Biodiversity offsetting is a conservation approach that involves compensating for the loss of biodiversity caused by human activity with conservation gains in a different location, after measures to avoid and minimize adverse impacts and restoration efforts have been implemented.
Biodiversity offsetting was introduced in the United States through the Clean Water Act (CWA), which aims to provide regulatory protection for the chemical, physical, and biological integrity of the country’s waters. As per Section 404 of the CWA, developers who intend to dredge or fill a wetland must first obtain a permit from the administering agency of the §404 permitting program, which is the US Army Corps of Engineers. The Corps is required to follow the environmental guidelines established by the US Environmental Protection Agency (EPA) when making permit determinations.
One of the two goals guiding the §404 permitting program is the national “no net loss” of wetlands, set by President George H.W. Bush in 1989. The concept of no net loss implies that any wetland destruction must be offset by the creation or restoration of an equal or greater amount of wetland function. Wetland function can include water purification, fish and wildlife habitat, and flood protection. This goal can be achieved by creating a new wetland, which would result in a net gain in wetland acreage and function, or by restoring a former or degraded wetland elsewhere.
The “no net loss” goal’s offsetting requirement led to the emergence of a group of entrepreneurs who commodified offsets in the 1990s. These entrepreneurs created large wetland acreages to earn certified “mitigation credits,” which could be sold to developers who needed to comply with environmental guidelines (Robertson, 2006). The exchange activities that occur under this framework are known as wetland mitigation banking.
Since then, mitigation banking has become the primary form of biodiversity offsetting in the USA (Dauguet, 2015). Depending on the context of a particular offsetting application, one of two types of mitigation banks may be used: 1) Wetland or stream mitigation banks, which offset losses of wetland or stream functions, and 2) Conservation banks, which offer mitigation credits to offset losses of endangered or threatened species and/or their habitats.
It is important to note that all mitigation banks must have an approved instrument signed by the sponsor and the district engineer before they can be used for offsetting purposes. The district engineer will establish an Interagency Review Team (IRT) to review documentation for the establishment and management of a mitigation bank. Once approved, the instrument will provide authorization for the mitigation bank to offer credits that can be used as compensatory mitigation for ecological losses caused by development projects.
References:
Dauguet, B. (2015). Biodiversity offsetting as a commodification process: A French case study as a concrete example. Biological Conservation, 192, 533–540. https://doi.org/10.1016/j.biocon.2015.08.015
Robertson, M. M. (2006). The nature that capital can see: science, state, and market in the commodification of ecosystem services. Environment & Planning D: Society & Space, 24(3), 367–387. doi: 10.1068/d3304
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