No Net Loss – a Biodiversity Fairy Tale
The idea that one ecosystem can be traded for another is, at best, a fiction.
Biodiversity offsetting, or replacing one ecosystem lost to development with another ‘similar’ ecosystem, is increasingly popular in Canada. In an attempt to reduce the negative impacts of economic development on biodiversity, governments around the world have adopted No Net Loss policies. Agriculture, urban expansion, and extractive industries often operate at the expense of biodiversity.
No Net Loss policies are structured by the mitigation hierarchy: avoidance, minimization, and offsetting (or compensation) of impacts.
The mitigation hierarchy is meant to mediate between the seemingly contradictory need to preserve biodiversity and the pursuit of economic growth. Biodiversity offsetting is meant as a last resort, but it too often becomes the go to option, as corporate lobbying and pressure to pursue economic development outweigh environmental protection. However, the uncertainty and limitations of ecological restoration mean that offsetting undermines the goal of No Net Loss.
Offsetting and the mitigation hierarchy have a long history in Canada.
A policy of No Net Loss was implemented for federal wetlands in 1991. Many provinces have since followed suit for those wetlands under provincial jurisdiction. No Net Loss has also been applied to fish habitat in Canada since 1985.
In 2012, the DFO amended the Fisheries Act and released The Proponents Guide to Offsetting in 2013, which made the mitigation hierarchy explicit for fish habitat.
In 2012 Environment Canada released an Operational Framework for the Use of Conservation Allowances that clarifies the use of biodiversity offsetting under a wide variety of environmental acts. This includes the use of offsets as a condition for National Energy Board environmental assessments. Biodiversity offsets have become a condition for many pipeline and other energy infrastructure projects.
A closer look at biodiversity offsetting reveals several immediate problems.
Biodiversity losses resulting from economic development such as expansion of the tar sands or urban sprawl are immediate and guaranteed. Gains from offsets, on the other hand, can take decades to be realized, if they’re realized at all.
Ecological restoration in many cases is not capable of fully restoring the structure and functioning of a degraded ecosystem. Oil companies in Alberta’s tar sands widely advertise reclamation projects, but restored wetlands may never have the same functions as those lost.
Most biodiversity offset policies include compensation ratios in order to deal with uncertainty in restoration, requiring more ecosystems to be restored than are destroyed. But a recent meta-study found that even the most generous of ratios are not enough, given the uncertainty and limitations of ecological restoration.
Once offsets are given the go ahead there is often little in the way of monitoring and enforcement, resulting in poor compliance. Fish habitat offsets in Canada were only monitored for an average of 3.7 years, despite the fact that it may take decades for benefits to fully emerge. Monitoring and assessment is extremely important given the uncertainty of ecological restoration.
Corporate power further undermines No Net Loss Goals. There is agreement amongst scholars, scientists, policy makers, and regulators that the mitigation hierarchy is often ignored, with offsetting becoming the first option rather than one of last resort. A study of Alberta’s wetland mitigation program found that pressure to encourage economic development pushed regulators to jump straight to offsetting in the case of wetland impacts.
Biodiversity banking allows organizations or private companies to restore and set aside land in anticipation of future offset requirements. This land produces credits, which can then be used by the developer or sold to comply with offset policies. Credits are generally defined by the area of impacted land and some measure of the quality of that land. The value of these credits reflects the rate of biodiversity loss, creating a financial incentive to continue using offsets and ignore avoidance and minimization. Biodiversity and the functioning of ecosystems become financial commodities to be bought and sold, driven more by the interests of banks and profits than conservation.
Biodiversity banking has been used for wetlands and endangered species in the United States for several years. The Canadian experience is more recent. The 2012 amendments to the Fisheries Act allow biodiversity banks to offset impacts to fish habitat, explaining that “The benefits accumulated in the habitat bank are counted as credits, while serious harm to fish caused by a project or projects are considered debits. A proponent that has established the bank may “withdraw” credits from the habitat bank to offset the serious harm to fish resulting from their project. When the balance of habitat credit in the habitat bank reaches zero, the bank is closed and no more “withdrawals” can be made.” Destruction of biodiversity becomes a simple economic transaction.
Provinces have also begun to explore offset banking. Alberta’s new Wetland Policy allows for both first and third party offsetting, opening the door to biodiversity banking. Ontario is piloting a Species at Risk Benefits Exchange in response to the failure of regulation to protect at risk species. British Columbia is exploring options for habitat banking in response to increased industrial development in Northern BC, including the proposed LNG development. Port Metro Vancouver has been banking fish habitat credits in the Fraser River Estuary to offset future projects such as the Terminal 2 expansion at Roberts Bank.
Case in Point: Read More about Roberts Bank and Terminal 2
 Curran, Hellweg, and Beck, Is there any empirical support for biodiversity offset policy? Ecological Applications, 2014, Vol 24, Iss 4: 617-32.
 Harper and Quigley, No net loss of fish habitat: a review and analysis of habitat compensation in Canada, Environmental Management, 2005, Vol 36, Iss 3:343-55.
 Clare et al, Where is the avoidance in the implementation of wetland law and policy? Wetlands Ecology and Management, 2011, Vol 19, Iss 2: 165-182.