may have very different names in different countries. (For example, a “Forest Reserve” in one country into account any possible dependence on may mean an area of strict preservation, while in another it might mean a production forest suitable for commercial logging.) The upstream water sources or other key off-site standardized IUCN categories include Category I: Strict Nature features. The conservation value should be Reserve/Wilderness Area (protected area managed for science or wilderness protection); Category II: National Park (protected verified based on reliable, recent references area managed mainly for ecosystem protection and recreation); (reports, databases, or expert opinions), Category III: Natural Monument (protected area managed mainly for conservation of specific natural features); Category IV: Habitat/ supplemented by additional field work as Species Management Area (protected area managed mainly needed. for conservation through management intervention); Category V: Protected Landscape/Seascape (protected area managed mainly for landscape/seascape conservation and recreation); and Category VI: Managed Resource Protected Area (protected area managed mainly for the sustainable use of natural ecosystems). Preparing and Implementing Biodiversity Offsets 25 TABLE 6.1  Checklist of Issues to Consider for the Planned Biodiversity Offset Technical and • Have the biodiversity and ecosystem values to be offset been listed and described? Ecological Aspects • Has the full mitigation hierarchy (first avoid, then minimize, then restore, and only then offset) been duly considered, with adequate documentation? • Have potential offset sites and activities been screened against selected criteria (ecological, social, implementation feasibility)? • Are there potential offset sites nearby which meet the desired criteria, or do you need to look into the wider landscape? If the ecological characteristics are not similar, can you trade-up? • How do the proposed offset sites fit in with national and regional conservation priorities? • How do the proposed offset sites provide additionality? • What conservation interventions will be required for the offset to achieve No Net Loss or otherwise succeed? • For proposed restoration offsets, is there demonstrated success for these types of habitats? • Which outcome indicators will be monitored? Land Tenure, • Who legally owns, who claims ownership or use rights, and who effectively controls Social, and Political all the parcels of land comprising the proposed biodiversity offset area, as well as the Aspects corresponding water rights? • Do local residents (individuals or communities) own, occupy, or otherwise use the proposed offset sites? • Are local residents adequately engaged in the biodiversity offset planning process? • What changes in land or natural resource use (if any) will be needed for the biodiversity offset to succeed? How will those changes be implemented? • If access to natural resources will be restricted more than at present, are the livelihood restoration measures (including alternative livelihoods) proposed for or by local residents realistic? • Is there sufficient political support for the planned offset activities? If legislative (congressional or parliamentary) approval is required (such as to create a new protected area), can this realistically be achieved when needed? • Are there other social or political risks (such as security and conflict issues) that could prevent effective implementation? Long-term • Are there any legal requirements in place that dictate a particular methodology be Protection and followed for designing or implementing the offset? Legal Aspects • How long is the proposed offset site expected to be legally protected or otherwise secure? • Will the offset be part of a protected area system or managed independently? • In the case of private (individual or community) ownership of the offset area, what types of conservation instruments will be used to ensure or promote long- term conservation (such as conservation easements, legal covenants, community management agreements, environmental service payments, etc.)? 26 Biodiversity Offsets: A User Guide Financial Aspects • Have the up-front investment costs been adequately budgeted, with an agreed funding source? (These costs may include land acquisition, physical demarcation, protected area infrastructure and other small civil works, vehicles, office and field equipment, staff training, consultancies including Management Plan preparation, etc.) • Will there be adequate funding of recurrent protection, management, and monitoring costs (including salaries, fuel, supplies, and spare parts) over the long term? Through what mechanisms? Human Resources • What human resources are needed to plan and implement the biodiversity offset, including long-term management and monitoring? • How much and what kinds of training will be required? Partnerships • Which organizations have been, or should be, engaged as partners to support offset planning or implementation? • Are people from local communities (adults or students) willing and able to participate in the protection, management, or monitoring of the offset area and its biodiversity? Stakeholder • Have the interested and potentially affected stakeholders been adequately Engagement identified? • Have timely communications and an open and regular dialogue been maintained with local communities or other key stakeholders? • Have interested stakeholders been provided opportunities to engage throughout the biodiversity offsetting process, including site selection, offset design, no-net-loss calculations, implementation, and monitoring? • Has a stakeholder complaint and feedback mechanism been defined (where warranted)? • Do a significant number of local residents or other stakeholders object to key aspects of the proposed offset plans? If so, how will these objections be effectively addressed? 4. Delineate the Boundaries. The offset pro- requirements regarding how this consulta- posal should include a detailed map showing tion process is to be carried out. the planned protected area boundaries. The 6. Prepare the Legal and Supporting Documents. boundaries should be selected in close con- Getting the new or expanded protected sultations with key stakeholders, including area legally established (gazetted) typically neighboring landholders (public or private) will require drafting a new (i) law, regulation, and local communities. or executive or ministerial decree for public 5. Stakeholder Consultation. Robust consul- (government-owned) protected areas or (ii) tations should be carried out with the full by-laws, contracts, trust agreements, ease- range of interested stakeholders—including, ments, or other legally binding documents but not limited to, local communities and for private (community, corporate, or family/ resource users—regarding the proposed individually owned) protected areas. In addi- new or expanded protected area and its tion to these key legal documents, a variety planned boundaries and management of supporting technical documents (includ- category. Some countries have specific legal ing maps) will usually need to be prepared. Preparing and Implementing Biodiversity Offsets 27 Depending on national or local political wastes; (iv) no washing of machinery or chang- circumstances, obtaining final approval of a ing of lubricants in waterways; and (v) enforc- new law or decree can take months or even ing good behavior by construction workers, years; these delays need to be considered in including prohibition of hunting, fishing, wildlife the timing or phasing of the original project capture, bush-meat purchase, plant collection, as well as the biodiversity offset. unauthorized vegetation burning, speeding, firearms possession (except by security person- Biodiversity Offset Preparation Checklist. nel), or inappropriate interactions with local Table 6.1 provides a checklist of issues to con- people. Rules such as these—along with trans- sider when planning a biodiversity offset. This parent penalties for non-compliance—should checklist can serve as a reference during the be part of the relevant bidding documents and early planning stages of the offset (or other type contracts for the biodiversity offset. Even more of conservation project), as well as during the importantly, environmental rules for contractors pre-approval (appraisal) stage to help verify that are needed as part of the mitigation hierarchy, key details have been addressed. to minimize the biodiversity-related and other adverse impacts of the larger-scale civil works that are part of the original development project. Monitor Implementation of the Biodiversity Offset Activities and Outcome Monitoring. To verify that a biodiver- sity offset has indeed achieved its No Net Loss Results or other conservation objectives, some kind Biodiversity offsets, like other kinds of conser- of field-based outcome monitoring is needed. vation projects, merit significant investment in Outcome monitoring is also an essential part of the monitoring of implementation as well as adaptive management: If the biodiversity offset outcomes. is falling short of achieving its goals, monitoring can provide the information needed to effec- Implementation Monitoring (Supervision). tively adjust project implementation so as to Diligent monitoring of implementation by the improve on-the-ground outcomes. The scope, responsible entity is important for achieving the duration, frequency, and budget for outcome desired outcomes on the ground, as summa- monitoring activities (including field work, data rized by the saying, “You get what you inspect, analysis, and reporting) should be defined as not what you expect.” Where civil works (such as part of the preparation of a biodiversity off- protected area facilities) are a part of the bio- set. Outcome monitoring activities should be diversity offset, it is important for the bidding designed (i) to be feasible to carry out in the documents and contracts to have sufficiently field; (ii) to obtain much-needed information; precise technical specifications. and (iii) to avoid undue complexity (such as too many indicators). Outcome monitoring reports Environmental Rules for Contractors are also and data should be routinely shared with needed to help ensure that contractors and con- interested stakeholders; exceptions should be struction workers do not cause undue damage limited to special cases, such as when disclos- while working in sensitive natural areas. Such ing the precise locations of threatened plants rules would typically cover, for example, (i) min- or animals could cause them harm. Interested imizing any clearing of natural vegetation; (ii) citizens and volunteers often usefully assist with adequate clean-up and restoration of construc- outcome monitoring within a biodiversity offset tion sites; (iii) proper disposal of solid and liquid 28 Biodiversity Offsets: A User Guide conservation area, along with other protection BBOP. 2012. No Net Loss and Loss-Gain and management functions. Calculations in Biodiversity Offsets. Washington: Business and Biodiversity Management Effectiveness Tracking Tool. For Offsets Program, Resource Paper, 27p. those biodiversity offsets involving some type of http://www.forest-trends.org/documents/ protected area (whether public or private), the files/doc_3103.pdf Management Effectiveness Tracking Tool (METT) DEFRA. 2012. Technical Paper: The Metric for is a useful means to track progress in improv- the Biodiversity Offsetting Pilot in England. ing the quality of protected area management London, U.K.: Department for Food, across a broad range of indicators. The METT Environment, and Rural Affairs. was developed by World Wildlife Fund (WWF) https://www.gov.uk/government/ International in collaboration with the World publications/technical-paper-the-metric-for- Bank; it is now being used in many protected the-biodiversity-offsetting-pilot-in-england area projects (including those supported by the World Bank and the Global Environmental IUCN. 2016. Best Practice Guidelines (various). Facility, GEF). At its core, the METT is a standard- International Union for Conservation of ized questionnaire about different aspects of Nature, World Commission on Protected protected area management, with a theoretical Areas. “perfect” top score of around 100. Most pro- http://www.iucn.org/protected-areas/world- tected areas worldwide face protection and commission-protected-areas/publications/ management challenges of different kinds and best-practice-guidelines thus have scores that are considerably lower NSW. 2014. BioBanking Assessment Methodology. than the theoretical maximum. The METT Sydney: New South Wales Office of provides a useful instrument for tracking the Environment and Heritage, 136p. effectiveness of protected area management http://www.environment.nsw.gov.au/ and setting future goals, whether or not the pro- resources/biobanking/140661BBAM.pdf tected area in question is part of a biodiversity offset. New Zealand. 2014. Guidance on Good Practice Biodiversity Offsetting in New Zealand. New Zealand Government, 44p. FURTHER RESOURCES ON PREPARING AND IMPLEMENTING BIODIVERSITY http://www.doc.govt.nz/Documents/our- OFFSETS work/biodiversity-offsets/the-guidance.pdf Oyu Tolgoi. 2016. Health, Safety, and BBOP. Three key resource documents are the Environment: Net Positive Impact. Mongolia: Biodiversity Offset Design Handbook, the Oyu Tolgoi LLC, 22p. Biodiversity Offset Cost-Benefit Handbook, and http://ot.mn/media/ot/content/page_ the Biodiversity Handbook Implementation content/commitments/ESIA/1_ESIA/9-may/ Guide. Washington: Business and Biodiversity OT-10-E14-PLN-0008-E-Net_Positive_Impact_ Offsets Program. Forecast_v1.0.pdf http://www.forest-trends.org/documents/ files/doc_3092.pdf Preparing and Implementing Biodiversity Offsets 29 Quintero, J.D. 2007. Mainstreaming Conservation USFWS. 2016. Kaheawa Wind Power I: Proposed in Infrastructure Projects: Case Studies from Permit Amendment to Reduce the Take of Latin America. Washington: The World Bank, Federally Protected Species. Washington: U.S. 85p. Fish and Wildlife Service, News Release. http://documents.worldbank.org/curated/ https://www.fws.gov/news/ShowNews. en/760811468300693809/Mainstreaming- cfm?ref=kaheawa-wind-power-i—- conservation-in-infrastructure-projects-case- proposed-permit-amendment-to-reduce- studies-from-Latin-America;jsessionid=HNrd the-take-of-fede&_ID=1602 RWuVEGQr4Nn0lp3YCRFC World Bank. 2010. Policy on Access to Information. Parkes, D., Newell, G., and Cheal, D. 2003. Washington: The World Bank. “Assessing the Quality of Native Vegetation: World Bank. 2013a. Environmental Assessment The “Habitat Hectares” Approach.” Ecological Operational Policy (OP) 4.01. Washington: The Management and Restoration 4 (Supplement): World Bank. 29–38. World Bank 2013b. Involuntary Resettlement Pilgrim, J.D. et al. 2012. “A Process for Assessing Operational Policy OP 4.12. Washington: The the Offsetability of Biodiversity Impacts.” World Bank. Conservation Letters 6(5): 376–384. http://www.doc.govt.nz/Documents/our- World Bank. 2016. Environmental and Social work/biodiversity-offsets/pilgrim-et-al-2013. Standard 10: Stakeholder Engagement and pdf Information Disclosure. Washington: The World Bank. Temple, H.J. et al. 2012. Forecasting the Path towards a Net Positive Impact on Biodiversity WWF International. 2007. Management for Rio Tinto QMM. International Union for Effectiveness Tracking Tool: Reporting Progress Conservation of Nature, 78p. at Protected Area Sites. Gland, Switzerland: https://portals.iucn.org/library/efiles/ World Wildlife Fund International. documents/2012-049.pdf 30 Biodiversity Offsets: A User Guide 1 7 Hydroelectric projects, such as the bi-national Itaipu Dam (Brazil and Paraguay), are often suitable for biodiversity offsets because they generate long- term revenues that can cover the recurrent costs of conservation areas. Financial Sustainability of Biodiversity Offsets Just like any other on-the-ground conservation 1. Regular Operating Budget. Most functioning activities, biodiversity offsets inherently involve protected areas, as well as other conserva- recurrent costs for the protection, management, tion programs with recurrent costs, receive and monitoring of ecosystems and species. some type of annual support: Typically this These recurrent costs can include salaries, fuel, comes from national or local government supplies, spare parts, incentive payments to funding for public protected areas, or from landholders, and field support to volunteers, their respective landowners in the case of among others. Since—like other conservation private (individual- or community-owned) initiatives—biodiversity offsets will ideally last in protected areas. For public protected areas, perpetuity, they should be designed with a view the level of support from governmental towards how sufficient funding can be mobi- budgets is often well below what is needed lized to cover at least some of their long-term for adequate management; this problem recurrent costs. is particularly acute in—but not limited to—developing countries. In severe cases, Recurrent Cost Funding Options. Different such funding neglect leads to “paper parks” biodiversity offsets will face different opportuni- with little or no on-the-ground protection or ties and challenges with respect to their recur- management. The money that governments rent costs. Ideally, the developer of the original do spend on protected area recurrent costs project will somehow provide assistance with largely comes from general revenues; some- long-term recurrent costs; however, many devel- times it also comes from dedicated taxes and opers (public as well as private sector) are only fees, such as some tourism-related taxes. willing to support the up-front investment costs 2. Donor-funded Projects. Conservation proj- of the offset area (and maybe the first few years ects funded by international donors, includ- of recurrent costs), but not all the recurrent costs ing multilateral and bilateral development in perpetuity. With this reality in mind, the typical agencies and conservation NGOs, tend to menu of possible options for meeting the recur- cover up-front investment costs. They also rent cost funding needs of biodiversity offsets typically provide some support for recur- and other conservation projects includes: rent costs, but usually not over the long term. Thus, many protected area systems Financial Sustainability of Biodiversity Offsets 31 (particularly in poor countries) address their in their biomass and/or soils. Carbon offsets recurrent cost needs in part by stringing involve site-specific investments intended together irregular amounts of support from to compensate for the carbon emissions donor-funded projects. This type of “boom from fossil fuel combustion elsewhere, often and bust” funding is far from ideal, resulting in another country. Carbon offset invest- in conservation programs that lack the conti- ments often support low-carbon (typically nuity needed for efficient operation. renewable) energy development or targeted energy efficiency improvements. However, 3. Self-generated Revenues. Many protected some of the most cost-effective carbon areas generate some revenues within their offset options involve either restoring forests boundaries through visitor fees, lodges, through reforestation, or conserving stand- guiding or other tourism services, or fees ing forests that would otherwise be at risk of for legally-harvested products. In most loss or degradation. Therefore, carbon offset protected areas worldwide, these self-gen- payments can be part of a funding package erated revenues are not sufficient to cover to cover some of the protection and man- their full recurrent operating costs, although agement costs of forests or other high-car- there are some noteworthy exceptions, such bon ecosystems that are being conserved as Ecuador’s Galapagos National Park (GNP and/or restored (e.g. through reforestation) 2013). Compounding the cost recovery chal- under a biodiversity offset. Such payments lenge is the requirement in many countries can be made on a project-specific basis, such for public protected areas to send some or all as when the carbon emissions from one of their self-generated revenues back to their large power plant are offset through support respective governments. to a specific forest conservation area. At a 4. Private Philanthropy. Some conservation more aggregated level, the global program areas (potentially including biodiversity for Reduced Emissions from Deforestation offset areas) have their recurrent costs of and Forest Degradation (REDD+) provides protection and management met—fully or a range of opportunities for channelling in part—by corporate or individual sponsors. climate change mitigation funds to govern- Certain protected areas (particularly near ments or other entities (including organized urban centers) benefit from the assistance communities) for the conservation of stand- provided by local NGO “friends groups” ing forest areas, some of which might also that focus on one particular park, providing be biodiversity offset conservation areas. support that is additional and complemen- For any conservation area that might receive tary to whatever comes from the national or support through both a biodiversity offset local government. A few conservation NGOs and a carbon offset, it will be important to explicitly provide substantial funding to document the additionality (Chapter 4) pro- cover protected area recurrent costs; a case vided by each type of offset. in point is Africa Parks, which has obtained 6. Project-specific Revenue Transfers. long-term concession agreements to man- Conservation areas, particularly those age and mobilize funding for specific pro- established or strengthened as biodiversity tected areas in a number of African countries. offsets, can be sustained through dedicated 5. Carbon Offset Payments. Biodiversity offsets revenue transfers from specific infrastructure frequently establish or strengthen protected projects. For example, a proportion of the areas; many of these contain forests or other operating costs of the Argentina-Paraguay ecosystems with high levels of carbon stored Yacyreta Hydropower Project is to maintain 32 Biodiversity Offsets: A User Guide the compensatory protected areas that were tied up as principal and thus unavailable to established or strengthened under the proj- be used for on-the-ground conservation. ect (Quintero, 2007). Hydroelectric and water There are many good practice principles and supply dams, toll roads, pipelines, and other lessons learned to take into account when revenue-generating infrastructure projects creating a CTF, such as (i) ensuring ade- can be highly suitable for supporting the quate capitalization; (ii) cost-effective fund recurrent costs of associated biodiversity management; (iii) sufficiently independent offsets because maintaining the offset can governanace; (iv) transparent procedures be part of the infrastructure project’s regu- and oversight; and (v) obtaining additional- lar operating costs—just like water quality ity from the conservation money spent (for monitoring, fisheries management, or other details, see “Further Resources” section). recurrent environmental management costs. In special cases, the infrastructure project FURTHER RESOURCES ON FINANCIAL can actually benefit from the environmental SUSTAINABILITY OF BIODIVERSITY services provided by its biodiversity offset OFFSETS (such as an upstream conservation area that serves to filter water supplies or reduce Emerton, L., Bishop, J, and Lee, T. 2006. sedimentation). Sustainable Financing of Protected Areas: A Global Review of Challenges and Options. 7. Conservation Trust Funds. Conservation trust Gland, Switzerland: International Union for funds (CTFs) enable development project Conservation of Nature, 97p. sponsors to set money aside up-front to sup- port the recurrent costs of maintaining the GNP. 2013. “Entry Tax to Protected Areas.” biodiversity offset. If enough money is set Ecuador: Galapagos National Park aside, the CTF can serve as an endowment Directorate. fund that generates a sustainable (perhaps http://www.galapagospark.org/nophprg. variable) annual income stream to be used php?page=programas_turismo_tributo for conservation expenditures. However, if Quintero, J.D. 2007. Mainstreaming Conservation not enough is set aside, the CTF will become in Infrastructure Projects: Case Studies from (intentionally or not) a sinking fund that Latin America. Washington: The World Bank, supports specified conservation activities for 85p. a certain amount of time, but not indefinitely. http://documents.worldbank.org/curated/ Sinking funds disburse their entire principal en/760811468300693809/Mainstreaming- and investment income over a set period of conservation-in-infrastructure-projects-case- time, until the value of the fund sinks to zero. studies-from-Latin-America;jsessionid=HNrd A CTF can be established for a single biodi- RWuVEGQr4Nn0lp3YCRFC versity offset. However, there are large econ- omies of scale in CTF financial management Spergel, B. and Mikitin, K. 2013. Practice costs. Accordingly, it may make more sense to Standards for Conservation Trust Funds. develop one large (perhaps nation-wide) CTF Conservation Finance Alliance. that can cover the costs of multiple biodiver- World Bank. 2012. Expanding Financing for sity offsets (or other conservation projects), Biodiversity Conservation: Experiences from rather than a proliferation of smaller CTFs Latin America and the Caribbean. Washington: that have most of their limited capitalization The World Bank. Financial Sustainability of Biodiversity Offsets 33 World Bank Group. 2015. National Biodiversity Offset Scheme: A Road Map for Liberia’s Mining Sector. Washington: The World Bank Group. See especially Appendix 3: “Additional Details to Support the Establishment of a Conservation Trust Fund in Liberia” (pages 105–127). 34 Biodiversity Offsets: A User Guide 1 8 The project-specific example of support to Liberia's East Nimba Nature Reserve has inspired the preparation of a national-level Biodiversity Offsets Roadmap. Photo: ArcellorMittal Ltd. Scaling-up Biodiversity Offsets through Aggregation Aggregated Biodiversity Offsets: 1. Reduced Transactions Costs. Achieving suc- cessful biodiversity offsets typically involves An Idea Whose Time Has Come? high transactions costs, with multiple stake- holders and various legal, political, or social Aggregated Biodiversity Offsets. As used impediments that need to be overcome. here, “aggregated biodiversity offsets” refers to a Under an aggregated offsets system, the system in which biodiversity offsets are planned transactions costs could be greatly reduced, and implemented in a systematic or wholesale since it would not be necessary to design manner, more than just a one-off single offset every new biodiversity offset “from scratch”. area to compensate for a single original devel- opment project. This can mean, for example, 2. Increased Developer Participation. In view of (i) planning one or more relatively large off- the high transactions costs and other practi- set sites that would compensate for multiple cal challenges, biodiversity offsets are often original projects; (ii) pre-selecting offset areas implemented by international companies to facilitate support from development project that might be considered the “environmen- sponsors; or (iii) otherwise promoting the use tal leaders” within their sector. Meanwhile, of biodiversity offsets through some type of in the absence of clear procedures or strict national or sub-national government planning legal requirements, competing firms within framework. the same sector tend to carry out similar types of high-impact projects, but with- Advantages of Aggregation. Project-specific out the conservation offsets. A consistent biodiversity offsets—where an area-specific governmental framework that promotes set of conservation actions is identified, agreed or requires offsets under specified circum- to, and funded to compensate for one origi- stances would likely result in participation by nal development project—typically require a higher proportion of all the companies—or considerable effort to implement successfully. public works agencies—with projects that Accordingly, a national or sub-national system affect biodiversity. The benefits of such an to facilitate appropriate kinds of biodiversity approach could include (i) increased funding offsets could significantly scale up offsets use, for biodiversity conservation from the private with benefits that might include: sector or through public sector infrastructure Scaling-up Biodiversity Offsets through Aggregation 35 projects and (ii) improved on-the-ground BOX 8.1  Mozambique Biodiversity environmental outcomes for infrastructure, Offsets Roadmap extractive industry, and other large-scale development projects that would have been In Mozambique, existing Conservation approved in any case (with or without a bio- Areas (CAs) cover about 26% of the diversity offset). country’s land area and encompass most types of terrestrial and aquatic 3. Addressing Cumulative Impacts. Increased ecosystems. However, most are seriously participation by private or public sector underfunded, with low levels of on-the- project developers in supporting biodiver- ground protection and management. In sity offsets could more fully address the 2015, Mozambique launched its national cumulative impacts of multiple development conservation trust fund, BioFund, largely projects. A governmental offsets framework to provide sustainable support to its CAs. could identify large, ecologically valuable Like conservation trust funds in many offset areas that could compensate for the other countries, BioFund needs additional cumulative impacts of multiple projects that funding in order to function at an affect a certain ecosystem type. optimum level. Mozambique’s Biodiversity 4. Optimizing Site Selection. A governmental Offsets Roadmap, Contrabalanços framework could enable biodiversity offset da Biodiversidade: Um Roteiro para sites to be selected according to conserva- Moçambique (also in English), proposes tion priorities at a national (or sub-national) using BioFund to transfer biodiversity level, rather than in an ad hoc, proj- offsets funding from infrastructure and ect-by-project manner. The pre-identification extractive industry projects to selected of suitable conservation areas would also CAs that are ecologically similar to the reduce the project-specific costs and delays project-affected areas. This approach associated with verifying the feasibility of intends to ensure additionality of the proposed offset locations. offset investments by (i) supporting 5. Improved Land Use Planning. A governmen- CAs that have very limited on-the- tal framework for biodiversity offsets that ground protection or management pre-selects potential biodiversity offset sites (thus enabling “paper parks” to become will help to ensure that high-value conserva- real ones) and (ii) using matching tion areas (that have not yet been gazetted grant requirements to help ensure that as protected areas) are not mistakenly allo- existing governmental support (such as cated to incompatible forms of development. for ranger salaries) will not be reduced. Implementation has begun of the Roadmap’s recommendations through Developing National Biodiversity the Conservation, Impact Mitigation, and Biodiversity Offsets (COMBO) Project Offsets Systems supported by the French Development Types of National or Sub-national Offsets Agency (AFD) and several partners. Systems. A number of developed as well as developing countries have some elements of an aggregated biodiversity offsets system. true offsets but nonetheless can help chan- Table 9.1 classifies these systems into four nel funding from large-scale development types: (i) Compensation Funds (which are not projects towards biodiversity conservation); 36 Biodiversity Offsets: A User Guide TABLE 8.1  Different Types of National or Sub-national Biodiversity Offset Frameworks 3. Developer Implements under 4. Government Implements with 1. Compensation Funds 2. Mitigation Banking Government Framework Developer Support A. Type of • Compensation funds provide • Mitigation banking (aka conser- • Project developer (whether • Government implements the Offsets a mechanism whereby project vation banking) typically involves private firm or public agency) is offset, typically as part of a System developers are required to pay a buying credits from third parties responsible for implementing protected area strategy, but the fixed fee or a percentage of total who have already restored or the offset, although the loca- costs are paid by the project project cost, in lieu of conducting own sites in the same region to tion and approach is decided developer (private or public project-specific mitigation or buy- offset the impacts from a project. by a government environmen- sector). The amount to be paid ing conservation credits. They are • Conservation area habitat “banks” tal agency, which also provides by the developer is based on sometimes referred to as in-lieu are typically located on private guidance on offset design. the area and quality of the hab- payment systems. (individual or community) lands. itat to be affected by the pro- • Funds either directly go towards The value of habitat credits posed project. Offset sites are compensation for project-caused fluctuates based on economic normally expected to be similar biodiversity losses, or they sup- factors, land values, competition, to, or (ideally) better than, the port more indirect biodiversity-re- and market demand. areas lost to the project. lated projects such as funding • Often there are “brokers” who protected areas management or connect people who want credits research. with people who are selling credits. B. Conditions • Can be used in situations of • Works well in situations where • Requires good data on the • Can be used in situations of where uncertain land tenure, since the a lot of land is under private location and quality of different uncertain land tenure, since the Approach funds are typically applied to ownership with well-established habitats, including potential funds are typically applied to may be protected areas. tenure. offset sites. protected areas. Useful • Require a reasonable level of • Requires a well-developed • Requires reasonable level of • Suited to countries seeking to capacity within regulatory and market infrastructure and is capacity within regulatory and significantly expand the area enforcement agencies, but less dependent on a high level of enforcement agencies, espe- and/or increase the funding for than for conservation or mitiga- capacity within regulatory and cially if project-specific offsets their protected areas network. tion banking. enforcement agencies. are part of the mix. Scaling-up Biodiversity Offsets through Aggregation 37 38 3. Developer Implements under 4. Government Implements with 1. Compensation Funds 2. Mitigation Banking Government Framework Developer Support C. Some • The Environmental Compensation • In the United States, mitigation • In Colombia, offsets are • Biodiversity Offsets Roadmap Examples Fund in Brazil was established banking is used nationwide required for mining, oil and for Liberia proposes that large under the National Protected to promote “no net loss” of gas, other energy projects, mining companies be encour- Areas System Law (Federal Law wetlands protected under the new ports, infrastructure and aged or required to support off- 9985/2000). It has channeled funds Clean Water Act. In Australia, the new international airports sets within proposed protected from large infrastructure projects to State of Victoria’s BushBroker (Resolution 1517 of 2012, areas, enabling them to become protected areas and other conser- program works by identifying Article 2). They are imple- part of the formal protected Biodiversity Offsets: A User Guide vation initiatives. For example, the landowners willing to preserve mented by the private sector areas network. Bolivia-Brazil Gas Pipeline (GASBOL) and manage native vegetation. but the National Environmental • Biodiversity Offsets Roadmap Project channeled the required A BushBroker official assesses License Authority (ANLA) for Mozambique proposes a 0.5% of project investment costs the potential offset site using a identifies the site in accordance system in which project devel- to on-the-ground strengthening Habitat Hectares methodology with the regulation. opers would support offsets that activities in 12 Brazilian protected and determines the number and strengthen parts of the spatially areas within the general vicinity of type of credits available for sale extensive yet severely under- the pipeline route (Quintero, 2007). to developers. funded protected areas network. D. Advantages • Compensation funds are fairly • Developers (private firms or public • Approaches can be designed • Developers (private firms or straightforward to implement, works agencies) need not spend to embody the offset principles public works agencies) need compared with either conser- time and effort to locate offset sites, of No Net Loss or Net Gain and not spend time and effort to vation or national no-net-loss since this responsibility is vested in like-for-like or trading-up. locate offset sites, since this frameworks. a third party (such as BushBroker). • Offset sites may be identified, responsibility is vested in the • Low burden to developers, as sim- • Offset sites are identified, protected, protected, or restored before the government. ple payments are made propor- and sometimes restored before project’s adverse impacts occur, • Offset sites are identified and tional to project size. the development project’s adverse in which case there is no time lag protected with developer impacts occur; thus, there is often between biodiversity losses and support, but before the original no time lag between biodiversity gains. project’s adverse impacts losses and gains. • A single large site can provide occur; thus there is no time lag • A single large site can provide com- compensatory mitigation for between biodiversity losses pensatory mitigation for impacts impacts from several projects. and gains. from two or more projects. • May reduce the time needed • A single large site can provide • May reduce the time needed for the development project to compensatory mitigation for for the development project to obtain environmental permits. impacts from several projects. obtain environmental permits. • Facilitates a strategic approach • Facilitates a strategic approach • Developers with limited capacity to biodiversity conservation at a to biodiversity conservation at (such as smaller firms) can easily landscape level, since offset sites a landscape level, since offset participate. are pre-selected. sites are pre-selected. 3. Developer Implements under 4. Government Implements with 1. Compensation Funds 2. Mitigation Banking Government Framework Developer Support E. Disadvant- • Strictly speaking, compensation • An effective mitigation banking • Project developer still needs to • Offsets may be located far away ages funds are not real biodiversity system normally requires secure implement the offset and may from the original development offsets because the conservation land tenure, a well-functioning lack the requisite capacity or project; in such cases, stake- actions supported do not neces- legal system, and adequate gov- commitment. holders might perceive that the sarily involve (i) the same ecosys- ernmental regulatory oversight; it • Finding suitable offset sites original project’s impact and tems or species that were harmed may thus be best suited for more might be difficult, especially to the corresponding offset are under the original project or (ii) highly developed countries. obtain a like-for-like ecosystem not really connected. “trading up” to an ecosystem of • Over time, landowners might match. • Extractive industry and other higher conservation priority. not adequately manage their private firms might be reluctant • In the absence of adequate designated offset land from a to support government-im- safeguards for project permitting, biodiversity standpoint, due to plemented offsets, fearing the a simple mechanism for making high recurrent costs, insufficient potential diversion of their compensation payments could commitment to conservation, etc. funds to other uses. facilitate, rather than deter, proj- • The potential supply of high ects that convert natural habitats. conservation value offset sites • In the absence of clear criteria and might be limited, particularly if procedures for how the funds col- many landowners are reluctant lected are to be spent as intended to commit to permanent land or on biodiversity conservation, the water use restrictions. money could accumulate unused • Some mitigation banks rely on in a special account and/or be restoration offsets (as opposed to diverted to unrelated uses. averted loss offsets), which can be high risk, not cost-effective, or • If the amount to be paid by the impossible for some habitats. (private or public sector) devel- oper is a fixed fee or based on total project costs (rather than specific project impacts), it does not pro- vide an incentive for the developer to reduce biodiversity damage through mitigation hierarchy. • Compensation funds can be per- ceived as just another tax, making them politically vulnerable to reduction or elimination. Scaling-up Biodiversity Offsets through Aggregation 39 (ii) Mitigation Banking (which involves mainly BOX 8.2  Liberia Biodiversity Offsets privately owned conservation offset sites, Roadmap brokered by third parties under government regulation); (iii) Developer Implements under The Liberia Biodiversity Offsets Roadmap, Government Framework; and (iv) Government National Biodiversity Offset Scheme: A Implements with Developer Support (which Roadmap for Liberia’s Mining Sector, largely focuses on establishing or strengthening emphasizes industrial-scale mining state-owned protected areas). Table 8.1 summa- because of its prevalence in the country rizes the main characteristics of each system, the and the successful offset example to date conditions under which it might be useful, and with ArcelorMittal (AML) at Mt. Nimba some advantages and disadvantages of each (see Annex 1). A network of Proposed approach; it also indicates some countries that Protected Areas (PPAs) provides excellent are using or developing each type of system. potential offset sites for future mining projects by other firms. Since adequate To date, no country—developed or develop- funding for Liberia’s protected areas ing—has in place a fully functional aggregated remains a challenge, biodiversity offsets biodiversity offsets system across all ecosys- (scaling-up from the AML-Nimba model) tem types within its territory. However, some offer potential for improved financial countries are taking steps in this direction and sustainability. The Roadmap outlines a experimenting with different approaches. Under series of steps for scaling-up biodiversity the World Bank’s Program for Forests (PROFOR), offsets in Liberia: Among the most preliminary planning documents known as important is the establishment of a Biodiversity Offsets Roadmaps were prepared national Conservation Trust Fund (CTF) for Mozambique (Box 8.1) and Liberia (Box 8.2). to enable the reliable and transparent transfer of funds from extractive firms to For any country, the feasibility of establishing priority Protected Areas (as one of multiple an aggregated biodiversity offsets system—and CTF funding sources). The new Liberia the ideal nature of such a system—will differ Forest Sector (REDD+) Project, approved according to various factors. These include the April 2016 with support from the World (i) policy, legal and regulatory framework in Bank and Government of Norway, provides support of offsets; (ii) institutional capacity to a vehicle for moving forward some of the implement offsets, including on-the-ground Roadmap’s key recommendations. The conservation enforcement; (iii) existing land use Project’s Protected Areas Component 2.2 plans or available planning mechanisms; (iv) includes technical assistance for designing prevailing land tenure systems and security; (v) a national Conservation Trust Fund, as quality of available biodiversity data; (vi) extent well as Biodiversity Offsets Facilitation of remaining natural habitats; (vii) rates of defor- activities such as (i) developing metrics; estation and other habitat loss; (viii) protected (ii) convening a Stakeholder Advisory area system coverage and prospects for expan- Committee; (iii) promoting additional sion; (ix) presence and capacity of NGO partners; voluntary pilots (beyond AML-Nimba); (iv) and (x) non-governmental conservation funding establishing thresholds for possible future options. mandatory participation by large mining firms; and (v) proposing adjustments to Four Key Pillars of Aggregated Biodiversity Liberia’s Environmental and Social Impact Offsets. Notwithstanding the different types Assessment regulations and other legal requirements regarding offsets. 40 Biodiversity Offsets: A User Guide of aggregated biodiversity offsets systems that FURTHER RESOURCES ON SCALING-UP exist—including ecological compensation sys- BIODIVERSITY OFFSETS THROUGH tems that are not quite offsets—experience to AGGREGATION date suggests that four key “pillars” or enabling Quintero, J.D. 2007. Mainstreaming Conservation conditions are especially important for estab- in Infrastructure Projects: Case Studies from lishing a functional system: Latin America. Washington: The World Bank, 1. High-level Government Commitment. 85p. Sufficient political support is needed to estab- http://documents.worldbank.org/curated/ lish and sustain a viable program of biodiver- en/760811468300693809/Mainstreaming- sity conservation in general (including but not conservation-in-infrastructure-projects-case- limited to protected areas) and a functioning studies-from-Latin-America;jsessionid=HNrd biodiversity offsets system in particular. RWuVEGQr4Nn0lp3YCRFC 2. Legal and Regulatory Framework. Scaling-up ten Kate, K. and Crowe, M.L. 2014. Biodiversity biodiversity offsets depends upon sup- Offsets: Policy Options for Governments: An portive laws and regulations that facilitate Input Paper for the IUCN Technical Study Group appropriate offset use. For example, envi- on Biodiversity Offsets. Gland, Switzerland: ronmental assessment laws and regulations International Union for the Conservation of can promote offsets by mandating that all Nature, 91p. large-scale public or private projects with https://portals.iucn.org/library/sites/library/ certain characteristics comply with offset files/documents/2014-028.pdf requirements. Furthermore, protected area World Bank Group. 2015. National Biodiversity systems legislation can facilitate the legal Offset Scheme: A Roadmap for Liberia’s Mining establishment of new protected areas (under Sector. Washington: The World Bank, 127p. various management categories) in a timely http://www-wds.worldbank.org/external/ manner, when needed to fulfill the offset default/WDSContentServer/WDSP/IB/2015 requirements for new development projects. /04/24/090224b082e0380b/1_0/Rendered/ 3. Offset Site Selection Mechanism. Some PDF/A0national0bio0eria0s0mining0sector. type of scientifically credible mechanism— pdf whether run by government or capable third World Bank Group. 2015. National Biodiversity parties—is needed to identify ecologically Offset Scheme: A Roadmap for Mozambique suitable offset sites and the corresponding (pre-publication draft). Washington: The conservation actions needed to compensate World Bank, 73p. for biodiversity damage from each develop- ment project. World Bank Group (2015). Contrabalancos da Biodiversidade: Um Roteiro para Mocambique 4. Funds Transfer Mechanism. For Compen- (pre-publication draft). Washington: The sation Funds, Mitigation Banks, and World Bank, 79p. Government-Implemented Offsets, a secure and transparent mechanism (such as a CTF) is needed to transfer funds from the project developers (private firms or public agencies) to the conservation offset activities. Scaling-up Biodiversity Offsets through Aggregation 41 42 Biodiversity Offsets: A User Guide 1 9 The protected areas assisted financially by the Bolivia- Brazil Gas Pipeline (GASBOL) Project in southeast Brazil support numerous endemic species, such as the Saffron Toucanet Pteroglossus bailloni. Photo: Catherine C. Ledec Final Considerations The Potential and Limitations of not take place; and (iii) to avoid being used in cases where the loss of unique or irreplaceable Biodiversity Offsets sites could not feasibly be offset. The relatively simple, step-by-step guidance in this User Guide Project-specific Offsets. Biodiversity offsets on how to plan and implement biodiversity pose many of the same issues and challenges as offsets seeks to complement the more detailed other types of conservation projects, from stake- technical publications recently produced by holder engagement to careful site selection to NGOs. When considering or planning offsets, it is long-term financial sustainability. Beyond this, always important to refer to the specific require- they involve further complexity and controversy ments of each country and financing source, because (by definition) they are linked to devel- including (where applicable) existing and future opment projects that somehow harm biodiver- World Bank Group environmental standards. sity, such as by removing or degrading natural habitats. Under the widely-adopted mitigation National Offsets Systems. As discussed in hierarchy, biodiversity offsets are legitimately Chapter 8, national or sub-national biodiver- viewed as a last resort, when other mitigation sity offset systems potentially offer significant options are not sufficient to prevent significant advantages in comparison to ad hoc proj- biodiversity losses. In such circumstances, prop- ect-by-project approaches. These advantages erly done offsets can improve the conservation could include (i) substantially reduced transac- outcomes from large-scale, private or public sec- tions costs; (ii) increased developer participation tor development projects (ideally to the point (such that more projects with significant adverse of Net Gain); in the process, they can provide residual impacts would be implemented with much-needed additional funding for protected offsets, rather than without them); (iii) address- areas and similar conservation efforts. However, ing the cumulative impacts of multiple projects; achieving positive conservation outcomes is by (iv) optimized conservation area site selection; no means assured; it requires biodiversity offsets and (v) improved land and water use planning (i) to be adequate in their scale, scope, design, at a national (or sub-national) level. Although implementation, and monitoring; (ii) to avoid no country to date has in place a fully functional facilitating the approval of environmentally aggregated biodiversity offsets system across damaging projects that otherwise would likely Final Considerations 43 all ecosystem types within its territory, this (Liberia Nimba and Madagascar Ambatovy) User Guide summarizes four different types of are large-scale, private sector mining projects, approaches with which various (developed and while the third (Cameroon Lom Pangar) is a developing) countries are experimenting. Some large public sector hydroelectric project. These of these approaches hold promise for wider three Case Studies are certainly not represen- application across more countries, which—with tative of the full range of (i) economic sectors the appropriate precautions—could help to or project types for which offsets might at improve the conservation outcomes associated times be needed; (ii) types of offsets (including with future large-scale development projects. restoration and species-based offsets); or (iii) countries or regions where offsets could be implemented under particular circumstances. In Overview of the Case Studies none of these Case Studies was the design and implementation of biodiversity offsets carried This User Guide describes three selected Case out perfectly. Rather, the Case Studies provide Studies (Annexes 1–3) of recent biodiversity off- a few examples of real, positive on-the-ground sets that have already demonstrated significant results that can be achieved when biodiversity on-the-ground results, although conservation offsets are seriously planned and carried out. investments continue to be made. Two of these 44 Biodiversity Offsets: A User Guide ANNEX 1 Case Study: Liberia Nimba Western Range Iron Ore Project Overview ArcelorMittal (AML) is mining iron ore in Nimba County, northern Liberia, close to the Guinea border, where extraction commenced in 2011. Mining operations are focused on three mountains (Tokadeh, Gangra and Yuelliton) in the scattered Western Range of the Nimba Mountains. Ore is transported by rail 243 km to the coast where it is shipped from the port of Buchanan. ArcelorMittal rehabilitated an existing but dilapidated rail line as well as the Buchanan port and material handling facilities with little expansion of the existing footprint. Thus, land clearance for Phase 1 of the project (2011–2015) focused around the mine and resulted in the loss of up to 500 ha of agriculture and forest, including moist evergreen forest. Phase 2 (planned for 2015–2026 but delayed due to a downturn in iron ore prices) is expected to result in the loss of a further 700 ha of forest, including 225 ha of lowland evergreen forest. ArcelorMittal owns 85% and wholly funds its Liberia's East Nimba Nature Reserve is receiving Liberian mining operation. support from the mining firm ArcelorMittal as part of a biodiversity offset. The Reserve is a biodiversity hotspot with numerous species of conservation concern, Biodiversity Significance including the spectacular Giant African Swallowtail Papilio antimachus (top) and the endemic Nimba Otter Shrew Micropotamogale lamottei (bottom) The Nimba Mountains region is globally recog- Photos: Wing Crawley (top), Ara Monadjem (bottom) nized as having high biodiversity value and this was confirmed by the company’s ESIA studies. The concession area is made up of a mosaic were pockets of high value forest (usually tall, of moist evergreen forest, secondary forest, closed canopy forest) that contained restricted savanna, swamp forest, and some edaphic range species with high conservation value, but savanna on iron pan, together with more these pockets were found both within the min- degraded habitats and shifting agriculture. The ing concession as well as outside. baseline botanical studies determined there Case Study: Liberia Nimba Western Range Iron Ore 45 East of the mining concession is the East Nimba a biodiversity set-aside, where about 3% of the Nature Reserve (ENNR, 13,569 ha), which was available iron ore was not developed in order gazetted in 2003 and, at this writing, is one of to leave this area intact. This area is considered only four legally established protected areas in an important habitat for a very high abundance Liberia. There are also a number of community of dragonflies, crabs, and a wide range of bird forests including the Gba Community Forest species, as well as being the only remaining area (approximately 10,823 ha) that was formerly of sub-montane forest left on Mount Tokadeh. the West Nimba Proposed Protected Area, the Further examples of avoidance include stock- Zor Community Forest (1,140 ha), and the Blei piles, waste dumps, and in-pit access roads being Community Forest (629 ha)4. All of these for- designed specifically to avoid important habitats. est areas, including the ENNR, are threatened as a result of local communities’ activities and Minimization. Since an infrastructure footprint dependence on forest resources, including shift- could not be avoided altogether, AML addressed ing agriculture, hunting and timber extraction. minimization in two main ways. One was linked In addition, ArcelorMittal is developing its plans to the “value engineering” exercise as part of the to mine at Mt. Gangra, located within the Gba design process, whereby layouts were rational- Community Forest. ized to limit footprint, construction costs, and energy uses. The other was through a set of standards that had to be followed, such as sed- Mitigation Measures iment controls, buffer zones for riparian zones, strict rules for stream crossings, and minimizing A number of globally threatened species have nocturnal light disturbance to animals. been recorded from the existing and proposed mining sites and will be affected by the project, Restoration. Areas affected by construction which AML decided to offset after appropriate and early mining have been revegetated rou- mitigation measures had been applied. The com- tinely with the immediate aim of preventing soil pany took a standard approach in addressing erosion, and with the longer-term objective of the mitigation hierarchy in its environmental and initiating restoration. Revegetation is done by social impact assessment process. hand-planting stem-and-root cuttings of local native grasses; this has led to the successful Avoidance. Avoidance was achieved by devel- re-establishment of surface cover over large oping constraints maps detailing important areas. Induced habitat restoration is essentially habitats that should be avoided or preserved still unknown in Liberia, but to develop capacity wherever possible, and setting rules for the in this area, AML initiated a series of site trials on layout of infrastructure. For example, all mine the abandoned pre-war mines near the current drainage had to be directed into a single catch- mining site. By collecting the seed of pioneer ment at Mount Tokadeh, and the steep scarp tree species from the forests and raising them in slopes on the southern and western flanks nurseries, a series of trials with different species of the mountain were left untouched to pre- and planting treatments is starting to show how serve the higher quality forest in those areas. restoration might be accomplished. A relatively small (20 ha) but unique high-level catchment on the mountain was designated as 4 Community forests engage local communities in the Biodiversity Offset management of forest resources, in order to promote sustainable use through locally led governance. Management objectives are ArcelorMittal Liberia’s Biodiversity Conservation decided locally, and community forests are not usually established Program (BCP) is intended to compensate for with the protection of biodiversity as a primary objective. 46 Biodiversity Offsets: A User Guide residual adverse impacts to biodiversity result- Detailed baseline surveys were carried out to ing from the company’s operations. This is being verify the conservation value of the mining con- achieved through enhanced protection of exist- cession, ENNR, and Community Forests that this ing protected areas and agricultural intensifica- Project seeks to enhance. However, no specific tion to improve food security and reduce people’s loss and gain analysis was undertaken and, as dependence on forest resources. It should be such, the offset measures proposed here are not noted that Community Forests do not necessarily linked by specific metrics to the mining impacts. protect the forest since, depending on their man- In this respect, this Project admittedly and agement objectives, they may be designated for consciously does not meet all the offset design other uses, such as timber extraction. The specific principles espoused by BBOP. activities of the BCP are as follows: Nevertheless, real biodiversity gains are ■■ Enhancing the management and protec- expected through positive management inter- tion of the ENNR through a co-manage- ventions delivered at a landscape scale. The BCP ment structure and the development and program is designed to achieve a Net Gain, as it implementation of a Management Plan that extends over a much larger area than the com- defines clear roles and responsibilities (there pany is affecting through mining. Conservation was no Management Plan previously). agreements are being implemented at six ■■ Entering into Memorandum of initial sites started in 2015, expanding to more Understanding (MOU) agreements with sites in 2016 and subsequent years. Ultimately, Community Forest management bodies for with Phase 2 the AML offsets program aims to sustainable management, conservation, deliver a gazetted multiple-use protected area patrolling, and other operational activities. in northern Nimba County (tentatively referred to as the Northern Nimba Planning Area). This ■■ Introduction of sustainable livelihood proj- new protected area will be managed through ects to reduce dependence on hunting and coordinated and objectivized land use planning, forest products, including improved agri- incorporating existing communities, agricultural cultural practices that serve to diminish the lands, mines, and forest reserves. extent of shifting cultivation. ■■ Partnership with the NGO Conservation International to negotiate and manage Legal Framework Conservation Agreements that make conser- There is no specific mention of offsets in current vation a viable choice for local resource users Liberian legislation, although a requirement by providing benefits to communities in to comply with IFC Performance Standards is exchange for effective conservation of high increasingly being required in new Mineral priority areas and species. Development Agreements in Liberia. There was ■■ Establishing species-specific programs for the no requirement for an offset for this project, but endangered Nimba Otter Shrew and Western ArcelorMittal considered compensation for bio- Chimpanzee Pan troglodytes verus, focusing diversity impacts to be a company responsibility. on research to understand better the eco- logical requirements for these species and thereby inform the design of effective conser- vation measures. Case Study: Liberia Nimba Western Range Iron Ore 47 Stakeholder Engagement developing long-term methodologies and build- ing capacity. The Wild Chimpanzee Foundation A regional grouping of stakeholders was (WCF) and Actions pour la Conservation de la established in 2008, and comprised mainly the Biodiversité in Ivory Coast (ACB-CI), in collabo- Government of Liberia’s Forestry Development ration with Conservation International (CI), have Authority (FDA), Conservation International, developed a long term bio-monitoring program Fauna and Flora International, USAID and its for mammals, during which 42 persons were successive community forestry programs, and trained in field survey techniques. Similarly, BCP ArcelorMittal. Local-level involvement started activities include (i) the design of a long-term through various channels of AML, the NGOs and bio-monitoring program for butterflies that has Government, and was mainstreamed through been successfully piloted in the ENNR and (ii) a Community and Conservation Workshop in a Nimba Otter Shrew Conservation Project to November 2011. Since then, regular meetings investigate its ecology, status and distribution. have been coordinated by the BCP, including several workshops to define the management Both community members and FDA forest of the ENNR. The program is guided by and guards (the latter engaged for the ENNR) were submits quarterly reports to multiple stake- trained during these studies. The BCP has also holders, including local community represen- worked in partnership with USAID’s PROSPER tatives, in what since 2011 has been the Nimba program to train and support Community Forest Biodiversity Stakeholders Forum. guards to collect information on biodiversity and human activities in their forests in a simple Community participation and engagement have but meaningful way. In addition, ENNR rangers been central to developing the BCP. Capacity will conduct regular bio-monitoring, patrols, building is a key activity, made particularly and enforcement in the Reserve through the necessary by the gap in education caused by AML partnership with the NGO Fauna and Flora Liberia’s long civil wars. Both the BCP and the International. These activities will be built upon, international NGOs provide strong support to and capacity gradually developed, until they can local NGO staff to boost local skills. qualify as formal offset monitoring. Until that time, the program will not claim to be a quan- tified offset program, but rather a pragmatic, Monitoring landscape-level approach to the compensation of biodiversity impacts. Before the start of the BCP, formal bio-monitor- ing work proved to be difficult to administer to a consistent scientific standard, due to the remote Financial Sustainability location, challenging logistics, and limited local capacity. Rather than using a significant part Under Phase 1 of the mining (since 2011), of the program budget in expensive interna- ArcelorMittal has been funding the BCP by itself, tional bio-monitoring (and consequently less on although CI is bringing some complementary conservation-related works), a conscious deci- funding support. In 2016, AML also entered sion was made to defer quantifiable bio-mon- an agreement with the IDH Sustainable Trade itoring until such time as it could be achieved Initiative, which provided counterpart funding in a more cost-effective way. However, certain to allow the program to expand. For the longer bio-monitoring activities have been conducted term, the feasibility is being examined of estab- as part of the ESIA process with a view towards lishing a Conservation Trust Fund that would sustain the program in perpetuity. 48 Biodiversity Offsets: A User Guide Successes and Lessons Learned necessary to proceed with a good-faith compro- mise and demonstrate results on the ground, With three years of operational experience, the rather than trying to achieve the full consensus BCP-area communities, local and national gov- that may never be possible among a complex ernment, and non-governmental organizations range of stakeholders. are very engaged in the program and a large number of initiatives have been implemented. As time passes and experience is gained, the Nevertheless, true conservation outcomes still inter-linkages between all aspects of forests and require lengthy interventions, and the lon- society make it more and more apparent that ger-term Phase 2 will further demonstrate the a landscape scale and a long time horizon are extent to which the program can genuinely essential in this context. Without addressing deliver biodiversity Net Gains. the local needs for land and livelihoods, little progress can be made in protecting biodiversity. A more specific lesson relates to the need for Better agriculture to produce more food on less very extensive dialogue between stakeholders, land is essential, but bringing about this needed which can be inconclusive. As a result, it is often transition is challenging and needs to be done over the wider landscape. Case Study: Liberia Nimba Western Range Iron Ore 49 50 Biodiversity Offsets: A User Guide 1 ANNEX 2 Case Study: Madagascar Ambatovy Minerals Project Overview The Ambatovy Joint Venture is a large-scale nickel and cobalt mining and processing opera- tion in central eastern Madagascar. The mine is close to Moramanga, 80 km east of the capital Antananarivo, and is linked by a 220 km pipeline to the processing plant at Toamasina on the east coast. Ore is extracted from two pits, mixed with water to create slurry and then transferred by gravity flow to the coastal processing plant. The mine site footprint is approximately 2,000 ha, including 1,800 ha of intact and degraded nat- ural habitats. The processing plant footprint is 320 ha but the site was previously degraded and does not involve significant impacts on biodiver- sity. The most significant impacts to biodiversity are at the mine and upper pipeline areas. The Ambatovy is a large-scale nickel and cobalt mining and expected useful life of the mine is 29 years. processing operation in central eastern Madagascar. Ambatovy has identified multiple offset sites, totaling 18,225 ha, that support numerous threatened species Ambatovy is a joint venture between Sherritt including the world’s largest lemur, the Indri Indri indri. International Incorporated (40%; main operat- Photos: Ambatovy Project ing partner), Sumitomo (27.5%), KORES (27.5%) and SNC-Lavalin, the construction partner Only about 10% of the country’s original forest (5%). Ambatovy has received US$2.1 billion in cover remains. The Ambatovy mine lies in a high debt financing from 14 lenders and has raised biodiversity region at the southern tip of a large an additional $5 billion through the project section of remnant eastern rainforest corridor. To partners. It is the largest ever foreign direct the north-east lies the Ankeniheny-Zahamena investment in Madagascar. The project became Forest Corridor (CAZ), while to the east lie the operational in the latter half of 2013 and com- Torotorofotsy wetland (a Ramsar site) and the mercial production was attained in January 2014. Mantadia National Park. Connecting the mine forests to the CAZ and Mantadia is an area of mostly intact forest—the Analamay-Mantadia Biodiversity Significance Forest Corridor (CFAM). Madagascar is a global hotspot for biodiversity, with exceptionally high levels of endemism. These forests are collectively known to support 14 species of lemurs, 32 other mammals, 122 Case Study: Madagascar Ambatovy Minerals 51 birds, almost 200 reptiles and amphibians, 50 ■■ Locating the processing plant on degraded fish (including 25 endemic species) and over coastal land, far from any natural or critical 1,580 plants (including 250 orchids), represent- habitats. ing more than 10% of Madagascar’s known flora. To date, about 150 species of conservation Minimization measures include: concern are recognized from the mine footprint, ■■ Paced directional forest clearing, using including 109 species of plants and 48 species of non-mechanised, labor-intensive methods; animals. clearing from the center of a plot to allow mobile wildlife to escape; rescue and relo- Mitigation Measures cation of high-value plants and less mobile animals to the Conservation Zone within the Ambatovy adheres to IFC Performance Standards mining concession; protection of nesting on Environmental & Social Sustainability (IFC, species; and captive breeding of amphibi- 2012), required through its lender agreements, ans: Manual salvaging and captive breeding and has made a voluntary commitment to of a critically endangered frog species has the Biodiversity Offset Standard (BBOP, 2012). increased knowledge of its habitat require- Ambatovy’s commitment to these standards ments which will be used to restore and requires application of the mitigation hierarchy, enrich natural ponds to augment the wild including offsetting significant residual impacts. population. ■■ Recovery of timber, brushwood, and topsoil, Avoidance measures include: with timber being distributed to the gov- ■■ Minimising the project footprint during the ernment and local communities, brushwood design phase and continuing today with the being mulched, and topsoil being stored for systematic avoidance of any unnecessary restoration. forest clearance. ■■ Burying the slurry pipeline throughout most ■■ Establishing two set-aside areas of azonal 5 of its length and actively controlling erosion Forest (totalling 306 ha) over the ore body, along its entire length. set within a larger matrix of conservation forest within the concession, known as the Restoration measures include: Conservation Zone. ■■ Implementing a program of restoration ■■ Routing the slurry pipeline to avoid forest within the project footprint where mining fragments, cultural sites and local habita- operations have been completed; the first tions, such that it mostly traverses degraded mined areas became available for restoration areas of secondary vegetation. Where the in 2015. pipeline crosses the Torotorofotsy Ramsar ■■ Setting restoration targets to reflect forest site, it avoids sensitive wetland areas and the conditions prior to project development, with breeding habitat of the critically endangered a biologically diverse forest habitat harboring Golden Mantella Frog Mantella aurantiaca. protected species to the north and an eco- logically functional forest of native species delivering ecosystem services to the south. 5 “Azonal” forest refers to an atypical forest type associated with ■■ Establishing laboratory and nursery trials the ferruginous crust overlying the ore deposit, of similar species on project land to propagate priority flora composition but differing structurally from the surrounding “zonal” forests typical of the region. species for the restoration. 52 Biodiversity Offsets: A User Guide ■■ Rehabilitating the slurry pipeline along its Ambatovy supports forest conservation in com- entire length. munity management areas around the mine (2,937 ha). Given the uncertainty surrounding restoration efforts, predicted gains from restoration will Biodiversity gains would be made through not be included in the biodiversity accounting improved on-the-ground management, with the towards the No Net Loss target. assumption that the Ambatovy Joint Venture would achieve the same success in averting forest loss as the Madagascar Protected Areas Biodiversity Offset Administration had achieved in recent projects. While Ambatovy has predicted a Net Gain for Ambatovy aims to deliver No Net Loss, and all forest types combined over 40 years, it is not preferably a Net Gain, of biodiversity with no net considered possible to achieve Net Gain for the harm to Madagascar’s ecosystems. Ambatovy azonal forest habitat, due to its low representa- joined the Business and Biodiversity Offsets tion in the offset areas. Program (BBOP) as a Pilot Project in 2006, with the intention of benefiting from and contrib- The remote offset sites contain most of the uting to best practice in achieving its biodiver- mobile species (including all of the lemurs sity goals. Malagasy law requires a thorough and most small mammals) that occur in the environmental impact assessment for all major project-impacted area, and at least 50% of the investment projects, but biodiversity offsetting plant species. Surveys in forest around the mine is not as yet a legal requirement. (within the concession) show a greater similarity of flora species, but the extent of this overlap Ambatovy is in the process of implementing has not yet been fully defined. In addition to its biodiversity offset program. In designing habitat-based offsets, specific conservation the offsets, residual impacts from Ambatovy’s programs have been developed for three crit- mining and related activities were considered ically endangered fauna species—two lemurs, to be “absolute” and were not discounted to Diademed Sifaka Propithecus diadema and take account of background loss and degrada- Indri Indri indri, and the Golden Mantella Frog tion within the project area that would have Mantella aurantiaca—as well as five endemic occurred even without the project. “Averted fish and 10 flora species. loss” was chosen as the most appropriate approach for offsetting, in light of Madagascar’s high background rates of forest loss outside of Monitoring well-protected areas. Ambatovy has identified multiple offset sites, including two azonal forest Habitat Hectares—calculated as the number of areas and a large block of zonal forest within hectares multiplied by a factor for habitat condi- the Conservation Zone, totaling 3,634 ha. In tion—was chosen as the basis for determining addition, there are three off-site forest offsets losses and gains. The Ambatovy Joint Venture is totaling 18,225 ha: (i) Ankerana Forest 70km developing a biodiversity monitoring program to the north and part of the CAZ (5,715 ha); (ii) that aims to detect changes in species popula- a portion of the CFAM forest connecting the tion viability over time for lemurs, birds, amphibi- Conservation Zone to Mantadia National Park ans, and certain other species groups. (7,269 ha); and (iii) forest on the northern and western sides of the Torotorofotsy wetland to Adverse edge effects from forest clearing and the east (1,597 ha) (Figure A2-1). Additionally, mining operations, such as dust penetration Case Study: Madagascar Ambatovy Minerals 53 and noise, have been taken into account in boundaries of remote forest offset sites in future. loss calculations by extending an impact zone Temporary protection has been agreed with the 50–100 m beyond the actual working footprint. Malagasy Government for the Ankerana Forest, In addition, satellite monitoring has been set Analamay-Mantadia Forest Corridor (CFAM) and up to examine deforestation rates around the the Conservation Zone (including the azonal mine, pipeline, and off-site offset areas in order forest areas), while permanent legal protection to determine whether there are detectable is being pursued. effects of “leakage” (deforestation displaced from the project-protected offset areas to other forested areas in the vicinity). For the Ankerana Stakeholder Engagement offset and concession forests, satellite monitor- Ambatovy is (i) developing community forest ing has demonstrated a 90% decline in defor- management zones adjacent to the conserva- estation rates, which are attributed to active tion offset forests; (ii) conducting community protection measures. To date, it has not been awareness and education; and (iii) developing feasible to monitor deforestation in the adjacent alternative livelihood programs, including more unprotected forest area, where some unknown efficient rice production, sustainable cash crops, amount of leakage-type forest loss might possi- and woodlots for fuelwood. Community man- bly be occurring. agement associations contribute to Ambatovy’s ecological monitoring program. Compliance with Ambatovy’s commitments on biodiversity is evaluated by (i) the National Technical partners include the Missouri Environment Office (Malagasy regulator) through Botanical Garden (responsible for surveying site visits and review of the Company’s annual flora, prioritizing species of concern, and estab- reporting on biodiversity; (ii) an independent lishing an orchid shade house); Conservation Scientific Consultative Committee (SCC) which International (forest corridor conservation); meets annually; (iii) quarterly visits of the Wildlife Conservation Society and Forest Trends Independent Engineers on behalf of Ambatovy’s (biodiversity offsetting); Duke Lemur Center lenders; and (iv) through a separate audit in (lemur spatial and biomedical monitoring); IRD 2012–13 done jointly by Golder Associates and (France) (ecosystem services & restoration); Forest Trends. University of Antananarivo (departments of Animal Biology, Plant Biology, and Earth Long-term Plans Sciences); and various technically specialized NGOs including Vahatra (biodiversity surveys), The biodiversity conservation set-asides and Asity (bird conservation), GERP (lemur con- offset areas will be managed for the life of the servation), Madagasikara Voakajy (amphibian Ambatovy project and beyond. The offsets conservation), Mitsinjo (captive breeding of and set-aside areas within the Conservation amphibians), and GAF & IOGA (forest change Zone of the concession will be directly under assessment through earth observation systems). Ambatovy’s control, in accordance with provi- sions of the land lease taken from the Malagasy Government. Community management associ- Successes to Date ations have been established to protect forest ■■ The Ambatovy Joint Venture has enabled the around the concession boundary from degra- protection of over 20,000 ha of forest that dation (90% of the boundary is thus covered); was previously unprotected. a similar approach is planned to protect the 54 Biodiversity Offsets: A User Guide ■■ Net local populations of two species of crit- Lessons Learned ically endangered lemur (Diademed Sifaka and Indri) have measurably increased since ■■ High-quality data and defensible mitiga- Ambatovy was established. tion design are an important foundation for sound biodiversity management and ■■ New approaches have been developed to mit- decision-making aimed at achieving NNL. igate project impacts upon wildlife, including However, some of the most significant chal- lemur bridges, which enable lemurs to move lenges lie with the implementation of these across mine tracks, thus reducing the impacts measures, including offsetting. Therefore, it of fragmentation. is wise to prioritize planning for implementa- ■■ Through its biodiversity survey work, tion as early as possible. Ambatovy has contributed a considerable ■■ Early engagement with stakeholders and the body of information on plants to Tropikos, an development of partnerships are essential to online flora database, as well as increasing the success of the mitigation and offsetting knowledge on the distribution and ecology program. This applies especially in the chal- of the critically endangered Golden Mantella lenging context of Madagascar and neces- Frog. The project has also confirmed a range sitates a wide range of partnerships, such as extension of the Northern Shrew Tenrec with Government authorities, national and Microgale jobihely, a species previously international NGOs, research institutions, known only from the north of Madagascar. community-based organizations, and inde- ■■ In recognition of its achievements, the pendent experts. Ambatovy biodiversity program received the Nedbank Capital Sustainable Businesses award in October 2014, as the winner in the Resources and Non-renewable Energy category. Case Study: Madagascar Ambatovy Minerals 55 56 Biodiversity Offsets: A User Guide 1 ANNEX 3 Case Study: Cameroon Lom Pangar Hydropower Project Overview The objective of the Cameroon Lom Pangar Hydropower Project is to store water in the wet season and to release it in the dry season by building a regulating dam on the Lom River, four km downstream of the confluence with the Pangar River. These are tributaries of the Sanaga River, the largest river in Cameroon. The dam will reduce water flows by 20% in the wet season and increase them in the driest month from 210 m3/sec to 900m3/sec. By creating more consistent dry season water flows, the Lom Pangar Dam will enable the downstream devel- opment of up to 6,000 MW of hydropower in the medium to long term, including for the expan- sion of aluminium smelters. It will also enable a 120 MW increase in power generation from two existing downstream hydropower plants. The Project includes its own 30 MW hydropower plant and transmission lines to provide power Western Lowland Gorilla Gorilla gorilla gorilla, one of to 2,400 households in the Eastern Province. the species protected within Cameroon’s Deng Deng National Park, established as a biodiversity offset for Twelve km of the existing Chad-Cameroon the Lom Pangar Hydroelectric Dam project, shown here pipeline required strengthening prior to being under construction. inundated by the Lom Pangar Dam. Photos: World Bank Group At this writing, the dam construction is about 45% completed. When fully completed, the dam compensation for lost assets, due to the con- will flood 54,000 ha, including 30,000 ha km2 struction of the dam and transmission lines. of natural forest. Some additional forest will be cleared for associated infrastructure, including The World Bank’s loan for the Project includes an access road and power transmission lines. the funding needed to establish and strengthen If left unmanaged, induced impacts such as the management of the Deng Deng National illegal logging and poaching will increase the Park a biodiversity offset, along with a range of dam’s ecological footprint. Around 1,200 house- other environmental mitigation measures. holds will require some form of resettlement or Case Study: Cameroon Lom Pangar Hydropower 57 The Project owner is the state-owned Electricity Bank’s Safeguard Policies on Environmental Development Corporation (EDC) of Cameroon. Assessment, Natural Habitats, Forests, Pest ANEX 3 The Project overall is expected to cost US$494 Management, Physical Cultural Resources, million, with funding provided by four devel- Involuntary Resettlement, and Safety of Dams. opment banks including the World Bank. Some The dam wall location was selected based on a US$73 million has been allocated to implement careful analysis of alternatives; as a result, the the Environmental and Social Management Plan footprint of the dam, reservoir, and ancillary including the biodiversity offset among other infrastructure avoids Critical Natural Habitats. mitigation measures. The alignment of access roads and planned location of a quarry were reviewed and changed in order to avoid gorilla habitat. Biodiversity Significance Minimization. The project includes a series The main natural habitats in the area of Project of measures to minimise adverse biodiversity influence include a variety of natural forest and impacts, including: savanna ecosystems. The diversity of mammal species is high, with 68 species found thus far. ■■ Careful water flow modeling led to a reduc- The Project area harbors 54% of the large mam- tion in the operating level of the reservoir mal species found in Cameroon. Bird fauna is (equivalent to 6 billion instead of 7 billion m3 highly diverse; 221 bird species have been found of water storage); this reduced the flooded in a single month of observation. While the land area by 5,000 ha. Project’s inundation zone does not contain any ■■ Civil works contractors and construction Critical Natural Habitats as defined by the World workers are prohibited from entering the Bank’s Natural Habitats Policy (OP 4.04), the area Deng Deng National Park. adjacent to the dam includes critical habitat for a geographically isolated but important pop- ■■ The main contractor camp was located well ulation of about 300 Western Lowland Gorillas away from the construction area, as well as Gorilla gorilla gorilla, along with Chimpanzees outside of the Deng Deng National Park. Pan troglodytes, Black Colobus Monkeys Colobus This helped to prevent a major influx of satanas, and other globally threatened mam- people into the Project area, which could mals. The river contains a diverse fish fauna, have led to increased bush-meat poaching with about 130 species known to occur, of and the planting of crops in the Park. Project which about 26 are regularly caught for food. construction workers are transported to Well downstream of the Project area, the river and from the work site each day. They are empties into the extensive Douala-Edea estuary, provided with meals to discourage roadside an important ecosystem for fisheries as well as shops and restaurants (which might sell biodiversity conservation. illegal bush-meat) from establishing in the area. The main civil works contractor has to purchase all food in towns that are some Mitigation Measures distance away from the construction site, to discourage the illegal planting of crops Avoidance. Various options were considered within the Park to sell to workers. for the location of the dam, taking into account technical, financial, dam safety, social, and ■■ All Project civil works contracts contain environmental considerations. The Project penalty clauses, including fines, for non-com- was designed in conformity with the World pliance with the environmental requirements 58 Biodiversity Offsets: A User Guide that are specified in the Environmental and including revised budget requirements that are Social Management Plan. in line with international standards for pro- tected area management. Cameroon’s Ministry ■■ The filling of the dam is scheduled to take of Finance, Ministry of Forestry and Wildlife, place over 18 months, to enable many and EDC recently signed a Memorandum of animals to flee the rising water levels. This Understanding concerning Park manage- slower filling scheduled also serves to help ment responsibilities and funding. Under this maintain adequate river flows, reducing Memorandum, the Ministry of Forestry and adverse downstream impacts on river Wildlife has committed 60 game guards to ecosystems. focus especially on preventing poaching, illegal ■■ During the filling of the dam, law enforce- logging, and agricultural or housing encroach- ment is to be strengthened to reduce poach- ment within the Park. The Park now also has ing as animals leave the flooded area. year-round, 24-hour checkpoints to monitor and check vehicles crossing key potential wildlife or Restoration. The Project requires civil works timber trafficking points. contractors to restore cleared areas where feasi- ble, following construction. Project budget has been set aside to address unforeseen environ- Legal Framework mental issues which might arise. As yet, Cameroon does not have specific leg- islation for biodiversity offsets. However, the Biodiversity Offset country legally requires environment assess- ments and, through consultants, carried out Studies undertaken during Project preparation, a rigorous Environmental and Social Impact including by the Wildlife Conservation Society, Assessment (ESIA) with an Environmental and demonstrated the suitability of the Deng Deng Social Management Plan (ESMP) that fully com- forest to help maintain the viability of the plied with World Bank requirements. 300-strong Western Lowland Gorilla popula- tion. As a biodiversity offset for the Lom Pangar Dam, an area comprising 58,000 ha of the Deng Stakeholder Engagement Deng forest was gazetted as a National Park in Significant stakeholder engagement took place March 2010. In terms of area, this was a 1-to-1 during project preparation including with offset for the 54,000 ha of inundated land and Project-affected families and with local and the 4,000 ha footprint of associated Project international NGOs. Local communities have infrastructure. However, the habitat quality was been made aware of their rights to monitor (and remains) distinctly higher within the offset Project implementation progress and to make area than in the inundated and cleared Project use of the established grievance redress mech- areas; for example, the offset area includes the anisms. Further consultation will take place on core habitat for the gorillas and other globally key issues, including adjustments in the water threatened primates. In 2013, the Government release regime during dam operation. of Cameroon expanded the National Park to 74,753 ha, thereby helping to increase the long-term viability of its wildlife populations. Monitoring The Park’s first Management Plan was adopted in December 2015. This plan spells out the The Deng Deng National Park Management management needs and priorities for the Park, Plan establishes the biodiversity monitoring Case Study: Cameroon Lom Pangar Hydropower 59 framework for the Park, including protocols for Park or (ii) provide an alternative financing gathering species data and wildlife monitoring mechanism to the satisfaction of the Bank. Until indicators. The Park also monitors its manage- such a financing mechanism is in place, funding ment effectiveness using the METT (described from the French Development Agency (AFD) in Chapter 6). The annual census of the Park’s loan for the Lom Pangar Project are being used gorilla population indicates that it is stable, a to cover Park operating costs. success attributable in no small measure to ongoing Park protection and management activities. Park rangers have recently been Successes trained in the use of GPS and other Park moni- The Project has resulted in significant con- toring tools. servation benefits, most notably the estab- lishment, on-the-ground implementation, Outside of the Park, key Project-level monitoring and subsequent expansion of the Deng Deng includes water flow, water quality, and fish spe- National Park. As a result of the investment cies population monitoring, both upstream and provided through the Lom Pangar Hydropower downstream of the dam including the Doula Project and complementary conservation Estuary. The Project also includes an estuarine projects, this Park is now a key stronghold for monitoring system to track the status of man- Western Lowland Gorillas (classified by IUCN as groves, salinity, geomorphology, West African Critically Endangered) as well as other globally Manatees and other threatened species, and threatened species. Taking into account the fishing communities. With respect to the dam baseline deforestation rates and intense bush- and other Project civil works, independent audi- meat poaching outside of protected areas in tors have been contracted to provide quarterly Cameroon, this offset appears to have achieved reports on the environmental and social aspects a very solid Net Gain from a terrestrial biodiver- of Project construction. EDC has also appointed sity conservation standpoint. two independent Panels of Experts to advise, respectively, on (i) dam safety issues and (ii) the Project’s environmental and social aspects. Lessons Learned Although still an ongoing work-in-progress, the Financial Sustainability Lom Pangar Project has (to date) implemented a very significant and successful biodiversity off- During Project preparation, it was estimated that set by establishing the Deng Deng National Park EDC would collect about US$29 million annually and supporting its on-the-ground protection in water use tariffs from the two existing hydro- and management. As is typically the case with electric plants downstream of the Project. This large development projects and their associ- was estimated to be more than sufficient to pay ated biodiversity offsets, there are some lessons for the annual operating and maintenance costs learned that could be useful for planning similar, of the Lom Pangar Dam, including the contin- future conservation initiatives. These lessons ued protection and management of the Deng learned include: Deng National Park as well as the other recur- rent costs of Project environmental mitigation. ■■ Because the downstream hydropower facil- Under the financing agreement with the World ities have not yet been constructed, alter- Bank, the Government is expected to either (i) native funding had to be found to cover the adopt a water tariff structure which will pay for recurrent operating costs of the Deng Deng the recurrent costs of the Deng Deng National National Park. 60 Biodiversity Offsets: A User Guide ■■ Certain environmental management issues and other highly threatened species were were addressed adequately during Project not adversely affected during construc- implementation, although they ideally would tion and (ii) on-the-ground protection has have been handled earlier: As an example, markedly improved in recent years, largely ecological baseline information (including in response to the Project’s conservation species-specific data) would ideally have investments. been obtained earlier, particularly for the ■■ As is still the case for most dam and reser- downstream riverine environment including voir projects worldwide, this Project did not the Douala Estuary. include a specific aquatic biodiversity offset ■■ Anti-poaching law enforcement was not for the free-flowing river habitat inundated sufficiently strong during the early years of by the Project. Project construction, although (i) the gorillas Case Study: Cameroon Lom Pangar Hydropower 61 2457