Economics of biodiversity

Both in the United States and in the European Union, several directives directives (such as the EU's Environmental Liability Directive (Annex II), EU's Habitats Directive, EU's Wild Birds Directive, EU's Environmental Impact Assessment Directive) were enacted to help to provide for ecological compensation, when natural resources are damaged. Currently, the EU is putting an emphasis on resource equivalency methods. However, quantifying the environmental damage, to prepare for the remediation is not an easy exercise.

On June, 5, 2009, Scott Cole from EnviroEconomics Sweden did a presentation at a NICOLE (Network for Industrially Contaminated Land in Europe) meeting to explain the principles of REMEDE.

REMEDE stands for Resource Equivalency Methods for Assessing Environmental Damage in the EU ; it is a EU project that took place between 2006 and 2008. It developed a toolkit to study the right quantity of ecological compensation after a damage to an environmental resource or service. The metric of the compensation, not the compensation in itself, can be a monetary unit, or an ecologic currency, such as a resource metric.

The toolkit aims at provided the methodological background to determine the right measure of the compensation. The first remediation, on the site of the damage, is only a reparation, and the damage maker still have to compensate (complementary) for the interim losses by creating 'credits'. Because they do no necessarily occur at the same time than the damages, all measures have to be discounted.

The REMEDE toolkit is composed of five steps. After step 1 where is made the initial evaluation, the step 2, aka "quantifying debits" (or environmental damage) determines the scenario baseline, in the case the damage did not occur, as well as the ecologic metrics to quantify losses. Once done, the step 3, aka "quantify credits" (remediation gains) helps to choose among the possible remediation projects, and determines the discounted gain units. Step 2 and step 3 calculate respectively the discounted debit and credit, in "discounted hectare-year", and step 4, aka "Scaling remediation & remediation costs" determines the scale of the remediation, by dividing the total debit by the per unit credit, which directly leads to the right size of the compensation project. Finally, step 5:, aka "Monitoring & reporting", helps to determine the right monitoring of the project to ensure its legitimacy.

This approach seems interesting to me, first because the remediation goes past the primary reparation, and aims at compensating for the accumulated "debit interests", and makes sure that the no net loss objective is achieved.

For further reading: http://www.envliability.eu