Most countries in Latin America have existing Environmental Impact Assessment (EIA) laws that address impact mitigation and many also feature examples of voluntary compensation programs. A majority of the programs tend towards government compensation rather than a market-based system for offsetting impacts to biodiversity. EIA laws requiring mitigation/compensation measures (though not necessarily true offsets) are in place in Argentina, Belize, Uruguay, and Panama. Argentina and Costa Rica also maintain national-level compensation funds to channel compensation fees; similar funds exist in Peru at the provincial level.
Only a few countries are actively developing offset programs, but existing programs provide a foundation for market-like mechanisms (for example, in Colombia).
Home to such biologically diverse areas as the Amazon, Cerrado, and Atlantic Forest, Brazil is a party to the Convention on Biological Diversity and has a long history of enacting legislation for maintaining biodiversity. The basis for Brazil’s environmental policy is the National Environmental Policy Act (Lei da Política Nacional do Meio Ambiente, LPNMA) and the National Biodiversity Policy; the latter applies specifically to environmental compensation, and the ‘no net loss’ principle is relevant. In Brazil, mitigation usually takes the form of indirect compensation through taxation. Brazil’s laws present two types of offset-like mechanisms to help compensate for negative environmental impacts, relating to: (1) projects complying with the Forest Code, and (2) industrial development.
The Brazilian Forestry Code (Codigo Florestal, enacted 1965) stipulates that landowners must keep a certain percentage of natural vegetation on their land, depending on the region. In areas where deforestation and vegetation clearance will exceed the legal quota, compliance with the law can still be met in part through off-site conservation. Landowners that are unable to meet the minimum requirement of native vegetation on their own land can compensate another landowner (theoretically within the same watershed) to retain more than the minimum percentage of native vegetation cover.
Industrial impact compensation, also known as developer’s offsets, is mandated by the National Protected Areas System Law (9985/00), which originally required that a maximum of 0.5% of the capital costs of the development go to the Protected Areas System (Sistema Nacional de Unidades de Conservação, SNUC) through the Environmental Compensation Fund (Fundo de Compensação Ambiental, FCA).
Colombia’s national environmental legislation, Decreto 1753, calls for environmental licensing and sets the stage for environmental compensation at the national level. To obtain an environmental license from the Ministry of Environment or local environmental authority (Corporaciones), any new development project must offset their impacts based on a simple calculation of trees per hectare that the project will affect in that particular ecosystem. The developer is then required to compensate via reforestation close to the project site or pay into a reforestation fund.
Regulations passed in 2013 require offsetting for residual impacts from development projects. The new policy places strong emphasis on no net loss and eocological equivalence and establishes standard offset ratios.
Paraguay has a few different ways in which companies or other organizations can compensate for negative impacts to biodiversity. The Paraguayan Constitution states that “Any damage to the environment will entail the obligation to restore and pay for damages,” but currently this mandate is mainly enforced by criminal law and is therefore neither strategic nor voluntary. Thus, there is no positive incentive for compensation. The Instituto de Derecho y Economía Ambiental (IDEA), has created a Conservation Trust whereby project developers can pay into a fund to compensate for damages as required by the Paraguay Constitution.
Additionally, a recent law (PES Law 3001/06) provides a mechanism for compensation for environmental damage. Similar to Brazil’s Forest Code, Paraguay’s Forestry Law (422/73) requires 25% of land be maintained in natural forest for private landowners. If 25% is not met, damage must be compensated through reforestation or by purchasing Environmental Services Certificates (ESCs) provided by landowners exceeding the 25% minimum forest cover required. Owners of large impact projects must also invest 1% of their total project budget in ESCs as compensation.
Chile’s EIA law explicitly requires avoidance, minimization, reparation and compensation, along with preventive measures. At least one voluntary offset example exists in the mining industry, and Instituto Forestal (INFOR) is researching compensatory conservation.
Venezuela’s Brisas Gold and Copper Project in the Orinoco Basin is a voluntary compensatory conservation project creating and expanding a protected buffer zone adjacent to a national park, planting trees, creating agroforestry and ecotourism projects, and establishing a biological reserve station.
Costa Rica and Panama both have Payments for Environmental Services strategies related to the reduction or avoidance of adverse biodiversity impacts that could lay the groundwork for future offset programs.
One-off voluntary offset projects have also taken place in Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Peru, Uruguay, and Venezuela.