Following investigations that revealed numerous issues with environmental offsets (including promised offsets that never materialized, offsets already having pre-existing protections, and conflicts of interest leading to consultants making massive profits), New South Wales’ environment minister has called for a major reform of the state’s environmental offsetting scheme.

So what?

For environmental offset schemes to succeed, it is critical that the promised offsets are well protected and managed, so that they can appropriately compensate for environmental harms elsewhere. Similarly, areas that are already protected by existing policies should not be considered for ‘offsets’, since they are not at a risk of harm/loss.

Promised offsets in New South Wales were found to be non-existent, not at the conditions necessary to be considered an offset, or already protected and therefore not appropriate to be offsets. These widespread issues demonstrate that offsets schemes will need reforms, strong regulatory enforcement, and regular checks to be successful. In absence of such mechanisms, offsets will fail in their compensating for the environmental harms of infrastructural projects.

As the use of offset mechanisms grow, will more states evaluate the successes of their offset schemes and consequently modify necessary policies to maintain the integrity of offsets? Or will offsets simply provide a way out for extractive entities to continue their harmful practices without actually compensating for the harms?