It is safe to say that 2022 was a year of Biodiversity in policy circles. While the Living Planet Report created a stir of emergency, the Kunming-Montreal Biodiversity Framework sealed the year with a much-awaited actionable goal emphasizing restoration policies in its Target 2. In addition, this decade (2021–2030) has been declared the UN Decade on Ecosystem Restoration. The European Union has been a forerunner with the European Union’s 2030 Biodiversity Strategy in proposing a legally binding nature of restoration targets. Meanwhile, many strategic buzzwords clouded the international and national environmental policy spheres. “No Net Loss” (NNL) policies stand tall among that list alongside their close cousins: the “Biodiversity Offsets” (BO).

No Net Loss ensures that equivalent gains balance the negative impacts of development on biodiversity and ecosystems. The term “Biodiversity Offsets,” on the other hand, describes a variety of conservation measures (from “averted loss” activities like strengthening or expanding protected areas and creating corridors and buffer zones to more active “restoration” interventions like reintroducing species, removing invasives, and improving land management practices) that make up for the negative effects of high-footprint development and industrial activities on biodiversity. Simply put, Biodiversity Offsets are one of the ways to achieve No Net Loss or Net Gain outcomes. These mechanisms target the residual impacts that cannot be avoided, reduced, and will not be restored, according to the steps of the mitigation hierarchy (MH): the environmental management framework that enables the inclusion of biodiversity throughout the life cycle of development projects.

Figure 1: The Mitigation Hierarchy

The popularity of Biodiversity Offsets engrained in No Net Loss policies is increasing exponentially as part of regulatory frameworks, especially among countries like Australia and the EU. According to a report released by ecosystem marketplace, more than 45 laws and policies worldwide have Biodiversity Offsets as part of their regulatory framework. Biodiversity Offsets have also gained significant traction among voluntary corporate Environmental Social Governmental Strategies. What makes Biodiversity Offsets favorites among many is the fact that they are the “last resort” option for unavoidable environmental impacts. However, the same reason also makes them highly contentious, and the world stands divided on this again! The question of who is right and who is wrong is a complex and multifaceted issue, one that warrants a deeper discussion and exploration.

Coming to the scene in India, CAMPA steers the BOs as the regulatory compensation mitigation strategy. CAMPA allows a mechanism for in-lieu fee collection from the developer for forest land conversion to afforest (planting trees) on an equivalent piece of degraded land. The in-lieu fee is supplemented by the Net Present Value (NPV) of forest land based on the previously provided services. This includes naturally assisted regeneration, forest management and protection, infrastructure development, wildlife protection and management, wood supply, other forest produce-saving devices, and other allied activities. Interestingly, the NPVs in India merely range from 4.38 lakhs to 10.43 lakhs. One primary reason for such abysmally low NPV is the improper assessment of ecosystem services.

The value of biodiversity is realized through the utilization of Ecosystem Services (ES), defined as “the contributions to human well-being.” The Millennium Ecosystem Assessment describes four categories of ecosystem services: provisioning services (e.g., food, water, timber), regulating services (e.g., climate regulation, water purification), supporting services (e.g., nutrient cycling, soil formation), and cultural services (e.g., spiritual and recreational benefits). While CAMPA acknowledges the value of Ecosystem Services, their presence in the estimation of NPVs for forest lands is almost absent, making it inefficient, ineffective, and insufficient in more ways than one. Utilization of CAMPA money merely for afforestation again does not translate into rebalancing ecosystem services or the ecosystem itself. CAMPA is just one case that needs an Ecosystem Services makeover. Many other No Net Loss and Biodiversity Offsets strategies across the world are devoid of Ecosystem Services approaches in their offsetting measures. This is why much of the conservation grounds are becoming the battlefield for the fight between people and nature.

To achieve ecological and biodiversity objectives and meet conservation goals, Biodiversity Offsets for Ecosystem Services must take the form of additional or complementary measures. While Ecosystem Services measures can prevent drifts, abandoning the existing methods like restorations would put nature in peril yet again. A standalone Ecosystem Services -centric strategy might result in replacing native species with new ones providing the same services leading to a cascading collapse of the planet’s ecological balance. Therefore, considering Ecosystem Services post ensuring ecological equivalence for Biodiversity Offsetting becomes as imminent as inevitable. All in all, mainstreaming Ecosystem Services approaches through policy considerations is the next step in the right direction to strike a balance between development and conservation.

*The Kautilya School of Public Policy (KSPP) takes no institutional positions. The views and opinions expressed in this article are solely those of the author(s) and do not reflect the views or positions of KSPP.