• A critical look at footprint compensation

    a deep-dive into offsetting

A critical look at footprint compensation

How do we manage environmental harm? All parts of society have an environmental impact, be it on our climate or biodiversity. Footprint compensation is one of the main policy tools used to mitigate this harm but it is also at the core of a heated debate. Let’s look into it!

Author: Chloé ten Brink

What is footprint compensation, and how is it different for climate and biodiversity?

The first step in addressing the issue of environmental harm is figuring out how to measure it. The concept of footprints was developed by scholars Wackernagel and Rees in the 1990s to do just that. Footprint, particularly the carbon footprint, is a term we hear very often and has become incredibly popular in the media as it provides a quantifiable understanding of ecological harm.

The ecological footprint measures the use of land and other environmental resources needed for a given action, and therefore its impact.

Within the wider ‘footprint family’, you have more specific calculations such as the climate (or carbon) footprint and biodiversity footprint. The carbon footprint is measured in metric tonnes of C02 and the biodiversity footprint is measured in global hectares, relative to the pressure exerted on land and ecosystems (although there is more than one way to measure this, given how many factors are involved in biodiversity harm).

Once we’ve measured our problem, one would hope we would want to do something about it – to compensate for the damage we have done. That’s where offsetting comes in!

This definition from the Institute for European Environmental Policy (IEEP) is useful: offsetting is the “measures taken to compensate for any residual significant, adverse impacts that cannot be avoided, minimised and/or rehabilitated or restored, in order to achieve no net loss or a net gain of biodiversity.” These measures typically include paying for various projects which reduce the harm done: to offset a carbon footprint, carbon sequestration projects are usually funded (such as the typical tree-planting!), whereas to offset a biodiversity loss, restoration and conservation projects are funded.

This whole approach to minimising harm is an application of the “polluter pays” principle – those who made the mess should be the ones to clean it up.

A little history – the evolution of the notion of footprints and compensation

While these concepts are fairly widely discussed and used nowadays, they are the product of a lot of policy deliberation. The second half of the 20th century, especially in the US, favoured market mechanisms rather than command-and-control policies to deal with environmental issues. Policies such as offsetting utilise these market mechanisms: you pay for your actions.

In this political climate, George Bush Senior, during his political campaign, attempted to promote the idea that economics and environmental issues could work together and use the same type of thinking. In the specific context of protecting wetlands, he promoted the term No Net Loss: the idea that “damages resulting from human activities need to be balanced by at least equivalent gains.” It brought together the idea that economic development, when paired with a compensation project or payment, would see no overall detriment to our environment.

One of the first applications of this principle occurred in 1988 when Applied Energy Services built a coal-fired power plant in Connecticut that would produce 14.1 million tons of carbon over the project’s 40-year lifespan. Through consulting with the World Resources Institute, they funded a forestry project in Guatemala. This was well-received at the time and opened the door to the idea of offsetting in practice.

This notion of offsetting and trading your negative actions for an alternative positive action has grown and spawned other ideas such as carbon credits and emissions trading. In 1995, the Kyoto Protocol brought about the notion of international emissions trading – a system which allows countries that have emissions units to “spare” (or rather emissions that they are permitted to but have not used) can be sold to countries that are over their targets. Also known as credits, it’s an application of the idea of bargaining and compensation. The world’s first international emissions trading system occurred in 2005 with the EU Emissions Trading Scheme.

Comparing footprint compensation limitations for Climate vs. Biodiversity

Now that we have a little background on the definitions and history behind the idea of footprint offsetting we can look at them a little more critically:

Climate compensation, the carbon footprint & limitations

Carbon compensation is an extremely debated topic and it is often chalked up to a form of greenwashing. First of all, simply the means of measuring climate harm through the carbon footprint has a tricky history. A term developed by scientists but popularised infamously by British Petroleum in a very successful campaign which essentially placed the responsibility for carbon emissions on the consumer rather than the producer (them).

The carbon footprint asks difficult questions about responsibility but so does the idea of offsetting, which has often been called a method to “burn now, pay later”. It is a policy approach which doesn’t compel actors to reduce how much carbon dioxide they emit by giving them an “easy way out”.

Nonetheless, this is now a huge market. There is a mandatory carbon market through policies such as the European Emissions Trading System and a voluntary one, in which companies and individuals choose to buy carbon offsets. Both of these markets together were valued at over 262 Billion US Dollars in 2021.

And yet – despite this market seeming very big – it’s not quite sufficient.

We emit more carbon than can be compensated. Only about 0.8-1% of annual CO2 emissions are offset. And even if we utilised all the projects that are currently available as carbon offsetting techniques, only about 1.6-1.75% of carbon emissions would be offset.

It will never be enough to reach carbon neutrality globally – and often the projects used to “offset” carbon don’t even directly aim at carbon sequestration but generally fund environmental projects.

Biodiversity footprint compensation & limitations

Biodiversity offsetting has its own set of specific limitations and issues. Firstly measuring biodiversity harm is difficult and there are different forms of damage: destroying or polluting a habitat, or harming a given species etc. And in some cases, the damage is too great – for example, the disappearance of an endangered species.

Moreover, damage to one habitat or ecosystem can’t be compensated by improvement to another ecosystem – it’s sort of like apologising for your child’s broken bone by curing their siblings’ flu. It does overall good for your family but it doesn’t fix the original issue.

So how can we go beyond just seeing their limitations?

The Mitigation Hierarchy

A useful tool for thinking about offsetting’s role in environmental mitigation is the mitigation hierarchy which allows us to view offsets as a “last resort”. It allows us to think about managing environmental harm in various steps:

  • First step: avoidance

    In planning a project or action, first start by seeing how you can avoid creating negative impacts.

  • Second step: minimise and reduce

    How can you reduce the intensity, scope, duration (and more) of the impacts of your action?

  • Third step: rehabilitation

    In the case of biodiversity harm, the next step is rehabilitation: try to rehabilitate ecosystems and habitats that were degraded by your actions.

  • Fourth step: offset

    Use offset or compensation measures, off-site to try to reduce the residual impact of your project.

Mitigation hierachy-graph

Source: The Biodiversity Consultancy

It is also worth saying that projects considered as an offset can’t be developed in isolation – these projects require collaboration & local knowledge to be effective. Moreover, they should utilise the value of additionality: the offsets must deliver environmental gains beyond those that would be achieved by ongoing or planned activities that are not part of the offset. And that of permanence – they must persist for at least as long as the adverse biodiversity/climate impacts from the original project.

Finally, “like-for-like” or equivalence needs to be taken into consideration: for biodiversity offsetting, projects should de facto protect or help the same species/habitat or ecosystem that was harmed.

Discussing “Acceptable”  Implications/Applications of the footprint…There are clearly many constraints and it has to be done very carefully to be done well.

But one of the key arguments for it being an “acceptable” practice rather than simply greenwashing and giving the green light for companies to produce or destroy more is that it still provides some good, rather than all bad.

There are tertiary effects to offsetting. This quote from Toby Janson-Smith from Conservation International is pretty eye-opening: “Through forest offsets, we can sustain the poor, prevent species loss, and slow climate change all at the same time. We’re losing fifty thousand square miles of tropical forest every year. Carbon financing is one of the only ways we can turn the tide on deforestation; there simply isn’t funding to do it otherwise.“His example is linked to forest offsets but he shows how these programmes can help provide tertiary effects: promoting project and community development and highlighting the need for financing biodiversity/carbon sequestration projects. The money to finance these projects, especially conservation projects, is hard to come by and this mechanism allows for some financing flow.

So, what now?

Overall, offsetting policies are a balancing act & one that keeps us at our current rate: we are simply trying to make sure things don’t get worse. It doesn’t actually make the global situation better. What that does mean is that we stay on the same trajectory, which so far is going downhill – emissions keep rising and our species’ precarity keeps increasing. We need to go above and beyond just counterbalancing harm.

Going forward with this policy method, we need to make sure to see offsets as a last resort within the mitigation hierarchy – we must avoid perpetuating displacement behaviour, where we simply shift the problem and the responsibility rather than addressing the original cause of the damage.

It is simply one tool of many for understanding and mitigating environmental harm.

Overall, the debate remains – we can see offsets as “better than nothing” or “greenwashing”, and to be honest, I would position myself on the side of “better than nothing”.

Want to learn more? Here are some places to start:

  • Footprint versus Biocapacity at the national level: open data

Critical perspectives (more positive): The Nature Conservancy’s Why we can’t afford to dismiss offsets