Can carbon and biodiversity outcomes be delivered from the same project?

The recent UK Environmental Law Association (UKELA) annual conference included a session on the parallels and contrasts between carbon offsetting and biodiversity net gain. The session was provocatively entitled “Can we get a litre from a pint pot?”.

Notwithstanding the thinly veiled reference to the post-Brexit loss of recourse to the European Court of Justice, the final arbiter of environmental laws and protections, the question really alluded to the idea that carbon and biodiversity outcomes might be co-delivered from the same project. This would either be more lucrative for landowners or better value for money for investors, depending on the dominant market force.

Queue a plethora of technical terms: additionality, permanence, stacking, stapling and layering to name a few. But one above all highlights the difference between carbon offsetting and biodiversity offsetting, fungibility. This is the idea that a given quantity of a traded commodity is the same wherever it occurs or is sourced from.

A tonne of wheat is a tonne of wheat anywhere in the [metric-speaking] world, even if the quality might vary. Similarly, it is generally taken that the global warming impact of a tonne of carbon dioxide emitted to the atmosphere can be balanced by a tonne drawn down elsewhere, no matter where that might be. But does the logic apply to biodiversity? How many red squirrels is a pine marten worth?

In reality, things aren’t entirely straightforward even with carbon. For a start, all greenhouse gases (GHGs) are converted into carbon dioxide equivalence, the universal currency of climate change. Different GHGs have different atmospheric residence times and different global warming potencies, even different behaviours according to where in the atmosphere they are emitted. At the end of the day, though, they are chemical molecules reacting with other chemical molecules in fairly predictable ways.

Chemistry brings order, biology thrives on chaos.
Unpredictability, uncertainty and the differences between otherwise similar individuals are the stuff of selection, the driver of evolution. Whereas two carbon dioxide molecules are exactly alike, two red squirrels aren’t. Furthermore, where those squirrels are has an influence on their environmental impact. Nature, in other words, has a strong locational component.

“An economist knows the price of everything and the value of nothing”, as the old misquoted adage goes. This suggests that it is possible to value something without having to put a price on it. It’s perhaps the fundamental difference between biodiversity as a co-benefit in a carbon project and a market for biodiversity credits. When carbon comes with benefits for wildlife we might attribute greater value to that project than one that focuses purely on carbon impact (or worse, if it has negative wildlife outcomes).

Natural England’s Biodiversity Metric attempts to achieve the impossible, to collapse the infinite variety of nature into single-dimensional biodiversity units, numbers. The logic is that development loss of a single unit can be compensated by the creation of another unit somewhere else, somewhere more convenient. To make sure of the equation, more new units must be created than are lost, hence biodiversity net gain. A market is born, allowing developers to develop, freed from the shackles of the old fashioned, restrictive planning system.

Alongside this double entry book-keeping system for nature, there is another invisible hand at play. Landowners, as rational players in this new market, will seek to maximise their returns and minimise their losses. Factors to consider include the type of habitat to create and the length of tenure over which rights to its biodiversity units will be extended.

Landowners, by virtue of owning land, tend not to like giving it or any of its properties away. When they do it’s usually in exchange for something like money, and for the shortest time possible. If land is committed to one thing it cannot be switched for something else better that might come along later: decisions tend to be short term. This is a truth that has plagued agricultural subsidy systems and over the years has led to butter mountains, wine lakes and unharvestable forestry, as the short term money is chased. Genuine long term environmental gains since the introduction of subsidies are hard to pinpoint but that doesn’t seem to knock the economists’ enthusiasm.

A likely outcome of Biodiversity Net Gain (BNG) is that the most cost effective donor solutions will be created, that is, those that produce the maximum number of biodiversity units for the least amount of money spent or land used, and where the opportunity costs of that land are lowest. Grasslands are likely to be favoured, given they incur little initial establishment or ongoing management costs and provide habitat for lots of species. They are also eminently reversible.

For all the challenges to the credibility of carbon offsetting, it only needs to be happening over a relatively short time period. We need to decarbonize fast and ultimately develop technical solutions to the problem of greenhouse gas overloading. But we need nature for ever: how we mitigate the negative impacts of increasingly abundant human demands has to be in a way that accommodates wildlife permanently. We must make space for nature.

Can we get a litre out of a pint pot? Probably not. If only we had a litre glass.