Biodiversity Offsets & Habitat
Banking in Climate Change Law
an MBI’s (Coase) efficiency
Cheryl Micallef-Borg | cmb@law.kuleuven.be
What is Bio/Habitat Banking? 1
• BioBanking, NSW Australia
- Part 7A of the Threatened Species Conservation Act 1995
- Threatened Species Conservation (Biodiversity Banking)
Regulation 2008
• Wetland Mitigation Banking, USA
-
a.k.a. Compensatory Mitigation
Clean Water Act 1972 §404(b) (1)
US Army Corps of Engineers regulations 33 CFR 320.4(r)
Compensatory Mitigation for Losses of Aquatic Resources Final
Rule, 2008 US ACE, US EPA (40 CFR 230)
• Conservation Banking
- Endangered Species Act (ESA) 1973
- Guidance on Establishment, Use and Operations of Conservation
Banks
What is Bio/Habitat Banking? 2
• Development
• Impact on Ecosystems/ Biodiversity/ Habitats
• Mitigation Hierarchy
1. Avoid
2. Minimise
3. Offset
• (On/)Offsite like-for-like or dissimilar Conservation
Bank Sites
Why include this MBI in CC Law?
• GBO3 asserts ‘[…] that fighting CC is undermined by current trends
in the state of ecosystems’.
• ‘Conservation of biodiversity, &, where necessary restoration of
ecosystems, can be cost-effective interventions for both mitigation of
& adaptation to CC, often with substantial co-benefits.’
• ‘The linked challenges of biodiversity loss & CC must be addressed
[…] with equal priority & in close co-ordination, if the most severe
impacts of each are to be avoided.’
The mutual supportiveness principle
How is the potentiality of inclusion in
CC Law assessed?
• New Institutional Economics – Coase Theorem
– Demsetz Comparative Systems Approach
– Regulatory Structure Analysis of mechanisms adopted to
reach the same nature conservation aims
– Focus on transaction costs, allocation of property rights
and liability Regulatory Structure Analysis
Coase Efficiency
Transaction Costs in all applications of
this MBI (1)
 Set-up costs in the compilation of information of:
o adequate areas for the set-up of Banks;
o the biodiversity/endangered species/habitat features & ecosystem dynamics
therein - i.e. the Databases.
 Running costs in the review & update of the Databases &
Assessment Methodology; maintenance of the trading platform, &
public registers; training Assessors; managing the Trust Fund.
 Administrative costs paid by the parties for credit transfer or
retirement, annual contributions for making use of the scheme.
 Bank Statement/ Habitat Conservation Plan costs i.e. employing an
Assessor, plus administrative costs to the regulator in applying for
said Statement & Statement modification costs.
Transaction Costs in all applications of
this MBI (2)
 Bank Agreement /In Lieu Fee costs i.e. employing an Assessor, plus
administrative costs to the regulator in applying/modifying/terminating
said Agreement.
 Contract of Credit-Sale Costs – drawing it up; policing it.
 Compliance Assurance Costs borne both by the regulator as well as
the Bank landowner.
 Opportunity costs
o of what the Bank landowner could have done with his land had it not been
converted into a Bank;
o of the other mechanisms the developers/regulators could have employed to
reach the same aim (this shall be examined further on).
Alternative Regulatory Instruments
• Alternative 1: Threatened Species Assessment of
Significance’ under the Environmental Planning and
Assessment Act 1979 (NSW, Australia).
• Alternative 2: Safe Harbour Rule under the
Endangered Species Act (US)
• Alternative 3: EU Habitats and Birds Directive
Compensation Mechanism
Brief Conclusions to Demsetz
Comparative Systems Approach
• Greatest Coase efficiency lies in Bio/Habitat Banking
• Stark alarm bell sounded: Information is needed about
biodiversity & habitats, ecosystems, threatened/
endangered species & ecosystem services; their
interdependencies and interactions; their adaptability &
response to newly created habitats, &conservation
management practices; & the equivalence criteria.
Conclusions & Recommendations
• Mutually Supportive Principle still embryonic
– Being pushed by CBD
– Creeping inclinations in UNFCCC re: forests, less so in LULUC
– Information deficit makes MBI hard to implement on an International
plane
• EU in initial stages of policy work re: LULUC & Forestry
– Potential inclusion in CAP reform?
– Nothing on CC Law front
• MBI should work through CBD channels
• EU implement MBI through Nature Conservation Law
– Get CC mitigation/adaption in through the back door
• Keep in mind need to continue to reduce tranaction costs by tackling
knowledge gap.