Environmental Compensation Actions in Costa Rica: Disparity between Commitments and Actions

Introduction: Environmental compensation is a legal-administrative instrument used by agencies that supervise the environmental impact assessment (EIA) to offset irreversible impacts generated by development projects. The compensation is usually framed in the principle of ecological equivalence, which seeks to equate the losses due to the impact with a net environmental gain obtained by the compensatory actions. Methods: We analyzed the records of development projects that have merited an environmental compensation plan registered by the National Environmental Technical Secretariat of Costa Rica (SETENA) between January 2018 and June 2020. Results: Seventy-four projects were analyzed; just over 75% of them corresponded to infrastructure projects while the rest concerned exploitation activities of materials and resources. The main impacts that elicited compensation plans were: deforestation and destruction of riverbanks (13%), earthworks (15.5%), poor water management (15.5%), and administrative faults or non-compliance with environmental commitments (62%). The main compensatory measures conducted were: building school infrastructure (20% of the projects), support for environmental education programs (17%), and reforestation programs (>15%), although actions such as the purchase of school supplies, donation of equipment to local communities and the arrangement of roads and causeways were also recorded. In only three projects, the replacement of evaluation of the project. The compensation plan used in Costa Rica is a sanctioning instrument based on economic valuation and does not guarantee a return equivalent to environmental losses. Therefore, compensation must be integrated in the preliminary evaluations of the projects, identifying these measures in the early stages and separating them from administrative faults.


Introduction
Environmental compensation (EC) is an administrative provision that seeks to remedy the losses that result from irreversible impacts to the environment or communities due to production or development projects [1]. EC measures are carried out as a last resort of the so-called mitigation hierarchy [2] when it is impossible to avoid or mitigate impacts or recover the environment affected by them [3]. Thus, the intended objective in EC is that the net losses are null (zero losses) or even better that an environmental gain is generated [4] [5].
EC is usually endorsed by the countries' legal framework that uses this instrument in their environmental management plans [6] [7], standardizing when and who should compensate the environment or communities for the damages [8]. Different factors, such as the estimation of impacts, the level of involvement of government authorities, the role of the developer, and the level of environmental awareness that society has, affect how compensation is carried out and therefore are subject to legal regulations [9].
In addition, the compensatory measures depend significantly on the approach that frames the compensation, be it economic, ecological, or sociocultural [10]. Under the ecological approach, the offset requests ecological equivalence, pursuing to trade-off with environmental components similar to those damaged by the impacts [11]. This approach is preferred by financial agencies such as the Inter-American Development Bank (IDB), the World Bank, the United Nations Organization (UN), among others, as they seek direct compensation for the losses generated by the projects they finance [12] [13]. Under the economic approach, the cost of the impacts is calculated, and the compensatory measures try to achieve economic equivalence. Although there are many ways to compensate under this approach [14] [15], the standard practice is to settle with other environmental or social benefits for a value equivalent to that assessed for the losses [16]. This approach has the advantage of estimating the compensatory measure and is straightforward and relatively easy to implement [16] [17]. However, it has been criticized for reducing environmental components to mere interchangeable goods and not compensating them directly with equivalent elements, making it challenging to ensure zero net environmental loss [4] [18].
In addition, government agencies supervise the implementation of compensatory measures, generally those responsible for regulating and evaluating the projects' environmental impacts (EIA). In this way, the state guarantees to preserve a quality environment and the production processes that the developer intends to carry out [19] [20].
For Latin American countries, Arbeláez & Sagre [21] point out that it is generally during the planning stage that projects must indicate how they plan to resolve negative impacts on the environment. This plan is part of the requirements to obtain environmental licensing and is designed by the proponent or even by third parties and includes actions aimed at avoiding, mitigating, or compensating for potential damage. However, not all countries have incorporated these procedures adequately, and issues related to impacts on biodiversity and protected areas have often been left out of the EIA system [22]. This situation makes it imperative to assess the effectiveness of compensatory treatments on a case-by-case basis.
Here, we evaluate the scope of compensatory measures in the face of irreversible environmental impacts generated by development projects in Costa Rica. This nation enjoys an enormous reputation as a green country by promoting the sustainability of its natural capital [23]. The government also has comprehensive legislation that tries to regulate actions in all dimensions of the environment: forestry, water, biodiversity [24]. However, a recent analysis indicates that the issue of environmental compensation has been treated very superficially in the regulations [25]. The administrative authority in charge of evaluating the environmental impacts of projects and ensuring compensation is the National Environmental Technical Secretariat (SETENA), a department from the Ministry of Environment and Energy of Costa Rica created in 1995 by the Organic Law of Environment 7554 [26].
SETENA uses the General Regulations on Environmental Impact Assessment Procedures of Decree 31849-MINAE-S-MOPT-MAG-MEIC [27] to support its judgments. A preliminary assessment is performed for all projects; the possible impacts are categorized through two documents (D1 and D2). D1 is used for projects that anticipate a moderate to significant impact and involves submitting complementary technical studies (i.e., geological, biological, archaeological) and a record of environmental measures to mitigate the possible effects. Before 2004, the instrument used by SETENA for the same purposes was the FEAP (Preliminary Environmental Assessment Form). In contrast, D2 is a tool for low-impact projects, basically being a sworn statement of the works to be developed and the commitment not to negatively impact the environment, which does not require any additional study.
Based on this initial assessment, SETENA determines whether a project must include a sworn declaration of environmental commitments (DJCA), a predictive environmental management plan (P-PGA), or an environmental impact study (EsIA) (Figure 1), according to the magnitude of the impacts identified a  priori. Once the EA is approved, SETENA grants the environmental feasibility, the license that authorizes the development of the project or activity. Those projects that do not comply with the ecological commitments acquired during the EsIA (or that generate new impacts not previously contemplated) are sanctioned through compensation measures (Figure 1), whose costs are appraised according to the agreement of the Plenary Commission of SETENA (CP-042-2011-SETENA) [28]. These new measures make up the Compensation Plan, which specifies the actions to defray those impacts that were not contemplated during the environmental evaluation. Although the procedure described above has been regulated since 2011, no analysis has been carried out on its capacity to offset environmental impacts generated by projects. It is also not entirely clear whether the measures adopted are proportional to the effects incurred. This study presents the first analysis of project files that have merited presenting a Compensation Plan before SETENA.
Our goal is to assess whether the measures requested by SETENA in the face of unavoidable impacts effectively correspond to compensatory actions that ensure zero net loss. Based on this analysis, we also wish to formulate recommendations that allow environmental compensation to be framed as an essential in-strument in a project's environmental management to generate an ecological gain.

Methods
We requested the records of projects requiring environmental compensation plans registered in January 2018-July 2020 before the National Environmental Technical Secretariat of Costa Rica (SETENA-DT-ASA-09232020). The inclusion criteria were projects with viability or in the process that presented environmental compensation, whether in protected wild areas or not. The files were exhaustively reviewed, noting the information on the size and type of project, negative impacts, estimation of the value of the effects, and approved compensatory measures. We assessed whether the compensatory actions occurred in protected wild areas or if, on the contrary, they were conducted outside of them. We conducted a descriptive study of the agreed-upon measures based on this information.

Results
Between January 2018 and July 2020, SETENA registered 74 projects that required environmental compensation measures. Fifty-four of those projects were initially submitted under the D1 form, five under the D2 form, and 15 submitted under a FEAP. Two of the projects were obtaining environmental viability at the time of this review, while the rest had already been approved. Almost half of the reviewed reports (49.2%) concern infrastructure projects in services, industries, and housing, while 18.3% were constructions in agro-industrial plantations, mainly palm-oil, ornamental plants, and pineapple. The extraction of materials in rivers and pits involved almost a fifth of the projects analyzed ( Figure 2). Table 1 shows the project's profiles, including their dimensions, the impacts that required compensation, and the measures SETENA endorsed to compensate  for these damages. The extent of the project infrastructure varied: from small-scale constructions (e.g., buildings less than 500 m 2 ) to those considered megaprojects (construction of the Río Piedras Reservoir, projected on more than 900 hectares).
The leading causes for presenting the compensation plan include the destruction of riverbanks by logging and deforestation of areas with coverage (13% of the projects), unauthorized earthworks (15.5%), and poor water management (15.5%) ( Table 1). We also recorded impacts on fauna, waste contamination, and movement in 5.6%, 4.0%, and 2.8% of the projects, respectively. Because some projects registered more than one impact, these combined causes affected just over a third of the total number of projects evaluated (35%) ( Table 1).
In contrast, almost 80% of the projects registered administrative failures and violations of the measures proposed in their environmental commitments. Among the most frequent administrative offenses are included: expiration of the environmental guarantee, lack of an environmental regent, non-submission of regency reports, and starting works without environmental control instruments or authorization by SETENA. The most common violation was the modification of the design and the affected area of the project. SETENA considers these faults as causes to trigger the compensatory actions.
In several cases, an estimate of the economic value of the impacts to be compensated is presented (Table 1), with records between $237 and $172,437 US dollars. However, no report shows how this valuation is calculated.

Discussion
Although compensatory measures are contemplated in Costa Rican regulations and a mechanism has been established to implement them, our analysis reveals  The preliminary evaluation (and therefore the category of studies to which the project is assigned) does not necessarily determine whether or not a project will merit compensatory measures. Thus, five projects initially registered as D2 required compensation plans, although this category is assigned to projects with minimal and reversible impacts [27]. product of negative impacts of some human activity or natural origin, which affects, interrupts or destroys the components of ecosystems, altering their function and structure reversibly or irreversibly" [30]. Therefore, in Decree 31849, the environmental damage is recognized after the execution of the project, whereas in the Biodiversity Law, the damage is identified from the beginning. This second definition does not seem to be considered by SETENA since most observed compensation plans are carried out after environmental viability and are not planned at the project formulation stage.
A consequence of the conceptual differences is that two types of environmen-  (Table 2)  A fundamental aspect of compensation is to achieve a net environmental gain [11] [31], which is attained when the offset is not less than the cost of the impact.
Net gain can be established on the surface area of the habitat of interest, species composition, structure, ecosystem function, or use by people [11]. When administrative sanctions replace compensation, there is a danger of not guaranteeing an equivalent return of environmental losses. This situation was evidenced in many of the compensatory actions extracted from the project records. Thus, the environmental gain does not seem to be a goal to follow in the compensatory measures endorsed by SETENA.
Following regulation CP-042-2011-SETENA [28], the environmental compensation measures practiced in Costa Rica are based on an economic approach [10], where the monetary value of the impacts is estimated, and the suggested compensation should have an equivalent cost. To ensure economic equivalence, SETENA's plenary commission indicates that the financial estimate for the damages must be carried out by a suitable professional facilitated by the developer. In proven environmental damage, SETENA could request support from SINAC (the administrative authority for natural resources and conservation areas) or the Environmental Court, both MINAE agencies, to assess that impact.
Even in very complex situations, SETENA is empowered to carry out specialized outsourcing [28], which, as stipulated, should be paid for by the developer [25].
None of this was evidenced in the cases reviewed. Instead, usually, the developer proposes the Compensation Plan, based on an approximate economic valuation made by him, and submits it to SETENA for approval. One of the drawbacks of this procedure is that the developer is responsible for identifying the possible negative impacts, estimating the monetary costs associated with them, and proposing the compensation measures equivalent to that expense (paragraph a, point 2 of regulation CP042-2011) [28]. In addition, there is no clarity on how proportional to the estimated cost of the impacts (or infractions) that originated the sanction. In other words, it is not clear whether proportionality is established in economic matters that represent the desired value-value balance [32]. A monetary deposit must be consigned as an environmental guarantee to ensure that the developer complies with the environmental measures when executing the project. The objective of this guarantee is to protect the application of correction or compensation measures for environmental damage, and its amount is appraised by SETENA, generally for 1% of the value of the project (article 21, Organic Law of the Environment 7554) [26]. For the developer to recover his deposit, he must present the environmental compensation plan, so it is in his interest to minimize the costs associated with unforeseen impacts or non-compliance. However, there is no evidence that SETENA has claimed the environmental guarantee in any analyzed cases, even though several did not specify compensatory measures. Thus, the role of SETENA seems to be relegated to the regulation of procedures and not to guarantee that the negative impacts are effectively compensated, or to seek an environmental gain.
Under the principle of the environmental hierarchy, compensatory measures must be carried out if the mitigation is not sufficient, focusing on tangible components of the environment, such as biodiversity or natural habitat [13]. Although measures such as those recorded in Table 2 benefit communities or public institutions and are socially acceptable, they do not compensate for the affected environmental components. In addition, these measures have the drawback of being temporary, while compensation for environmental elements should involve actions with more lasting results.
Compensatory alternatives based on contributions to specific environmental education activities also do not guarantee compensation proportional to losses, especially since there is no greater detail or follow-up evidence to verify whether these actions have materialized and their scope. Similarly, there is no evidence that the reforestation efforts mentioned in many files as compensation measures are sustained over time, nor if actions beyond planting are included (e.g., care and monitoring of planted trees, weed cleaning, protection, etc.). Thus, there is no guarantee that these actions meet the environmental gain requirement expected from the compensation [11].
The non-proportionality shown between the compensation measures and the impacts recorded in Table 1 may have legal consequences under Costa Rican law. On the one hand, article 50 of the Costa Rican Political Constitution [33] establishes the right to a healthy environment, which would not be ensured by resorting to the measures observed. On the other hand, the scarce legislation on compensation has resulted in jurisprudential pronouncements that recognize the responsibility for environmental damage, regardless of whether a norm establishes it. For example, the general principles of Environmental Law should be oriented towards preserving nature to allow sustainable development, even when there is not enough legislation [34].
Our analysis also warns of confusion between the concept of environmental compensation and environmental mitigation, both in the regulations and institutional framework. Thus, measures such as: cleaning the riverbed, stabilizing slopes, monitoring surface waters, establishing recycling stations, wildlife crossings, sedimentation traps, and waste disposal systems (Table 2)  How to reverse this situation?
We believe that several aspects should lay the groundwork for how to proceed in the event of negative impacts on the environment from development and production projects. First, compensation (and any other level in the mitigation hierarchy) should be considered from the earliest stages of the environmental impact assessment process. In the case of Costa Rica, if a project requires an environmental impact study (EsIA), compensation should be considered one of its possible outcomes, as it is done in other countries (Australia [35], United States of America [11] Canada, [36]). The study must then clearly indicate the foreseeable impacts, including if these can be avoided, mitigated, or if the environment once impacted can be rehabilitated or restored. If the expected impacts persist, an environmental compensation plan should be presented to account for them. The actions to be followed, both mitigation and compensation, would constitute the environmental commitments that the developer would acquire to make his project environmentally viable. SETENA must have sufficient technical criteria to anticipate the impacts of works and projects and be able to evaluate the containment, mitigation, or compensation plans proposed as environmental commitments. Once the environmental effects and the possible solutions submitted in the environmental obligations have been evaluated, the environmental viability would be granted. Following this strategy, SETENA should identify most of the impacts to be compensated at the planning stage.
In large-scale projects, SETENA must guarantee inspections in the field that corroborate and follow up on the commitments made by the developer. Two If faults that generate compensation actions are identified during the field inspections, these should be recorded as an addendum to the compensation plan proposed during the first evaluation stage. Ideally, these measures should be based on ecological equivalence, proportionality, and net profit that constitute the spirit of environmental compensation [15] [37]. When the breaches are administrative, it is clear that an economic sanction applies, along with a warning or even the cessation of the project's operation. These actions should be sanctioned and valued separately from environmental compensation.
Other aspects would improve the treatment of environmental compensation in the country. If the strategy of economically assessing negative impacts continues, this assessment should be carried out by an expert appointed and assigned by SETENA, and paid for by the developer. In this way, the transparency of the process is favored, and compensatory measures are prevented from being proposed unilaterally [25]. The economic valuation needs to be regulated with a calculation methodology free of ambiguities so that the expert opinion has an established and objective roadmap [17].
In the economic approach, the implementation of some strategies that have been successful in other countries could be contemplated in Costa Rica. An ex-ample of this is the use of environmental banks or biodiversity banks [38] [39] [40]. Once the project's negative impacts have been characterized, these mechanisms seek compensation through an economic investment to a cumulative fund destined to be applied in areas or tasks to conserve the environment. In this way, it is possible to maximize the environmental gain by better designing environmentally fair compensations.
Many of the compensations made in the reviewed projects aim for social assistance. However, we emphasize that adverse environmental impacts are compensated with compensatory measures on those environmental components affected (equivalence) and in the same amount (proportionality).