Biodiversity offsetting schemes around the world are suffering from critical challenges across a number of issues, according to a preprint paper published this month that outlined the “taxonomy of failure” for such programmes.

The list of problems – spanning data, ecology, economy, society, and institutions – show how offsets fail to make up for biodiversity losses, according to Stanislav Edward Shmelev, the founder and executive director of Netherlands-based Environment Europe Foundation and author of the report.

“Offsets do not compensate for lost biodiversity, especially for affected communities, and are rarely supported by ecosystem mapping or robust valuation metrics,” said Shmelev in the paper, published by preprints.org this month but not yet peer reviewed.

“Rather than relying on ineffective offset schemes, the global community must prioritise genuine ecosystem restoration and sustainable conservation strategies to protect biodiversity for future generations,” he said.

The “taxonomy of failure” explores analysis of over 100 peer-reviewed publications on why biodiversity offsets do not usually work, Shmelev told Carbon Pulse.

A primary reason, related to data, is how there is no single metric for the value of ecosystems. When offsets translate nature into money, all biodiversity becomes comparable in a system that does not accurately represent ecology, he argued.

“It simplifies to the point of making it impossible to deal with. The world is not linear – there are all kinds of complex feedback loops and interconnections.”

“To assume that you could add everything up and present it as one number is a ludicrous idea. The fact that business people don’t understand nature means that they need to be educated – not that nature should be denigrated to [their] level.”

Biodiversity offsetting schemes have been around for years, and are different from biodiversity credits exclusively for nature-positive practices, without implying offsetting.

As crediting schemes emerge around the world, participants often stress they should not be used for offsetting as that would legitimise damage to nature – but offsetting is often seen as the only way of galvanising sufficient private funding to close the financing gap.

INSTITUTIONS

Another category in the taxonomy relates to how institutions overseeing offsets often suffer from poor regulation, monitoring, and auditing, said the paper.

Examples from around the world illustrate this in areas including the US and Australia, alongside countries in Europe and Africa, said Shmelev.

“What’s most shocking is biodiversity is supposed to be forever. But these schemes don’t work forever – they work on a finite time horizon. This means that you don’t care what goes on afterwards.”

Last December, a paper argued that biodiversity credit markets are unlikely to be effective for nature if they function as offsets, as that would require an excessive amount of regulation.

ECOLOGY

The ecology aspect of biodiversity offsetting was also listed in the paper as a problem, primarily how detailed ecosystem services mapping almost never supports offsetting initiatives. Mapping of the range of benefits from nature helps to understand its full range of outputs.

“In simple words, it means that nobody cares what’s inside the ecosystem, which trees, which plants, which levels of complexity, and so on,” said Shmelev.

“I would argue that without really detailed scanning of ecosystem services on a fine scale, such as 1 square kilometre, it’s impossible to understand the true value of what you’re trying to destroy.”

Some nature is almost always lost overall with biodiversity offsetting schemes, the study said.

ECONOMY AND SOCIETY

Regarding the taxonomy category of economy, the financial flows around offsets are usually abused in different ways, said Shmelev.

For example, the Indian government accumulated $5.7 billion intended for nature compensation while deforestation continued to take place, according to a paper published in 2018. Immediate financial gains are usually prioritised over long-term ecosystem preservation, he said.

The final arm of the taxonomy, society, underlines how biodiversity offsets have affected local communities, said Shmelev.

“Communities that are suffering from the removal of those ecosystems are not being compensated. Often, compensation for these offsets happen somewhere else, and different groups are benefiting from the offsets,” he said.

In March this year, another paper said most of the problems with biodiversity offsets are solvable, although some remain particularly difficult due to power dynamics.

THE SOLUTION

Despite the numerous issues with biodiversity offsets, Shmelev believes there may be a way for the instruments to be used with credibility.

“I’m not arguing that the method is hopeless throughout. It’s quite possible the scheme could help to restore wetlands, some mangroves,” he said.

Instead of having one single metric for nature, stakeholders must take a multidimensional approach, he added. For example, different biomes could have a variety of scores for each square kilometre to share degradation levels based on a range of indicators.

“Multidimensional scales are an option for assessing the complexity or the true value of nature.” Nevertheless, some ecosystems are irreplaceable through offsetting, such as ancient forests, he said.

By Thomas Cox – [email protected]

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