Environmental offsets have been utilised worldwide for over 40 years. Defined by the EPA (2011) as “an offsite action or actions to address significant residual environmental impacts of a development or activity,” these initiatives typically cover issues such as biodiversity loss and greenhouse gas emissions.
There are an array of policies, guidelines and metrics available that frame the consideration of offsets at both the State and Federal level. At Talis, we leverage these frameworks to quantify and evaluate offsets for various approvals.
Effectiveness of Offsets: A Critical Perspective
Whilst acceptability of the use of offsets to counterbalance significant residual impacts forms part of the current approvals processes and are widely used, their effectiveness is questionable.
“Review of the Western Australian environmental offsets framework” (2019) states that “implementation of the framework has not fully counterbalanced the significant residual impacts of approvals.” Similarly, an extensive study by Guardian Australia in relation to NSW’s offsets framework was critical of “offsets that had been promised and not delivered, as well as…offsets in areas that already had some form of protection and restoration activity.”
Earlier this year, the Federal Government released an audit report on environmental offsets, revealing 1 in 7 were non-compliant or potentially non-compliant with their approval conditions and a further one in four had not, or potentially had not, secured the necessary offsets. This is alarming given recent inclusions to the Federal list of Matters of National Environmental Significance, now numbered at 2,224.
Polly Hemming notes the inherent contradiction in treating nature as a low-risk, tradeable commodity (Dec 2022 – The Saturday Paper). In our view, this underscores the problem of offsets.
Proponents want approval and may opt for low-cost solutions that align with statutory requirements. However, these solutions might not always achieve the intended goal of counterbalancing environmental impacts. Whilst legally acceptable, they may not achieve the desired environmental outcomes.
Challenges and Ethical Considerations
Ethically, several questions remain to be answered in relation to improving the offsets framework, including:
Potential ineffectiveness to mitigate loss and provide a net gain;
- Temporal and spatial discrepancies between impact and offset;
- Mismatches between social and ethical values lost locally and those used as offsets;
- Implementation and monitoring difficulties leading to poor delivery outcomes;
- Perception issues regarding ‘buying’ an approval; and
- Inability of offsets to counterbalance intrinsically lost values.
In this ESG world, such a one-dimensional approach is unlikely to remain palatable.
Offsets do not create acceptability for a project’s impacts but should create a net environmental benefit. Talis suggests that offsets still have a role in the approvals framework, but their application and benefits need careful consideration.
Where used with impunity, offsets could undermine a company’s Social Licence to Operate, damage its reputation, and lead to further environmental degradation.
Assuming nothing changes for the better, Talis suggests the acceptability of offsets may diminish, forcing proponents to demonstrate the acceptability of their proposals without relying on offsets.
What is clear is that all parties involved in the approvals process – proponent, consultant and regulator, must ensure the process remains appropriate and accountability maintained.
Shaping Environmental Futures: The Consultant’s Role in Offsets
As environmental consultants, our role straddles the divide between environmental protection and project approval. We work with our clients to develop projects that can be approved, potentially incorporating an offsets package.
From a consultancy perspective, we have an obvious role to play in minimising the quantum of this package and ensuring it is easily attained and manageable. There can be a mindset of “what would be the least that the regulators would sign off on?”. The other side of the coin is that, as environmentalists (which I’m assuming, most of us are), we should strive to improve and provide the best environmental outcome possible. It’s not always a comfortable internal monologue to have and a satisfactory resolution often relies on clients with similar ethical values.
In consideration of these values, a more deliberate and enforceable framework surrounding offsets should be enacted if we are to continue to use them. This could incorporate:
- More stringent offset criteria;
- Aligning geographic and temporal expectations around impact and offset sites;
- Consideration of adaptive management practices; and
- Better enforcement with an increased quantum of penalties (not just financial).
It seems clear that the current approach to offset development, management and regulation is not working, or at least not passing the ‘pub-test’. Proponents and consultants alike face an ethical dilemma in ensuring what we propose and deliver provides an acceptable ‘net gain’ for an environment that will otherwise gradually demand greater compensation for its destruction.
Learning from International Practices
Perhaps we should be looking to align with England’s new environmental policy, biodiversity net gain, that requires all new road and housebuilding projects to provide a net environmental benefit – specifically, at least a 10% net gain in biodiversity or habitat. Whilst similar problems may arise in terms of monitoring and enforcement of such an initiative, there is no criteria set to trigger such a requirement. Ambitious as it sounds, an approvals process that results in a net gain for the environment seems reasonable.
