Habitat Banking as a potential instrument for European biodiversity policy

The use of Market-based Instruments for Biodiversity Protection – The case of Habitat Banking for the European Commission Directorate-General Environment, January 2009 – February 2010. Habitat banking is similar to carbon trading whereby units of biodiversity credits are created and sold to compensate units of damage to biodiversity. The difference to carbon trading is that while for carbon, the unit of trade is uniform (a tonne of carbon), for biodiversity this unit is location, habitat, species and damage specific. The aim of this study was to examine the potential use of habitat banking in the EU in implementing the Habitats, Wild Birds and Environmental Liability Directives and national planning regulations. It investigated whether a viable habitat banking system can be managed so that it benefits biodiversity protection and whether such a system can be expanded EU-wide. The study compared habitat banking with other market based instruments as a means of delivering biodiversity protection, designed a prototype banking system that could maximise the benefits and address the potential risks.  The study reports are available on the European Commission website.