1. Policy mechanisms for internalising the
externalities:
the example of biodiversity offsetting
SFT Workshop
December 2013
Guy Duke
Principal Investigator, EMTF Research Phase I & II
Director Europe & Research, The Environment Bank Ltd
Senior Visiting Research Associate, Oxford University ECI

2. England - biodiversity loss
• 492 species extinct in last 200 years
• 7 species with Species Action Plans gone in last
decade
• All taxa - 25% butterflies, 20% amphibians, 10%
bees, 2% plants extinct
• Quantity and distribution as well – 60% of all species
declining
• Most loss outside protected areas

3. Natural Environment
White Paper 2011
• Triggered by CBD Nagoya, Lawton review, National Ecosystem
Assessment & evidence of biodiversity decline
• Three themes
– Growing a green economy
– Reconnecting people and nature
– Protecting natural environment
• Four policy initiatives for environment
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Local Nature Partnerships
Nature Improvement Areas
Ecologically coherent planning (NPPF)
Biodiversity offsetting

4. UK Ecosystem Markets Task Force
Research and Findings

5. EMTF - BACKGROUND
REMIT: To review the opportunities for UK business from expanding green goods, services, products,
investment vehicles and markets which value and protect nature’s services.
REPORTING: To senior ministers through the Green Economy Council

6. http://www.defra.gov.uk/ecosystem-markets/work/evidence/

7. EMTF - FINDINGS
5 PRIORITY RECOMMENDATIONS
• OTHER OPPORTUNITIES
http://www.defra.gov.uk/ecosystem-markets/work/publications-reports/

8. EMTF – RESEARCH FINDINGS on BIODIVERSITY OFFSETTING
• SCALE OF OPPORTUNITY FOR UK BUSINESS
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Market approach – scale, transaction costs, nature
£90-470m/yr
Mandatory for  liquidity, brokers to balance supply & demand
Good scalability, good practice transferable
Risks acknowledged – but well-designed market can overcome them
• POTENTIAL BENEFIT TO NATURE
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1100-3400 km2 new habitat over 20 years
Larger, ecologically more viable sites; funding for l/t management

9. EMTF – RECOMMENDATIONS on BIODIVERSITY OFFSETTING
SEPTEMBER 2013
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GOVERNMENT RESPONSE TO EMTF PUBLISHED
GREEN PAPER ON BIODIVERSITY OFFSETTING PUBLISHED

10. UK Government analysis of planning
• Phase 1 - Desk-top study on effectiveness of PPS9
in delivering no net loss - failure
• Phase 2 - Analysis of 570 planning applications
(major developments), looking closely at how
PPS9 was applied in 46 of those cases (including
interviews of planning officers) - failure
• Phase 3 - Predicted the biodiversity results and
costs of applying PPS9, compared to those when
applying the offsetting metric, using a sample of
real-life historic cases – offsetting cheaper

11. National Planning Policy
NPPF 2011 - demands ‘sustainable development’
• Para 118 - Planning authorities should aim to enhance
biodiversity
• Para 152 – If adverse effects are unavoidable… then
compensatory measures can be used
• Para 176 – Where [such measures] are necessary…. [they
must be] secured through appropriate conditions or
agreements.
Offsetting pilots – 6 county pilots, 2012-2014
Conservation covenants – Law Commission consultation 2012
Green Paper – September 2013

12. Biodiversity offsetting
through planning
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Compensating for impact in one place with gain in another
Offsetting ‘metrics’ allow for estimation of both loss and gain
Simply a tool for planners – guarantees no net loss
Measurable – accountable, transparent, consistent
Enables development and delivers biodiversity protection i.e.
sustainable development
• Observes mitigation hierarchy
• Additional/complementary to statutory site protection

13. Biodiversity offsetting –
global principles
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Net biodiversity gain (no net loss at minimum)
Follows the mitigation hierarchy
Recognises limits – not within protected areas
Large-scale and long-term
Equity – especially locality
Like-for-like or like-for-better (trade up)
Multipliers to account for risk and lag
Transparent, documented and evidenced

14. Mitigation hierarchy

15. The Environment Bank
An independent broker that will:
– calculate Credit requirements for developers
– calculate Credit availability at ‘receptor’ sites
– register offset receptor sites on a live trading platform
– facilitate the creation, purchase and tracking of credits,
using certificates
– ensure the long-term management, monitoring and
reporting of receptor sites, using legal agreements
– ensure site long-term protection using covenants.

16. EBL Infrastructure
• Guidance notes
– Introduction, Planning Authorities, Developers, Landowners
– County specific versions
• Trading platform
– Launched on-line Feb 2012; National registry
• Metrics
– Delivering national frameworks, accreditation & validation
– Developing software
• Legal agreements
– Legal planning advice
– COPA & Conservation Bank Agreement
– Conservation credit certificates & letters of sale

17. Essex offsetting strategy

18. How does it work?
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LPA offers offsetting as option
Developer chooses offsetting, impact assessed
Land managers register receptor sites
Developer seeks to purchase credits – consults national
registry, chooses receptor site (with LPA)
• Environment Bank brokers deal - signs legal
agreements to purchase with developer, and to
manage with receptor site land manager
• Money transferred, over time, to the land manager
against specific conservation management
• Monitoring and reporting systems for LPAs

20. What’s needed?
• Willing LPAs & developers and a network of
receptor sites – buyers and sellers
• Metrics for assessing credit requirements of
developments and credit value of ‘receptor sites’
• Trading systems e.g. brokers, platforms
• Delivery systems e.g. legal assurance, fiscal
assurance, registries, monitoring and reporting
systems

21. Benefits
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For Planning authorities
– Transparent, consistent & auditable
– Enables rigorous ecological input
– Removes compliance monitoring needs but retains decision-making locus and enforcement
capability
– Removes obligations but increases accountability
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For developers
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Reduces planning delays and consultant costs, Greater clarity, predictabiity and consistency
Potential increase in net developable area
Long-term liability discharged, no long-term management costs
Transparent and accountable delivery of SD
For conservation
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Ensures environmental value accounted for in all planning decisions
Gives financial disincentives to habitat destruction
Mainstreams land management value
Enable long-term and large-scale habitat conservation
Increased funding to NGOs

22. Biodiversity offsetting
www.environmentbank.com
https://environmentbank.mmearth.com