Ecological compensation – here to stay
Ecological compensation – a tool used to stop the loss of biodiversity – represents a growing global market and currently generates annual revenue of USD 3-4 billion. Now ecological compensation is gaining ground in Sweden.
The compensation proposal was prepared by LKAB with the support of Enetjärn Natur. The compensation plan proposes that protection be provided for an area with a nature value that corresponds with the high nature value of the area that will be impacted. Nature conservation measures are also being planned in the area in the form of ecological restoration and management activities.
This procedure, referred to as ecological compensation, is becoming increasingly common in Sweden as compensation legislation gains force. At the same time, work is under way within the European Commission to determine how compensation can be used as a tool for reducing the loss of biodiversity.
“Mining operations are assessed in accordance with the Environmental Code and public authorities are increasingly requiring that developers compensate for damage caused to ecosystems, natural environments and species as part of the terms for receiving permits,” says Josefin Blanck, Conservation Consultant at Enetjärn Natur.
According to legislation, any impact on a protected Natura 2000 site must be compensated – but compensation requirements may also be linked to applications for exemption from the Species Protection Ordinance in the event that an industrial establishment affects a protected species. These two factors often form the basis of a company’s compensation requirements.
Ecological compensation should only be considered as a last resort, once all other alternatives have been explored. For example, developers should first make every attempt to avoid causing damage by identifying the optimal location for their operations and investigating all potential mitigation measures. Compensation may then be used as a final step to compensate for any residual damage.
Despite the use of mitigation and avoidance measures, biodiversity often suffers lasting damage. In such cases, ecological compensation can used as an additional step, which means that measures are taken to restore and recreate similar values in other locations.
Josefin Blanck explains that ecological compensation can also be used to protect valuable natural environments threatened by other operations.
While the market for ecological compensation is undeveloped in Sweden, interest in this relatively new and innovative method of promoting biodiversity conservation is growing within the EU. Ecological conservation also represents an attractive business opportunity for landowners and other stakeholders.
In countries such as the US, where compensation systems are already established, markets have been developed to supply land for the purpose of ecological compensation. These prearranged compensation areas are known as habitat banks. Developers are able to purchase compensation credits from a habitat bank, thus avoiding the need to restore the land themselves. Instead, the work is performed by a third party, namely the organization or company that manages the habitat bank.
Ecological compensation currently generates USD 3-4 billion in annual revenue worldwide. While California remains one of the forerunners in ecological compensation, compensation measures are also becoming a more common feature of Swedish permit procedures.
Independent ecological consultants do not assess whether a mine, wind farm or road is good or bad. Instead, they comment on the future consequences of such operations and their impact on the natural surroundings and species in the area. Then it is up to the authorities to decide whether or not these consequences are acceptable.
“We often become involved in projects early on. Our job is to produce accurate information for the customer to base this decision on and to identify the nature values in the area to be exploited. Among other tasks, we conduct species protection investigations and field inventories, which serve as the basis for environmental impact assessments. If we determine at an early stage that the area in question has a high nature value, a compensation investigation may be necessary. This enables developers to decide early on how they wish to proceed and to look into alternatives for compensation.
If the customer decides to proceed with the process of ecological compensation – or if the authorities so require – ecological consultants are brought in to establish tangible action plans and determine the areas where natural environments can be protected or restored. The level of compensation may then vary once the scope of the damage has been quantified.
The cost paid by companies for compensation also varies significantly. The Bothnia Line, a high-speed railway line through the delta region near the Swedish town of Umeå, is one of the largest compensation projects in Europe – one that was expensive, but also highly successful from an ecological perspective.
“The cost for ecological compensation varies from project to project. Some environments are easy to recreate, while others have long ecological delivery times, which makes them more difficult and costly to recreate. The size of the compensation area also factors into the cost.
Following the Land and Environment Court of Appeal’s approval of LKAB’s compensation plan for its operations at the Mertainen mine, the company will be required to compensate for its impact on the nature values identified in Kuosajänkkä, an area located to the north of the mine. The mining operations at Mertainen use approximately 1,220 hectares of land for an industrial area, storehouses and auxiliary operations and impact wetlands, coniferous forests and mixed forests.
The ruling passed by the Umeå District Court in September 2014 states that LKAB has signed an agreement to protect an area equal in size to the impacted area. The company’s compensation plan includes restoration, protection and management measures for forest land and wetlands in an area which, without formal protection, risks being used for forestry purposes. The compensation proposal is based on the idea that the company will help create new nature values, rather than simply protecting a particular area. Among other steps, dead wood will be moved from the exploited area to the compensation area.
The project has applied an international standard developed within the framework of the Business and Biodiversity Offsets Program (BBOP). This standard compiles various methods and basic principles for developers and government authorities with respect to ecological compensation. The BBOP is a collaboration between some 50 organizations, including nature conservation groups, government agencies, consultants, and mining and forestry companies.
The BBOP standard serves as guide and provides a foundation for work in the field of ecological compensation. An enormous amount of work has gone into the program, with various pilot projects implemented around the world over the past ten years. Through the project in Mertainen, the BBOP standard is now being tested for the first time in Swedish conditions, with the support of Vinnova.
“Ecological compensation is here to stay. It is a tool that can be used to achieve a more sustainable approach to land use and reduce the loss of biodiversity. But this tool must be used correctly to ensure it does not become a gateway for exploitation that would not otherwise have occurred. I’m excited to be part of this development,” concludes Josefin Blanck.
The article by Mikael Hedlund was recently published in the Process Nordic Magazine.