Area of Study: Ecosystem Service Markets

In-lieu Payments and Fees as a Mechanism of Environmental Compensation


Conservation offsets are one of the important tools policy-makers use in order to balance economic development and biodiversity.

The concept is simple: the ecological loss from a single development project or program of developments is compensated by the creation of new ecological benefits of a similar nature and extent.

To take a simple example, if a development project results in the destruction of one hectare of wetland, that impact could be offset by the creation of a one-hectare wetland nearby, providing the quality of the two were comparable.

Typically, there’s been three historic approaches of conservation offsets. The first is project-specific offsetting. The second is offset credit banking. And the final method is through In-Lieu Payments and Fees. This was the focus of a report recently released by the Alberta Land Institute. 

We examined the design and operation of In-Lieu Payment (ILP) systems within nine offset systems in four North American jurisdictions: British Columbia; Alberta; New Brunswick; and, The United States (federal domain) to recommend a new option for Alberta stakeholders. It charts a positive course toward the creation of a market in ecosystem service credits.

Practical questions are taken into consideration such as what legal authority ILP systems have to collect and issue payments, how a payment amount should be set, and how effective varying ILP systems have been used by various levels of government.