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 the impacted habitat was used as compensation for projected damage. Discussion: The registered compensatory measures do not endorse the spirit of return on components equivalent to those impacted that generate a net environmental gain and respond only to impacts that had not been considered during the preliminary 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.
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 instrument in a project’s environmental management to generate an ecological gain.
2. 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.
3. 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
NA: Not available; data not located in the SETENA archives during the time this review was conducted.
for these damages. The extent of the project infrastructure varied: from small-scale constructions (e.g., buildings less than 500 m2) 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.
Among the compensatory measures registered, the donation of construction materials or the installation of infrastructure for schools (20% of the cases), support for environmental education programs (17% of the projects), and reforestation programs (>15% of the cases) stand out (Figure 3). Other actions used in compensation were: the purchase of equipment or school supplies, the donation of equipment to community associations, and the repair of roads and paths. The records reviewed do not account for the scope of these measures, nor
is there evidence of evaluation and monitoring of the environmental education and reforestation programs over time. Only a tiny fraction of the cases (<5%) contemplated actions to replace the impacted habitats or measures aimed at its recovery, as well as actions to monitor water and pollutants (Figure 3).
Several compensatory actions taken are presented in Table 2. Compensatory actions taken were quite varied and included: the acquisition of food and water from community centers, the purchase of foosball tables for the development association, the purchase of school supplies, the establishment of reforestation programs, and the acquisition of land with forest cover to replace impacted areas. Only three projects registered biological monitoring to evaluate the scope of their compensation plan (Table 2). In two of the files reviewed, there is no mention of what the Compensation Plan consisted of, nor was information on the economic valuation of the impacts to be compensated included.
4. Discussion
Although compensatory measures are contemplated in Costa Rican regulations and a mechanism has been established to implement them, our analysis reveals certain inconsistencies in how environmental offsets are interpreted and how irreversible negative impacts are reimbursed.
Between 2018 and 2020, 74 projects required environmental compensation before SETENA. However, it is impossible to determine what proportion of the total number of projects this number represents. This is because the requests for compensation plans occur late in the project development process; consequently,
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