1. [ http://www.iucn.org ] Socio-economic aspects of biodiversity offsets Joshua Bishop IUCN-The World Conservation Union 29 September 2006 Pretoria, RSA

2. [ http://www.iucn.org ] Biodiversity offsets and sustainable development Ecological sustainability –“no net loss” → “net positive impact” Economic efficiency –cost effectiveness → sustainable production Social equity –no harm to the poor → poverty reduction

3. [ http://www.iucn.org ] Improving the socio-economic sustainability of biodiversity offsets 1.Information and analysis 2.Decision-making processes 3.Financing mechanisms

4. [ http://www.iucn.org ] 1. Socio-economic information and analysis for biodiversity offsets Institutional context –Demographic trends (e.g. migration) –Regulatory framework (offset requirements; rights to trade offsets) –Resource ownership, access, use and control –Direct and underlying threats to biodiversity –Capacity of NGOs, CBOs, government, etc Assessment of values –Net benefits of resource uses (= opportunity costs of an offset) –Financial costs of creating an offset (land purchase, environmental enhancement, validation, management in perpetuity) –Non-market benefits of benchmark, impact and offset sites Social impact analysis –Costs and benefits of impact AND offset to vulnerable groups (e.g. landless and female-headed households, children)

5. [ http://www.iucn.org ] 2. Decision making processes for biodiversity offsets Participation –Consultation –Local involvement –Local initiation and control –Distant stakeholders (regional, national, global) Transparency –Who provides what information when, how and to whom? Credibility –What institutions are trusted to assess impacts, to design, validate and implement sustainable offsets?

6. [ http://www.iucn.org ] 3. Financing mechanisms for biodiversity offsets Sufficiency –Long-term funding (duration of impact) Autonomy –Independence from expropriation (trust funds) Risk management –Insuring against failure or non-performance (over- compensation, performance bonds)

7. [ http://www.iucn.org ] Biodiversity and human well-being

8. [ http://www.iucn.org ] Assessing biodiversity values Qualitative methods –Expert opinion –Focus groups –Participatory assessment Quantitative methods –Market values (surveys, cost models) –Non-market values (revealed preference, stated preference, dose-response function) –Benefits transfer (“fit” data from elsewhere) –Macroeconomic models (for indirect impacts)

9. [ http://www.iucn.org ] Participatory assessment Wealth ranking Calendars of activities (livelihood and forestry) Map of forest product flows Ranking and scoring of livelihood benefits Ranking and scoring of forest benefits Discussion of costs or disadvantages of conservation Key informant calculations Barter game to establish values of non-marketed products PRA sustainability of stock and product flows exercise Feedback by research team Source: Richards M., Kanel K., Maharjan M. & Davies J. 1999. Towards Participatory Economic Analysis By Forest User Groups In Nepal. Overseas Development Institute in collaboration with the Nepal-UK Community Forestry Project (June).

10. [ http://www.iucn.org ] Market Valuation Techniques Non-market Valuation Techniques Physical Linkages Behavioural Linkages Revealed PreferenceDose-response Functions Change in Outputs (productivity) Change in Inputs (resource costs) Cost-of-illness Replacement Cost Preventative Expenditure Travel Cost Method Hedonic Property Analysis Hedonic Wage-risk Analysis Contingent Valuation Method Stated Preference Benefit Transfer Conjoint Analysis (choice models)

11. [ http://www.iucn.org ] Costs and benefits of reforestation at selected sites in Coastal Croatia World Bank, 1996. “Croatia Coastal Forest Reconstruction and Protection Project: Staff Appraisal Report.” Report No.15518-HR. Washington: World Bank

12. [ http://www.iucn.org ] Atlantic forests of E. Paraguay Adapted from: Naidoo R, Ricketts TH (2006) Mapping the Economic Costs and Benefits of Conservation. PLoS Biol 4(11): e360 Ecosystem services valued: Sustainable bushmeat harvest Sustainable timber harvest Bioprospecting Benefit-cost ratios of corridor options: 1) 0.22 2) 0.27 3) 0.76 Indigenous Reserve B>C ($/ha) B<C ($/ha) Agricultural uses: smallholder agriculture (12%) large-scale cattle ranching (14%) soybean production (2.4%) Mbaracayu Forest Biosphere Reserve

13. [ http://www.iucn.org ] Social distribution of biodiversity benefits (impact and offset sites)

14. [ http://www.iucn.org ] Distribution of the costs and benefits of Madagascar’s protected areas Carret, J.-C., and D. Loyer. 2003. “Comment financer durablement le réseau d’aires protégées terrestres á Madagascar? Apport de l’analyse économique.” Paris: AFD and World Bank

15. [ http://www.iucn.org ] Questions for discussion What are the roles of different stakeholders to ensure the sustainability of offsets? How to ensure equitable decision-making and sharing of costs and benefits over the very long-term? How to avoid ‘leakage’ i.e. the transfer of damaging activities to other locations? How to quantify the indirect impacts of a project and offset (e.g. migration, product use)? Should developers be liable for indirect impacts, and to what extent?