Offsetting – new possibilities for sustainable economic growth?
Kirsi Kostamo,
Development Manager,
Biodiversity Centre,
Finnish Environment Institute (SYKE),
Finland
Minna Pekkonen,
Coordinator,
Biodiversity Centre,
Finnish Environment Institute (SYKE),
Finland
Despite all measures taken to protect species and habitats, biodiversity is declining at an alarming rate worldwide. Functional ecosystems are built on diversity of species and the interactions they have with each other and with their environment. We humans are also dependent on the ecosystems and the services they provide. Thus, biodiversity loss is a serious threat also to human well-being. Measures to halt the deterioration of the nature are needed urgently. One option not yet fully implemented is to start offsetting the human inflicted damages on nature. In this article we discuss biodiversity and nutrient offsets.
Before jumping into the offsetting, it is highly recommended to minimize the harm as the loss is certain but the success of producing the offset is not. This stepwise approach where environmental harm is first avoided and mitigated and thereafter the unavoidable loss offset is called mitigation hierarchy. Although offsetting concepts have been considered worldwide, within the European Union the need for compensating environmental harm can be drawn from Habitats Directive (biodiversity offsets) or Water Framework Directive (nutrient offsets) which bot require that that certain environmental parameters cannot be degraded.
Common and fair rules and guideline and open procedures increase the reliability and acceptability of offsetting (Primmer et al. 2019). One option is to define in legislation the rights and responsibilities of both the one causing ecological damage and the offset producer. Alternatively, offsetting can be done voluntarily f.ex. as a part of the corporate responsibility actions. Whether the nudge to offset comes from legislation or is voluntary, transparency and integrity in setting the offsetting targets, measures taken, and the evaluation of success are needed. They are the key factors in increasing the social acceptance of offsetting. For business sector a license to operate can be a key motivation to do voluntary offsetting and openness may increase general acceptance.
Offsetting follows the polluter pays principle: the costs should be paid for by the one causing the harm, such as a company, a municipality, or the state. This encourages to look for solutions that minimize the ecological harm. Eventually the offsetting costs can partly or fully be passed onto the prices of products and services.
Biodiversity offsetting
In biodiversity offsetting (also called ecological compensation) biodiversity loss is compensated by producing biodiversity gain somewhere else. Compensation is implemented by restoring, managing, or protecting habitats. In practice, biodiversity gain can be achieved, for example, by improving the state of coastal underwater meadows or bird nesting habitats. However, in the Baltic Sea region, successful restoration of the offset sites may require measures also in the watershed to improve water quality. Interest in biodiversity offsetting has increased especially among companies whose operations alter the use of coastal and sea space and which need environmental permits to operate.
Nutrient offsetting
EU Water Framework Directive and Marine Strategy Framework Directive both require that the state of the marine environment is improved. This means that currently no activities causing, e.g. excess release of nutrients into the seawater can be permitted in the marine areas. The central idea of nutrient offsetting is that the quality of water within a water body is not deteriorated due to human activities. This means that if human activities cause additional nutrient releases into a waterbody, it needs to be offset by removing nutrients from the same marine ecosystem. Potential tools for nutrient offsetting are e.g. growing and removing mussel, reed or macroalgal biomass or by binding nutrients into the sea bottom. The execution of offsetting measures requires extensive knowledge of the marine area and its ecosystem, as well as well-planned utilization of the removed biomasses or used chemicals.
Novel business possibilities?
Along with environmental benefits, developing operational offsetting system can provide opportunities for new business development. Planning, executing and dealing offsets can provide opportunities for companies involved in environmental consulting. Producing offsets can provide an additional source of income for agriculture and aquaculture sectors when novel land use and aquaculture practices are taken into use. For example, culturing bladder wrack (Fucus vesiculosus) for extracting alginate and other economically valuable chemical components would not only provide the possibility to remove nutrients from the marine ecosystem, but also develop new circular economy approaches to agricultural and fish farming practices.
Conclusions
Avoiding and reducing biodiversity loss and negative impacts on the marine ecosystem should always the priority in project planning. If harm inflicted on nature by human activity cannot be completely avoided or alleviated, offsetting measures should be considered. However, developing an operational offsetting system requires common rules to consolidate the roles of the various parties involved to render the activity as transparent as possible. Among fair policies, this requires a science-based tool for comparing the ecological loss and gain in the offsetting procedure. The practical implementation of offsetting needs also development, such as a registration system for keeping track on the offsets, agreements and monitoring. Finally, it also should be recognized that some nature values, e.g. rare or endangered populations cannot be offset. Active national and international discussion and development of sound practices are needed within the Baltic Sea region to guarantee that the potential environmental benefits of offsetting are truly met.
Raunio et al. (2019) Suitability of habitat types for biodiversity offsetting in Finland. http://urn.fi/URN:ISBN:978-952-361-012-5
Primmer et al. (2019) Institutions for governing biodiversity offsetting: An analysis of rights and responsibilities. http://hdl.handle.net/10138/304997
Kostamo et al. (2020). Nutrient compensation for aquatic coastal environment — legal, ecological and economic aspects in developing an offsetting concept. seabased_concept_for_nutrient_compensation_kostamo_et_al._2020.pdf (regeringen.ax)
Expert article 2867
> Back to Baltic Rim Economies 1/2021
To receive the Baltic Rim Economies review free of charge, you may register to the mailing list.
The review is published 4-6 times a year.