An environmental offset is a positive action to compensate for the negative environmental impacts associated with development. Offsets work on the principles of ‘no net loss’ or a ‘net gain’ of protected environmental values. For example, clearing native vegetation for a development can be offset by protecting another area of vegetation that is ecologically equivalent to the cleared area.
Offsets are most commonly used to meet part of the environmental regulatory requirements imposed on new developments. Environmental offsets may enable a development to proceed on a preferred site where, given regulatory requirements, the development would not proceed in the absence of the offset.
Offsets are quantity-based market-based instruments (MBIs) and have been applied to a number of environmental problems including greenhouse gas emissions, waste management, emissions to water and air, vegetation management and other management issues such as loss of habitat and biodiversity.
There are a number of potential benefits of using offsets for natural resource management (NRM).
- The community benefits because development assessments better reflect true benefits and costs. Offsets provide a way of internalising the environmental costs of a development. Often these costs are not adequately incorporated into the assessments of developments.
- The wider community also benefits as environmental values are protected, or enhanced, while development still proceeds. Offsets can, in some instances, provide superior environmental benefits. For example, vegetation offset sites adjacent to other parcels of land with high environmental values can provide corridor effects or create contiguous sites that meet critical size viability thresholds.
- Developers benefit from being able to use lower cost, or higher value, development options while still meeting environmental regulatory requirements. For example, a roads authority may be able to develop the most cost-effective route by offsetting the negative impacts of the project, such as clearing remnant native vegetation, by protecting and enhancing an area of vegetation of equal value somewhere else.
However, there are also costs involved with using offsets.
- There are costs associated securing an offset site. These costs could include site acquisition, covenants or other formal arrangement to secure enduring protection of the offset site. These costs are borne by the developer.
- There are costs related to the ongoing enhancement and management of the offset site, such as revegetation, stream bank stabilisation or weed management. These costs are directly, or indirectly, borne by the developer.
- Assessing, selecting and securing offsets also involves transaction costs. These costs are typically borne by the developer and the assessment agency or regulator.
The cost of an offset depends on the individual characteristics of both the proposed development and the proposed offset sites. |