Biodiversity: Europe is the center for policy innovation

America's Endangered Species Act of 1973 was exceptional in its day and for decades to follow. A first, national law that attempted to create comprehensive regulation of impacts from both public and private action that harmed endangered animals and plants. However, the law and its implementation have been relatively stagnant for many, many years. And now, with recent action in the European Union directing new levels of protection and restoration for all biodiversity, and with the UK's new policies that set net gain goals for all public and private sector impacts, the center of gravity on creative - and likely effective - wildlife protection and restoration policies - has really shifted across the Atlantic.

Through a series of blog posts, I'll review three facets of rapidly evolving European biodiversity policy and practice that are well ahead of US efforts:

1. The United Kingdom's exceptional effort under the Natural Environment and Rural Communities Act of 2006 and 2021 Environmental Act to create both incentives and regulatory obligation to avoid impacts to all important biodiversity and what could be a global model for how to use biodiversity restoration work to offset impacts that can't feasibly be avoided. This is critical in any country that has either or both a growing desire for improvement in peoples' quality of life and a need to finance greater investment in biodiversity conservation.
2. Ireland's leadership among all European Union nations in building pay-for-success approaches into its agricultural conservation subsidies. Most EU nations have piloted programs to give farmers more freedom in how they achieve environmental outcomes (and get paid for it). This summer announced a $1.5 billion program for one-third of all farmers to be paid for measurable climate, biodiversity, and water quality improvements.
3. Rapidly expanding ESG-focused corporate efforts to avoid or offset scope 1 and some scope 2 and 3 biodiversity impacts. This work is going on across Europe (and the US). This post looks at efforts by business in Sweden to voluntarily benefit biodiversity and offset impacts to it by minimizing and the offsetting their impacts.

These are just a small part of the expanding landscape of biodiversity policies spreading across the European Union. Some are centered around regulatory approaches requiring that all projects backed by public spending meet ‘no net los s’ or ‘net gain’ biodiversity goals. However, some policies (like the United Kingdom's) regulate private actions that would otherwise create a public cost. ?As is the case with U.S. ‘no net loss’ of wetlands regulation, the scope of EU biodiversity protection and offsetting closely resembles that of Scope 1 emissions under carbon reduction and offset programs.?New EU policies might still expand mandates further by adding ambitious restoration goals .

The U.S. context

In the U.S., there is no broad regulation limited biodiversity impacts at the state or federal level. However, there is law, regulation, and policy that prescribes avoidance and offsetting requirements for approximately 1,600 federally-protected endangered and threatened species of wildlife and plants as well as restrictive laws in a handful of states that protect additional imperiled species.?

U.S. policies requiring avoidance, minimization, and offsets for endangered species impacts lack the clear, quantitative and objective goal (e.g., no net loss or net benefit), but they do mandate a robust set of procedures and impose federal agency’s subjective requirements on projects.?This has supported the development of a modest set of third-party ‘conservation banks’ providing beneficial offsets for specific species.?There are about 150 conservation banks in existence today, primarily in California, Texas and Florida. These exist alongside in lieu fee and government-run mitigation programs that primarily result in on-site avoidance and minimization measures but also significant amounts of financial transfer from developers to local government or nonprofits for one-off land protection projects. Overall, the federal policies are designed and implemented to achieve a net loss in species population or range, but increase the proportion of area that is fully protected. Many of these policies are in flux, with hoped for new guidance and regulations available from the U.S. Fish and Wildlife Service in the near future. ??

In contrast, U.S. Clean Water Act policies (particularly under section 404 of the law) include a clear, quantitative and objective goal for how much compensatory is needed when water resources of the U.S. are impacted by development. An extensive set of procedures and standards address diverse scenarios through which mitigation goals can be met on a project by project basis across the country for different kinds of water resources.?This has resulted in a program that achieves the nation’s goal of no net loss of wetlands compared to the actions that are permitted, accurately prices the full costs of avoiding damage to wetlands or replacing them, and delivers these results in an efficient way that often meets time constraints under which developers and investors operate.?

Risks for Europe

It is not a given that European policy changes to embrace net zero or net gain outcomes - even though they parallel U.S. policy changes that led to private investment and efficient offset transactions - will lead to similar private investment and activity.?Just as regional state agencies and federal regulators blocked the development of a private wetland offset market in New England states under section 404 of the Clean Water Act, Germany has also implemented a system to avoid and offset harm to biodiversity by mandating transfers of funds to local government agencies beginning in the 1970s . That system has evolved to primarily use an in lieu fee approach where local government collects development fees that supposedly offset development impacts and spent them on existing public lands to pay for management that arguably government agencies should already have been obligated to carry out.

Some of the same pattern is emerging under 'nutrient neutrality ' policy in the UK, where the national government is now proposing to subsidize development of government-run offset supplies in order to address the deficit of nutrient credits needed to offset housing development, instead of providing equivalent opportunity for subsidy to private efforts to generate the same supply. Many in lieu fee and similar approaches in the U.S , Germany , and under pilots for biodiversity offsetting in the UK failed to either fully offset losses, do so without additional public expense, or adequately endow long-term management needs, its unlikely that a shift to public biodiversity banks from private ones will avoid similar poor ecological and taxpayer outcomes.

Putting U.S. and European approaches together

A major opportunity across the European Union, United Kingdom, and United States is to find ways to marry the mitigation goals frameworks of European nations with the regulatory and policy structures in the U.S. that can incentivize investment in large supplies of high quality offsets to produce more effective and efficient system of species and biodiversity offsetting in both regions. In particular, the U.S. regulations for wetland and stream credits offer solutions to criticisms about additionality and durability that plague carbon markets (and biodiversity markets).

However, the primarily goal of these posts is simply to share some of the exciting developments in Europe - and differences in terminology and priorities - because the lack of even a basic transatlantic dialogue on biodiversity policy and mitigation gets in the way of lot of exceptional learning that could help us all do better.