08. 09. 2010.

Essential Principles and Conditions for Habitat Banking

Habitat Banking, as one form of biodiversity offsetting* is a practice that has been around for a number of years in some countries (e.g USA, Australia, Germany) and defined in the Eftec report as “a market for the supply of biodiversity credits and demand for those credits to offset damage to biodiversity (debits). Credits can be produced in advance of, and without ex-ante links to, the debits they compensate for, and stored over time.
Habitat Banking presents both threats as well as opportunities for biodiversity and is a potentially controversial and divisive issue. The EC has commissioned a consultancy (Eftec) to assess the potential for developing EU policy in this area which implies that the EC is considering a role for habitat banking in a new EU biodiversity policy post 2010. The purpose of this paper is to provide to members of the European Habitats Forum a series of basic principles to be advocated by NGO’s when debating this issue and to allow for a common approach. It does not however present a full and detailed analysis of and position on habitat banking. The draft report by the European Commission’s consultants already provides such an analysis and can be downloaded from: http://ec.europa.eu/environment/enveco/taxation/pdf/Harmful%20Subsidies%20Report.pdf

Opportunities of using habitat banking:
• It becomes more easily possible to compensate for loss of biodiversity.
• Habitat banking can take advantage of economies of scale and markets.
• If effective, it would generate significant funding for habitat restoration and creation and also potentially for enhancing species populations or habitats.
• Achieving set ecological objectives in a more cost-effective way.
• Trading between equivalent habitat types is relatively straightforward.

Threats connected to habitat banking:
• Studies on ecological effectiveness, especially in the long term, are lacking but experience in the USA with wetland mitigation banking has shown that in 99.9% of the cases a permit is delivered while in only 20% of the cases mitigation has been successful .
• Habitat restoration or creation is in most cases extremely expensive compared to protecting biodiversity where it occurs.
• Need for sufficient ‘market activities’ (ie sufficient demand from destructive projects) before delivery of benefits at a sufficient scale.
• Trading between non-equivalent habitat types is less straightforward and requires a value judgment.
• It only works for habitats which develop in a short time period and for species which have high reproductive capacities and dispersal abilities, ie early succession habitats and species. Even in these circumstances, the species composition and quality of habitat offered by habitat banking will not be equivalent to those of the habitat lost and may be of lesser importance to biodiversity.
• It doesn’t work for the most valuable habitat types which take decades or even hundreds of years to develop such as old growth forest or peatlands or for habitats of the most highly threatened species as these should be “no-go” areas for development in the first place.

Basic principles relevant to habitat banking:
Although habitat banking has some important attractions and advantages, implementing it in practice will carry very significant risks. Successful habitat banking therefore requires a number of conditions to be met first:
• First of all it should be part of a legally binding EU policy framework that aims to ensure no-net-loss (NNL) or net positive impact (NPI) on biodiversity to underpin the delivery of a new biodiversity target. In particular, impact assessment and planning processes should be strengthened to consistently require, at a minimum, no net loss through biodiversity compensation and offsets should achieve conservation outcomes that are genuinely additional to what would have occurred without the offset.
• A rigorous application of the mitigation hierarchy (avoid, minimize, restore, offset) as it is for example legally arranged in the EU in Article 6 of the Habitats Directive should be ensured.
• Any potential weakening of the legally binding offset system outlined in Art 6 of the Habitats Directive or national wildlife protection/conservation legislation through the introduction of a wider habitat banking system must be avoided.
• A system should be limited to an exhaustive list of species and habitats whose characteristics (e.g. high dispersal and reproduction rates, early succession habitat types) make them suitable for habitat banking, also taking into consideration previous restoration efforts. Research into which habitats are suitable targets for HB should be carried out first.
• In addition a list of EU Directive species for which offsets are not permitted (because there is doubt that the habitat for the species can be successfully recreated in a reasonable time period) should be defined. Member States should be encouraged to include additional nationally endangered species on such a list where they match the criteria.
• Offsets should be in place and fully functioning before the damaging activities go ahead.
• Compensation activities should be carried out in the same region and be concerned with the same habitat which is able to provide similar functions and services as the habitat lost.
• Sufficient monitoring and data collection by authorities and independent experts need to take place in order to identify baselines, set qualitative and quantitative targets for compensation and to assess the success or failure of the compensation measures.
• Sufficient administrative capacities are necessary to manage the habitat banking schemes, oversee the issuance of debits and credits, trading, auditing, verification, and for enforcement and ensuring long-term compliance.
• Full transparency and openness is needed in the system to allow for public scrutiny.
As a final point it should be stressed that ALL of the above conditions are necessary to be fulfilled in their totality for there to be any chance for habitat banking to be a success.

Final draft from March 30, 2010, prepared by Pieter de Pous, EEB and Helen Byron and Zoltan Waliczky, RSPB.

*offsets are measurable conservation outcomes resulting from actions designed to compensate for significant residual adverse biodiversity impacts arising from project development after appropriate prevention and mitigation measures have been taken. The goal of biodiversity offsets is to achieve no net loss and preferably a net gain of biodiversity on the ground with respect to species composition, habitat structure, ecosystem function and people’s use and cultural values associated with biodiversity. (BBOP definition available from http://bbop.forest-trends.org/)
"From ten Kate, K, Bishop J, & Bayon, R (2004). Biodiversity offsets: Views, experience, and the business case. IUCN, Gland, Switzerland and Cambridge, UK and Insight Investment, London, UK, quoting Julie Sibbing from the National Wildlife Federation.

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