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Environmental compensation

Key conditions for increased and cost effective application

image of Environmental compensation

Environmental impacts are increasing due to human activities. The overuse of the benefits nature provides us is the direct result of our failure to put a price on these benefits. One way of addressing this is to require environmental compensation.

The purpose of the study is to provide Nordic Council of Ministers and national decision-makers with an overview of key conditions for increased, flexible and cost-effective application of compensation.

The study shows that for a relatively small cost society can make a significant investment in the provision of biodiversity and ecosystem services by requiring compensation.

The study outlines three main recommendations on how to increase the use of environmental compensation:

1. Stimulate supply of, and demand for, compensation

2. Clarify and supplement guidelines and legal framework

3. Strengthen Nordic cooperation on compensation

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Key issues in developing a compensation framework

A number of key issues need to be addressed in a compensatory framework if the future use of compensation is to increase in Nordic countries, whether that goal is No Net Loss of biodiversity and ecosystem services (i.e., the full internalization of external damage costs, as envisioned by the EU initiative) or some “acceptable level of loss” (i.e., based on some partial internalization of damage costs). We summarize these issues below and then recommend how best to address them in a cost effective manner in chapter 6.

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