Socioeconomic aspects of biodiversity offsets

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Socio-economic aspects of biodiversity offsets

• Joshua Bishop
• IUCN-The World Conservation Union

29 September 2006 Pretoria, RSA
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Biodiversity offsets andsustainable development

• Ecological sustainability
• no net loss ? net positive impact
• Economic efficiency
• cost effectiveness ? sustainable production
• Social equity
• no harm to the poor ? poverty reduction

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Improving the socio-economic sustainability of
biodiversity offsets

• Information and analysis
• Decision-making processes
• Financing mechanisms

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1. Socio-economic information and analysis for
biodiversity offsets

• Institutional context
• Demographic trends (e.g. migration)
• Regulatory framework (offset requirements rights
  to trade offsets)
• Resource ownership, access, use and control
• Direct and underlying threats to biodiversity
• Capacity of NGOs, CBOs, government, etc
• Assessment of values
• Net benefits of resource uses ( opportunity
  costs of an offset)
• Financial costs of creating an offset (land
  purchase, environmental enhancement, validation,
  management in perpetuity)
• Non-market benefits of benchmark, impact and
  offset sites
• Social impact analysis
• Costs and benefits of impact AND offset to
  vulnerable groups (e.g. landless and
  female-headed households, children)

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2. Decision making processesfor biodiversity
offsets

• Participation
• Consultation
• Local involvement
• Local initiation and control
• Distant stakeholders (regional, national, global)
• Transparency
• Who provides what information when, how and to
  whom?
• Credibility
• What institutions are trusted to assess impacts,
  to design, validate and implement sustainable
  offsets?

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3. Financing mechanismsfor biodiversity offsets

• Sufficiency
• Long-term funding (duration of impact)
• Autonomy
• Independence from expropriation (trust funds)
• Risk management
• Insuring against failure or non-performance
  (over-compensation, performance bonds)

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Biodiversity and human well-being
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Assessing biodiversity values

• Qualitative methods
• Expert opinion
• Focus groups
• Participatory assessment
• Quantitative methods
• Market values (surveys, cost models)
• Non-market values (revealed preference, stated
  preference, dose-response function)
• Benefits transfer (fit data from elsewhere)
• Macroeconomic models (for indirect impacts)

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• Participatory assessment
• Wealth ranking
• Calendars of activities (livelihood and forestry)
• Map of forest product flows
• Ranking and scoring of livelihood benefits
• Ranking and scoring of forest benefits
• Discussion of costs or disadvantages of
  conservation
• Key informant calculations
• Barter game to establish values of non-marketed
  products
• PRA sustainability of stock and product flows
  exercise
• Feedback by research team

Source Richards M., Kanel K., Maharjan M.
Davies J. 1999. Towards Participatory Economic
Analysis By Forest User Groups In Nepal. Overseas
Development Institute in collaboration with the
Nepal-UK Community Forestry Project (June).
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Market Valuation Techniques
Non-market Valuation Techniques
Behavioural Linkages
Physical Linkages
Revealed Preference
Dose-response Functions
Stated Preference
Change in Outputs (productivity)
Hedonic Property Analysis
Contingent Valuation Method
Conjoint Analysis (choice models)
Change in Inputs (resource costs)
Hedonic Wage-risk Analysis
Cost-of-illness
Travel Cost Method
Replacement Cost
Preventative Expenditure
Benefit Transfer
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Costs and benefits of reforestation at selected
sites in Coastal Croatia
World Bank, 1996. Croatia Coastal Forest
Reconstruction and Protection Project Staff
Appraisal Report. Report No.15518-HR.
Washington World Bank
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Atlantic forests of E. Paraguay
Robin Naidoo and Taylor Ricketts (Under review,
PLoS Biology)
Mbaracayu Forest Biosphere Reserve
Indigenous Reserve

• Agricultural uses
• smallholder agriculture (12)
• large-scale cattle ranching (14)
• soybean production (2.4)

BltC (/ha)
Benefit-cost ratios of corridor options 1)
0.22 2) 0.27 3) 0.76

• Ecosystem services valued
• Sustainable bushmeat harvest
• Sustainable timber harvest
• Bioprospecting

BgtC (/ha)
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Social distribution of biodiversity benefits
(impact and offset sites)
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Distribution of the costs and benefits of
Madagascars protected areas
Carret, J.-C., and D. Loyer. 2003. Comment
financer durablement le réseau daires protégées
terrestres á Madagascar? Apport de lanalyse
économique. Paris AFD and World Bank
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Questions for discussion

• What are the roles of different stakeholders to
  ensure the sustainability of offsets?
• How to ensure equitable decision-making and
  sharing of costs and benefits over the very
  long-term?
• How to avoid leakage i.e. the transfer of
  damaging activities to other locations?
• How to quantify the indirect impacts of a project
  and offset (e.g. migration, product use)?
• Should developers be liable for indirect impacts,
  and to what extent?