Developers are often required to offset their impacts on biodiversity, either by directly compensating for the loss caused by their projects or by making payments in lieu of the required biodiversity offsets. The concept is similar to paying to offset carbon dioxide emissions from aviation. In regions such as Queensland and New South Wales in Australia, developers typically meet their biodiversity offset obligations by contributing to a compensation fund, which is then used to create the required biodiversity gains.
However, the practice of “financial parity” has its advantages and disadvantages. According to recent research, these offsets have the potential to exacerbate the decline of endangered species. A study by researchers from the University of Queensland and Griffith University examined the effects of Queensland’s ecological compensation policy on koalas in the Southeast region.. The policy requires that for every tree removed from a koala’s habitat, three new habitats must be planted and protected elsewhere.
The study evaluated the potential impacts of financial settlement compensation on koala habitats and populations under different future urban growth scenarios. The results show that these compensations can be effective in some cases. For example, money could be strategically invested in tree planting initiatives in areas that would significantly improve koala habitats or numbers.
However, developers’ primary goal is usually to reduce cost, so they are unlikely to act strategically to maximize habitat and species benefits. As a result, financial compensation can yield 50-100% greater gains in habitat area and koala numbers than developers achieve.
However, these benefits depend on the availability of suitable areas for koala habitat restoration. These areas must be environmentally sound and amenable to protection and restoration, and landowners must agree. If less than a quarter of the environmentally suitable sites are available for compensation, the performance of the financial compensation is significantly reduced.
According to the Queensland Compensation Register
Only 5.2% (0.7 hectares out of 13.4 hectares) of financial compensation for koala habitats through state government activities has been implemented on the ground since 2018.
This indicates how difficult it is to find suitable compensation areas.
The study stresses the importance of developers bearing the actual costs of offsetting the impact. theInstead of taking care of the compensation themselves, they make the payments, essentially shifting their financial risk onto the state. If sufficient funds are not available to implement the necessary compensation, taxpayers will fail or end up subsidizing the environmental costs of developers—both undesirable outcomes.
It is therefore essential that the methods used to calculate the financial contributions of developers accurately take into account the availability and costs of land; Otherwise, it jeopardizes the implementation of compensation and increases pressure on endangered species such as koalas.
Source: Reuters
Cover photo: Lutz Fischer-Lamprecht / Wikimedia Commons
