Last month The Environment Bank launched an online market for “conservation credits”, another name for Biodiversity Offsetting. The idea, promoted by the Government, is that when a landowner reduces biodiversity as a result of a development, they have to offset this loss by increasing biodiversity somewhere else. This creates a demand for other landowners to “supply” biodiversity enhancement as a product. And hey presto, so the argument goes, once you have demand and supply, market forces come into play. It’s only a small step to creating a market where biodiversity credits can be traded – and with that no doubt biodiversity derivatives, biodiversty default swaps and so on.
One might think it’s a pity this market hadn’t existed before the financial crisis, and Greece, with its amazing biodiversity, could have swapped biodiversity credits for financial debt. Germany would have owned Greece’s biodiversity – but to what benefit?
More recently (1st March) I came across this exchange between a Tory MP and member of the Environment Select Committee, George Eustice, and the Secretary of State.
George Eustice (Camborne and Redruth, Conservative)
A report published this week by the think-tank Open Europe concluded that the best way to green the pillar one payments in a flexible way would be to replace the single farm payment with a market in transferable environmental obligations, so that we can use pillar one funding to bring to life some of the ambitions in the Natural England White Paper. Is that a proposal that the Secretary of State might take to the negotiating table?
Caroline Spelman (Secretary of State, Environment, Food and Rural Affairs; Meriden, Conservative)
My hon. Friend wrote an interesting article about CAP reform where he expressed the idea—which he calls “common objectives”—of introducing greater flexibility through the creation of a market in tradable biodiversity obligations. He is ahead of his time with this thinking. He has heard Ministers talk about the future importance of supporting ecosystem management through agriculture, although we are dealing with reform proposals as they stand. At this stage of reform, I am sure he would share with me the view that it is important that the CAP should be greened and that taxpayers should see other public goods for the support they provide.
The idea would be that a farmer in say Lincolnshire who had some very high yielding and intensively managed farmland, could avoid having to reduce his yields to provide some wildlife habitat by buying some credits from, say, a hill farmer on Dartmoor, who would reduce their productivity and provide more wildlife.
But why stop there? Why not have international biodiversity trading in the same way we have an international carbon trading, or indeed all the other global markets. British farmers could then buy (very cheap) biodiversity credits from a landowner in, for example, Greece – effectively paying for Greece to become a big nature park, while British farmers receive subsidies to increase the intensity of their production.
Of course this approach ignores the fact that our environment, not Greece’s, provides us with all the other ecosystem services on which we depend. And as a nation we still value greatly our own landscapes and our own wildlife – even if it is much less biodiverse than Greece’s.
It also ignores the fact that so much biodiversity has already been lost in this country and elsewhere – and needs restoring.
But there may be merit in thinking that we should “zone” the UK into areas where agriculture is the priority (and where wildlife has all but disappeared anyway) with other areas where wildlife and other ecosystem services are given much greater priority? In a way this is exactly what AONBs, National Parks and most recently NIAs were and are seeking to do. Would they be more likely to achieve their objectives if supported by a market in tradeable/transferable biodiversity credits? Only if strong regulations underpinned that market – in the same way as the previously under-regulated markets caused the global financial crisis.