thinking the unthinkable – a market in tradeable biodiversity?

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.

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About grasslandstrust

The Grasslands Trust is the only national UK charity that focuses entirely on saving grasslands that are valuable because they are rich in wildlife, history, or for other reasons.
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10 Responses to thinking the unthinkable – a market in tradeable biodiversity?

  1. Harriet says:

    The comment that pops into my mind is that assuming an analogy between biodiversity and finance is incorrect. As global markets currently stand, there is the possibility of an infinite supply of money via the creation of debt. (Positive Money at http://www.positivemoney.org.uk has short, clear explanations!). To simply map market mechanisms which have arisen in this context, on to biodiversity, which is governed by entirely different rules, seems a bit fraught.

    It’s an interesting proposition though. The way money is created now demands growth in financial return without regard to any other values, and it doesn’t acknowledge planetary boundaries (as described at http://www.nature.com/news/specials/planetaryboundaries/index.html). If biodiversity credits trading is introduced to the mix, what effect might it have?

    • Thanks Harriet. I’m not a proponent of biodiversity trading, but it is now clearly a serious issue being promoted by some.

      The biggest fundamental difference I can see between money and biodiversity, is that biodiversity exists independently of humanity, whereas money is an artefact created to get over the limitations of bartering.

      Trading in biodiversity will be far more complex than any other market because whereas a tonne of iron in the USA is the same as a tonne of iron in China, there is no simple equivalent for biodiversity. Creating a workable metric to enable biodiversity trading within England will be difficult enough, let alone an international one.

  2. Harriet says:

    I guess someone somewhere will have done work on how to value individual elements, or groups of elements, in complex networks?

    • yes Defra has commissioned some work over the past few years – USA and Australia already have various kinds of conservation banking system in place. I have to say I haven’t been convinced by it so far – it’s too simplistic. The metric Defra is promoting at the moment is in terms of habitat hectares, with some differentiation between habitats (eg those habitats which are “irreplaceable” and for replaceable ones how long it takes to replace them) but no attempt to include species.

  3. Biodiversity Offsetting Vs Sustainable Development and Landscape (as defined by the ELC & ratified in the UK) is a fight we cannot allow to happen. What is next? trading Landscape aethestic values or setting different standards of SD to enable trade also? And soils – they are clearly completely off the agenda as many good agricultural soils are good solely because of the underground biodiversity. Biodiversity offsetting is the maddest and most dangerous idea yet rolled out by any UK government ever and we have to ignore case studies from Australia and US because there they still have huge expanses of wilderness and in trying to replicate ‘wilderness’ in the UK what pre human state are people going to settle on? It is simply scientifically impossible!

    I believe in tree valuations and CAVAT, Helliwell etc, provide insurance values in the urban or peri urban fringe, which should be used much more for the vast quantity of unprotected trees subject to misconceived felling. This insurance money can be used to ensure the tangible benefits to humans trees have in towns are not lost. We have already seen the idea of offsetting these trees to provide woodlands in rural locations thrown out, quite rightly.

    And look at REDD+ and the carbon market, they simply do not work and spend more time in the garage than on the road. To introduce a similar initiative for biodiversity will NEVER be forgiven by the next generation and all of us with any link to land management or use will be to blame for not acting against it.

    George Eustice is the unpleasant face of euroscepticism, seeking to use the EU and its mechanisms for as much money as possible, dismantling and discrediting the best, perhaps the only decent things to have come out of it!

  4. Thanks very much European Trees (I’m sure that’s not your real name). Interesting comments.

    The twitter comments today have also shown how much feeling there is around this subject.

    I’ll return to it again from time to time.

  5. nirgunapa says:

    The question is about the quality of habitat, and therefore biodiversity lost, and that which is created to ‘replace’ it. In South Wales the analogy would be the Cardiff Bay barrage, which destroyed an important and valuable area of mudflats, and the Gwent Levels wetland reserve that was created from farmland as a replacement. Now while it has matured into a very important reserve for wildlife it is NOT a replacement for mudflats and houses completely different species. It can’t be right in simple ecological terms for example to destroy native woodland to allow development and replace it with newly planted trees on improved grassland. We need to recognise the inherent value of our wildlife and protect it.

    • Thanks very much for this Colin. This goes to the heart of the complexity of the offsetting process. If one is offsetting a tonne of carbon burnt in a coal fired power station, with a tonne sequestered in the soil of a lowland meadow, the metrics are relatively simple. Trying to work out how many hectares of grazing marsh equate to a hectare of mudflat is altogether more difficult. Let alone calculating the value of a mudflat with 40 priority species compared to one with 20.

      Also some habitats are regarded as irreplaceable and therefore cannot be offset. Limestone pavement is an obvious one. Ancient woodland is also often used in this context, despite the fact that it is not a priority habitat, and it is irreplaceable by definition, not for ecological reasons. Why an ancient woodland is any more or less replaceable than a 1000 year old flood meadow, I do not know.

  6. Pingback: Ancient Woodland Buy Buy Buy – Orchards Sell Sell Sell | europeantrees

  7. Paul Beevers says:

    I fear that this debate misses other significant considerations. Most people in this country are totally disconnected from nature. We need rich wildlife sites in and around our towns as well and we need our children and grown ups to be reconnected with all that nature delivers, including understanding, responsibility, pleasure and interest to inspire them. If we gain their understanding we can pick up more votes and goodness knows we need them. Conservationists will not win arguments if we think our population are not big factors in these issues. I found the above debate rather sterile because it tspent too much time regarding biodiversity as some tradeable commodity which I fear is what DEFRA is doing. I seem to see lots and lots of money being thrown at farmers and next to nothing used to pump prime organisations including local groups that probably offer better value for money than an awful lot of these farming schemes which I have grave doubts about based on the way many farmers currently behave.

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