Environmental Offsets

Environmental offsets are actions taken to create environmental benefits to compensate for unavoidable damage at development sites. NAILSMA is working with The Nature Conservancy and the Northern Land Council to examine ways in which offsets can be better used in the Territory. The aims are to create benefits for Aboriginal landowners by better protecting Aboriginal lands from development impacts through high quality offsets and to foster enterprise opportunities in providing offsets.

The Northern Territory Government has indicated that it intends to re-introduce offsets as part of a comprehensive reform of environmental assessment law.

What are offsets?

Offsets are actions taken by developers to ensure that their activities cause no net loss of environmental quality. They compensate for unavoidable damage at a development site by delivering equivalent or larger environmental benefits in another place. This can be done directly by protecting or rehabilitating an area similar to that affected by development, or improving the condition of somewhat different but important environmental assets. Indirect offsets can come in other forms like increasing capacity of the community to look after environments, including research needed to inform better management. Offsets are a key component of the mitigation hierarchy, designed to achieve no net loss or, preferably, a net environmental gain from development (Figure 1). 

Image 1

Box 1: Management of offset quality and security

Figure 3 below illustrates the decision space defined by social benefits (the horizontal axis) and biophysical environmental benefits (the vertical axis). Offsets that cause social detriment (position 1) like displacing people from lands they would otherwise use for customary purposes, are clearly unacceptable. Offsets with biophysical benefits that fall below the level of residual damage from the development (e.g. position 2) are also unacceptable, irrespective of social benefit. Offsets with a mix of positive biophysical and social benefits (e.g. positions 4-6 in in the yellow or green sectors) may be acceptable, but suitability varies markedly with context. 

Image 2

For example, a like-for-like offset slightly larger than the impacted site (3) might be set up on land over which local people have non-exclusive native title interests but without the provider or buyer seeking much local community support or involvement. Substantial risk of failing to meet biophysical standards - because margins for error in estimates of residual damage and offset compensation are small - is exacerbated by uncertainties about local support. Increasing biophysical benefits by increasing the area of offset substantially (i.e. moving towards 4) reduces biophysical risk but security will still be compromised by weak local and related institutional support. Better social fit (5) may remove risk of weak support or even opposition, but will not redress biophysical uncertainty.

Risk and ultimately the quality of offsets is best managed by designing explicitly for good social and institutional fit for offsets that also manage biophysical risk effectively. Premium offsets, of both high biophysical and social/institutional integrity (towards position 6), should be sought in all cases, within costs congruent with the nature and level of residual detriment determined during the environmental assessment process.

The above information are excerpts from:

Restoring environmental standards in the Northern Territory through offsets. A  discussion paper - DRAFT, October 2017

Prepared for the North Australian Indigenous Land and Sea Management Alliance Ltd and The Nature Conservancy

Working Paper 02/2017 Development by Design

(References in the text above are found in the full paper below)