I love a win-win approach to problem solving. Wouldn’t it be great to have win-win outcomes where development projects could go ahead, creating economic benefits for local communities, and at the same time protect and enhance natural assets, including native biodiversity? (Native critters and organisms such as plants, birds, fish, insects, and fungi).

Biodiversity offsetting is designed to meet these win-win goals. Offsetting trades biodiversity loss caused by development, for a biodiversity gain elsewhere. For example the construction of a new road may require diverting a stream into a covered drain, and the offsetting might involve riparian planting and restoration of another stream in exchange. Or if a new subdivision involved bulldozing some native vegetation, this damage might be offset by planting a reserve with native trees.

In principle offsetting sounds really good – aiming for no net loss or even a net gain of biodiversity while promoting development. However, researchers looking at the mechanisms and outcomes of biodiversity offsetting concluded that in practice the outcomes for biodiversity are rarely good.

So what are the problems? For starters, there is the issue of “currency”. To do a deal, to trade or barter or “offset”, the parties involved need to have some kind of agreed system of valuing the objects of bargaining, in order to come up with a fair deal. It’s an apples and oranges problem. Is one bulldozed hillside of established vegetation equivalent to another newly planted “restored” hillside?



Biodiversity offsetting – a balancing act. Is the goal of no net loss of biodiversity really being met? (picture modified)

Biodiversity assets do not lend themselves easily to interchangeability. Enhancing habitat for one species is not necessarily a good exchange for destroying habitat of another species. And species don’t exist alone anyway – ecosystems are complex and interwoven. There have been many suggested improvements to the way “currencies” are calculated and assessed, along with other proposed improvements to the offsetting system.

But Susan Walker, Ann Brower, Theo Stephens and William Lee researched biodiversity offsetting and discovered more fundamental reasons why offsetting is very unlikely to succeed in delivering its stated goals. In their paper “Why bartering biodiversity fails” they draw a picture of a triangle of players in the potential offsetting deal, and show that the goals of just one of these groups is likely to dominate the outcomes.

First, there are traders – the developers who want to invest in a new project, which requires damaging or destroying some natural habitat. I was surprised to see that restoration/offset providers are also included as traders, but of course they also stand to gain from the business created if an offsetting project goes ahead.
Second, then there are the biodiversity protection interests, which are typically members of the public who care, local community groups, such as “friends of ……”, and broader based advocacy groups, such as Forest and Bird. Third, there are regulatory officials. These are the people in government departments and local government offices who are charged with facilitating these negotiations and making sure the agreed outcomes are followed through.

This system of three types of players, unfortunately, always tends to tip towards the traders interests. The traders have a vested interest – they stand to gain financially from the proposed development. They have money to invest in the project, and are motivated to spend some resources on getting the project off the ground.

‘Biodiversity protection interests’ people, on the other hand, do not have vested interests. They are often people who recognize the intrinsic values of biodiversity and want to protect the bits that we humans haven’t yet destroyed. They do not stand to gain financially, nor typically do individuals or community groups have a lot of funds to work with. Larger groups, such as Forest and Bird, do have infrastructure and more financial resources, but because they are national organisations it is difficult for them to focus efforts on specific concerns at a case by case, local level. Whereas the developers interest is concentrated on the specific project, environmental protectors interests are often spread wide and thin.

Regulatory officials are required, under the RMA (Resource Management Act 1991) to take care of biodiversity in their region on behalf of all of us – the citizens and taxpayers of NZ. This includes ensuring follow-through, as in compliance with agreed conditions and monitoring of outcomes. But because of the nature of bureaucracy, the pressure on these folks to tick boxes and serve the system may at times override or obscure the impulse to serve the greater good.



Stockton Mine – West Coast

Ann Brower at Lincoln University is one of the authors of the bartering biodiversity paper mentioned above. She has highlighted the triangle of players described here, several times, first and most famously in her book “Who owns the high country?” – an exposé of the tenure review process for South Island high country stations. And then, together with other authors, in a paper about the assessment of significant natural areas under the RMA. In all three of these studies, the dynamics between the three groups of “players” follow a similar pattern – traders, biodiversity protection interests and regulatory officials, and all result in less than satisfactory outcomes for biodiversity.

Basically it is a competition between the motivated few and the disorganised many, refereed by the bureaucratically hamstrung, some of whom seem to forget that they are supposed to be looking after the public good and the unique indigenous biodiversity of this country. A study of biodiversity offsetting in Canada, the USA and Australia, by Joe Bull and others, also found that the challenges of ensuring compliance and monitoring, and “conceptual flaws in the approach”, often prevent biodiversity offset schemes from meeting conservation objectives. The concept of offsetting suggests that almost anything is negotiable and unfortunately both the traders and officials have more incentive to facilitate a deal than to ensure biodiversity protection. Hmmm.

Offsetting has the potential to “legitimise” biodiversity loss, and allow developers to skip the steps of looking for ways to completely avoid, or minimise damage or loss and go straight to the trading option. Walker, Brower and colleagues conclude that “while compensation and no net loss are worthy goals, and bartering biodiversity might appear more promising than simple and weakly enforced prohibitions…..policies that enable biodiversity trading may perversely yield worse biodiversity outcomes”. Frankly, it is looking a bit grim.

Some biodiversity offsetting outcomes are undoubtedly better than others, but Walker, Brower, Stephens and Lee argue that overall, simple prohibitions to protect biodiversity, even if imperfectly enforced, would be more effective than biodiversity offsetting.

There is an ongoing discussion about biodiversity offsetting and other forms of ‘compensation for ecological harm’ in New Zealand, and around the world. This Bartering Biodiversity paper has been cited in many other papers (See links to a few at the bottom of this page). The team that wrote “Why Bartering Biodiversity Fails” are a mixed bunch, blending their various fields of expertise, from ecology and conservation to economics and political science. Awesome! They have shown that “tweaking” the offsetting system is unlikely to create the desired outcomes for biodiversity, because of the underlying dynamics between the groups involved.

Biodiversity loss may look like an ecological problem, but ecology alone is not enough to deal with the reality of politics, bureaucracy and human behaviour. Collaboration between ecologists, social scientists, and policy makers is the way forward.

Some other papers about biodiversity offsetting and other forms of ecological compensation:

Biodiversity tradeoffs and offsets in impact assessment and decision making: can we stop the loss?
Susie Brownlie, Nicholas King; Jo Treweek

Ecological compensation: an evaluation of regulatory compliance in New Zealand
Marie A. Brown, Bruce D. Clarkson, Barry J. Barton; Chaitanya Joshi

Is there any empirical support for biodiversity offset policy?
Michael Curran, Stefanie Hellweg, and Jan Beck

Compensating for ecological harm – the state of play in New Zealand
Marie A. Brown, Bruce D. Clarkson, R.T. Theo Stephens and Barry J. Barton