Production-Integrated Compensation in Environmental Offsets—A Review of a German Offset Practice

Abstract

Environmental offset schemes designed to compensate for adverse development impacts are found in countries worldwide, pursuing no-net-loss policy. In Germany, a practice combining environmental improvements with farming evolved in the early 2000s, known as production-integrated compensation (PIC) (Produktionsintegrierte Kompensation). This paper provides a review of PIC, presenting origins, legal and cost aspects, as well as examples of PIC practice. PIC key challenges are the complexity of environmental improvements of agrarian habitats and the high efforts for communication among diverse actors and for designing and monitoring PIC. Benefits for nature conservation lie in the protection of strongly endangered species and an increase of acceptance of compensation measures. Positive effects for farmers are the sustaining of arable farmland and involvement in setting up land management terms. Investors profit from the increased availability of sites. However, a specific legal framework for PIC is still developing and representation of PIC in offset registries in the German States is only very small. In conclusion, targeted design, continuous monitoring, and long-term financing provided, PIC may (a) increase offset efficiency by focusing on implementation while avoiding land purchase and physical investments and (b) increase offset effectiveness by high conservation benefits and a collaborative approach towards farmers.