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Field testing Peru's new policy on environmental compensation

Madre de Dios MINAM Peru biodiversity offsets conservation economics

Macaws in the Madre de Dios region. Photo credit: Anonymous.

Since 2010, CSF has been collaborating with Peru’s Environmental Ministry (MINAM) in developing an environmental compensation policy to offset biodiversity losses resulting from large infrastructure projects (roads, dams, etc.). Along with other conservation organizations, such as the Sociedad Peruana de Derecho Ambiental (SPDA), Wildlife Conservation Society (WCS) and The Nature Conservancy (TNC), CSF provided technical input to the compensation guidelines that were officially approved in December 2014, during the COP 20 event in Lima.

Madre de Dios MINAM Peru biodiversity offsets conservation economics

Indigenous people travel the Madre de Dios River. Photo credit: Andre Baertschi.

Since the guidelines were approved, CSF’s work has focused on field testing them on different projects to illustrate how compensation plans, a novel concept in Peru, should be done in practice. Four projects in the Peruvian Amazon (a road, an oil concession, a dam and a river navigation project) were selected to show how the guidelines apply to different types of infrastructure development.

Madre de Dios MINAM Peru biodiversity offsets conservation economics

Interoceanic Road. Photo credit: Banco de Desarrollo de América Latina (CAF).

CSF’s case studies evaluate how the existing requirements for Environmental Impact Assessments allow for the application of a mitigation hierarchy, identify unavoidable direct and indirect impacts, select a portfolio of sites where the unavoidable impacts can be compensated, develop a metric to secure equivalency between the impacted sites and the compensation locations, analyze which of those sites can achieve the compensation goals in the most cost-effective way, and design financial mechanisms to ensure that the compensation plan is funded.

Madre de Dios MINAM Peru biodiversity offsets conservation economics

Lote 76 oil concession. Photo credit: Rumbo Minero.

Last March, CSF presented preliminary results of two of the compensation cases in an international workshop co-organized by MINAM, WCS and SPDA and attended by experts from Brazil, Chile, Colombia, Peru and the US. The cases, developed in collaboration with The Biodiversity Consultancy, focused on the so-called "Interoceánica" road and the Lote 76 oil concession, both in the Madre de Dios region in the Peruvian Amazon. Participants highlighted CSF’s thoroughness in developing the compensation cases, its methodological innovations in identifying compensation sites with geospatial analysis tools and introducing cost-effectiveness considerations in selecting compensation sites, and its exploration of the role of environmental compensation in securing protected areas.

Madre de Dios MINAM Peru biodiversity offsets conservation economics

The Las Piedras River. Photo credit: Tristan Thompson.

Next July, CSF will present MINAM with the final results and recommendations for preparing compensation plan guidance manuals, and making biodiversity offsets mandatory for major infrastructure projects in Peru.

This work would not have been possible without the support of the Gordon and Betty Moore Foundation, the John D. and Catherine T. MacArthur Foundation and the US Agency for International Development. Thank you!