In some environmental offset schemes, the “currency” used to measure impacts and benefits is vegetation or habitat. In these cases, it is important to account for the quality of that vegetation or habitat at the impact site and the gain in quality at the offset project.

Here is a typical scenario. A developer plans to clear 2 hectares of native vegetation to make way for a new business venture. They propose to offset this impact with a project at a nearby site that involves removal of environmental weeds and some replanting of vegetation that is native to the area. The vegetation at the offset site is partly degraded but is in moderate condition. How large would the offset site have to be to fully compensate for the losses at the impact site?

I’m aware of one Australian offset scheme where the requirement is one hectare of offset project for each one hectare of impact. That’s obviously wrong. That’s trading a complete loss of vegetation on one hectare for a partial improvement in vegetation on another hectare.

In another Australian scheme, there is an assumed fixed ratio between impact area and offset area. That’s not ideal either, as the appropriate ratio varies substantially from case to case, depending on (a) the quality of the vegetation that is lost at the impact site, (b) the likely improvement in vegetation condition at the offset site, and (c) how long it takes to generate the benefits at the offset site. Using a fixed ratio means, for example, that developers don’t have an incentive to avoid clearing the highest-quality sites. There is also the question of whether the fixed ratio is even right on average.

Evaluating what the ratio should actually be requires an ability to evaluate and score vegetation condition for three situations:

1. The impact site
2. The offset site, if the offset project is not implemented
3. The offset site, if the offset project is implemented

Some people don’t like the idea of getting quantitative about this sort of thing, but it is an unavoidable requirement if the impacts from development are going to be adequately offset.

There are some offset schemes that do this. For example, the Australian Government’s Offset Assessment Guide, and the Western Australian Government’s Part V offset scheme both require that vegetation quality be scored quantitatively for the above three situations, and they use these scores to calculate the required impact: offset area ratio. The scoring system comes with guidance but remains somewhat subjective.

The Significant Environmental Benefits scheme in South Australia goes further and sets a condition score based on a detailed template that must be completed after an on-ground assessment of the impact site. They use the same scoring system for offset sites, but with a standard set of inputs. Other schemes around the world have also used condition metrics of various types (Borges-Matos et al. 2023). Choosing the best metric to use in a particular scheme needs careful consideration.

Once you have the three required scores, calculating the impact: offset area ratio is a simple matter. For example, suppose we are using a scoring system that has a range from zero to 100. For a particular impact site, the score is 50 and for a particular offset site the score is 60 without the project and 65 with the project. This means that the ratio should be 50/(65 – 60) = 10 ha of offset for each ha of impact. Of course, other adjustments are required (e.g. for time delay), but this is a good starting point.

Further reading

Borges-Matos, C., Maron, M. and Metzger, J.P. (2023). A review of condition metrics used in biodiversity offsetting, Environmental Management 72, 727-740.