Targets to halt biodiversity loss are failing. Both the EU and the UK Governments admit as much, and it is a similar story around the world.

This failure is blamed in part on the lack of value that decision-makers place on nature and the benefits it provides humans.

‘We are running down our natural capital stock without understanding the value of what we are losing,’ said Deutsche Bank economist Pavan Sukhdev at the publication of a three-year study, ' The Economics of Ecosystems and Biodiversity (TEEB)' ,looking at the value of conservation.


However, the growing desire to place a value on nature is leading to new, market-based ideas about how to stop and even reverse biodiversity loss.

Bio-offsets market

One of those market instruments is biodiversity offsetting, or 'bio-compensation'. Quite simply, if a developer is going to build something that will damage or destroy a habitat of conservation value then they must buy a ‘bio-credit’ to compensate for that loss elsewhere.

The idea is not new. In the US a wetland banking scheme where public or private developers restore, establish or enhance an aquatic resource to compensate for any unavoidable damage they cause has been in existence since the 1970s. More than 400 wetland banks have now been established in a market worth more than $3 billion a year.

Initially, developers undertook the compensatory work themselves, but gradually a credits-based system emerged where a third party with expertise in conservation takes on the work.

Australia took on the credits-based system and launched a habitat banking scheme in 2006. Known as BioBanking, the initiative provides funding to restore sites, compensating for damage to biodiversity elsewhere.



The UK also has its own credit scheme run by a private company, the Environment Bank Ltd, which will allow developers to buy shares in a £100m project to restore conservation land around the river Thames.

Professor David Hill, the Bank's chairman, said they wanted to get local planning authority approval for developers to contribute to bigger conservation projects rather than the current tendency towards 'small plots of poorly maintained landscaping'.

Carbon comparison


The question now to those involved in the nascent industry is whether or not a widespread bio-credit market can emerge in the same way as the carbon market.

Although confident that a trade in biodiversity offsets will emerge over the next two or three years, Dr Heidi Wittmer, lead study author behind the TEEB report, says it suffers in comparison to the carbon market because of its lack of a ‘common denominator’ like CO2.

The TEEB report itself says trying to simplify the process by concentrating only on the selected components we currently consider to be of value was risky.

‘Ecological processes are too complex and interlinked and present too many unknowns for us to do this without risking grave damage to ecosystem services and wider aspects of biodiversity,’ says the report.

Some of the European officials who set up the EU’s carbon trading scheme agree, and question how something as complex as biodiversity can be translated into a price to take to the market.

‘With the carbon market we know what we are trading and how to tackle them. We can set a cap and use the price to drive them down. We have a baseline for biodiversity in Europe now, but it is not one figure - it is four pages of different elements of biodiversity,’ says Karl Falkenberg, European Commission director general for environment.

Others are more optimistic. The European Investment Bank expects the new market to be ‘as big as the carbon market’. Peter Carter, head of the sustainable development unit at the bank, says the success of the US wetland banking scheme shows it could be done.

Sourced The Ecologist, June 2010