Long-term financing of the mitigation measures

7. Long-term financing of the mitigation measures

Sustainable and sufficient financing for the implementation of all the mitigation measures resulting from business operations in KBAs throughout the project life cycle is secured from the outset of the operations.

 

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All the activities associated with the implementation of the mitigation hierarchy will bear some form of cost, although the cost of mitigation actions may in some cases be set against benefits from reduction of risks to operations and reputation. In the case of avoidance, this may take the form of lost revenue through the abandonment of some part of a resource, or alternatively the added costs associated with the redesign of project infrastructure to avoid sensitive biodiversity features. Minimisation and restoration costs are generally absorbed into project operating budgets. Possibly the biggest cost and financial security issue occurs with the implementation of offset activities. Offset conservation measures are only likely to be successful if they have adequate funding throughout the life of the offset project. It is sometimes the case that one company undertakes an activity which has impacts and then sells on a concession to another company. It is important that in this transfer that the plans and costs of any aspects of the mitigation hierarchy are also passed on, and costed as part of the concession transfer (see Guideline 7. Responsibilities in case of divestment).

There is no one-size-fits-all solution to the financing of company-led management programmes based on the mitigation hierarchy. Financing strategies can be based upon what is most applicable to the mitigation activities that require funding and the financial and business management systems of the company. The conservation trust model used by many NGOs to provide conservation programmes with long-term funding is a useful model, but may be difficult to implement in a company scenario, due to a number of financial barriers, such as heavy discounting of long-term costs and benefits, shareholder resistance to large capital expenditures, and strong downward pressure on operating costs.

Long-term financing strategies require several elements to be successful, including:

  • the development of a strong and up-to-date business case on why conservation funding needs to be a priority for operation spending;
  • collaboration and diversification of organisations involved in the delivery of biodiversity offsets; and
  • early planning for the company’s post-closure management and funding of biodiversity offsets and other conservation activities.

Wherever possible, companies and their stakeholders may explore and experiment with market-driven solutions for offset programmes.

References and Resources

Barnard, F., Davies, G., McLuckie M., Victurine R. (2017). White paper: Options and Financial Mechanisms for the Financing of Biodiversity Offsets, WCS