Nature finance: we need (some) offsets

Joseph W Bull

Nature offsets – mechanisms that allow for negative environmental impacts (e.g. biodiversity loss, greenhouse gas emissions) to be fully compensated for and neutralized – are extremely widespread, but have become increasingly controversial, to the extent they are now starting to be precluded from new environmental policy developments. In turn, leaders are becoming more reticent about their strategic use to support sustainability goals. I discuss here why it is paramount that this trend is reversed. Firstly, major international agreements like the Global Biodiversity Framework necessitate offsetting – conceptually, and explicitly – which seems to be glossed over by detractors. Second, offsetting is both (a) a substantial source of funding for nature and (b) a strong incentive to reduce negative impacts, internalizing environmental externalities; so, without offsetting, there would be a considerable hole in nature finance. Thirdly, without robust nature offsets, and in the absence of something equivalent, we risk regressing to a time when environmental impacts and corresponding compensation were not quantified, and thus almost certainly fell short. In sum – though their use should be limited – we need at least some offsets. Leaders must resist calls to exclude them entirely from environmental policy.