Biodiversity Offset & Proactive Offset Banking
And how the Conservation Heritage Foundation supports secure, lasting conservation outcomes
What is a Biodiversity Offset?
Biodiversity offsets are not just payments — they are long-term conservation commitments.
Who’s Involved?
Developer / Offset Holder
Causes biodiversity impact; must offset it.
Landowner / Offset Receiving Area
Owns or makes land available to receive the offset.
Conservation Heritage Foundation (CHF)
Securely receives, banks, manages, and disburses offset funds.
Independent Auditors
Experts who verify that the protected area is being managed properly.
Environmental Authority
Approves and oversees the process.
How Offset Banking Works
-
STEP 1: Offset obligation triggered
- Development impacts biodiversity.
- Environmental authorisation requires a biodiversity offset.
-
STEP 2: Find Offset Land
- Proactive option: A landowner has already declared (or committed to declaring) land as an offset receiving area.
- Acquisition option: The offset liability holder funds the purchase of suitable land to be declared as a protected area.
-
STEP 3: Declare Protected Area
- Land is declared as a protected area under the National
- Environmental Management: Protected Areas Act (NEMPAA).
- A Protected Area Management Plan (PAMP) is approved.
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STEP 4: Sign Management Agreement
- Offset liability holder enters into a management agreement with:
– The landowner, or
– The entity responsible for managing the protected area.
This agreement covers the full offset liability period (normally 30 years).
- Offset liability holder enters into a management agreement with:
-
STEP 5: Calculate Management Fee
- A fee per hectare is calculated and agreed by all parties.
- The fee covers:
– Conservation management activities
– Ongoing operational costs relating specifically to protected area management activities
– Inflation-linked increases - The fee aligns strictly with the approved Protected Area Management Plan.
-
STEP 6: Pay into CHF
- The offset liability holder pays the agreed management fees (calculated for the full 30 years including inflation) into the Conservation Heritage Foundation.
- The Foundation acts as a secure, transparent banking mechanism.
-
STEP 7: Audit & Monitor
- Annually or quarterly:
– Independent specialists audit management performance.
– Compliance with the management plan is verified.
- Annually or quarterly:
-
STEP 8: CHF Disburses Funds
- Following a clean audit:
– The CHF releases the annual or quarterly management payment.
– Funds are paid to the landowner or managing entity.
- Following a clean audit:
-
STEP 9: Payments End After 30 Years
- Payments to entity managing the protected area continue only for the duration of the offset liability period.
- This is typically 30 years.
- Payments cease automatically once the offset liability period ends.
Why Use the CHF?
Supported by South African Law & Policy
This approach is fully aligned with South Africa’s environmental legislation and biodiversity policy, including:
- Constitutional right to a protected environment
- National Environmental Management Act (NEMA)
- Protected Areas Act (NEMPAA)
- Biodiversity Act (NEMBA)
- National & Provincial Biodiversity Offset Policies
- Biodiversity Stewardship Programmes
How the Money Works
YEAR 0
END OF YEAR 30
Authorisation Granted
Payments cease.
Offset Liability Holder to CHF
Management fee paid into Foundation
.
CHF
(Holding Phase)
Funds securely held. Interest accrues.
.
Annual / Quarterly Audit
Independent specialists verify management performance.
CHF to Landowner / PA Manager
Payment released after clean audit.
.
Fund Retention
5% annually of total fund value (incl. interest) retained. Then allocated to other conservation projects.
How the Money Works
YEAR 0
Authorisation Granted
Offset Liability Holder to CHF
Management fee paid into Foundation
V
CHF
(Holding Phase)
Funds securely held. Interest accrues.
V
Annual / Quarterly Audit
Independent specialists verify management performance.
V
CHF to Landowner / PA Manager
Payment released after clean audit.
V
Fund Retention
5% annually of total fund value (incl. interest) retained. Then allocated to other conservation projects.
V