Compensating the biodiversity impacts of land use: Toward ecologically equal exchange in the North-South context

Doctoral thesis of Michael "Mike" Curran

Many commodities consumed in industrialized countries are produced in developing and emerging nations. Multi-faceted environmental impacts are caused at each step along the chain of production. Such damages to ecosystems and biodiversity are often not reflected in market prices. Therefore, while commodities such as biofuels and feedstock are increasingly imported into the First World, a “virtual environmental burden” is effectively being exported in the opposite direction (from North to South). Innovative methods are needed to reverse this damage, either through sustainable production, or through incorporation of such negative externalities into the market price (i.e. as an added premium). The project takes a tiered approach towards assessing the potential of ecological compensation to be applied in an ecological context.

The first phase focuses on critically assessing biodiversity offset methodology, particularly the controvercial practice of using restoration ecology (i.e. the restoration or enhancement of damaged ecosystems) to compensate the loss of existing or intact ecosystems. This will use a meta-analytic approach to assess the biodiversity value of secondary habitats and the timescales at which restoration occurs. This will provide an empirical basis for designing offset ratios (the amount of habitat restored per unit lost to development). Additional to this, existing mechanisms for conservation, such as Payments for Ecosystem Services or conservation land purchases will be investigated in terms of their cost-effectiveness and affect on social outcomes and institutional regimes (local development, institutional requirements etc.).

Using this ecological and socio-economic data, a regional case study(ies) will be used to assess the ecological and economic feasibility of compensating biodiversity impacts of land use. In this case, local biodiversity information (e.g. species distribution and monitoring data) will be used to assess biodiversity loss due to land use, as a further development of Life Cycle Impact Assessment (LCIA) methodology (in collaboration with a separate study) and an index of biodiversity loss developed to quantify these impact. At the same time, using the results of phase 1, restoration and protection outcomes will be modeled for case study projects, and projected biodiversity "gains" (or conservation benefits) quantified using a spatial conservation prioritization approach. By comparing LCIA damage results with predicted gains in biodiversity from the case-study projects, landscape modeling will be used to establish a cost of compensation for particular commodities. This will be applied to determine the anticipated premium per unit of product. This information will be particularly relevant for setting, e.g., an ecological value added tax on traded commodities, or in establishing a voluntary polluter-pays scheme for compensating impacts.