Ecological compensations from theory to practice

Based on the work of the Habitat Bank, EKOTEKO research project studies the feasibility of ecological compensations in Finland in collaboration with business and administration. The Kone Foundation finances the project.

Ecologically sound, economically feasible and socially acceptable mechanism

EKOTEKO analyses and develops common rules and institutional preconditions for ecological compensations in Finland. We will develop an ecologically sound and economically feasible metrics for compensations, analyse Finnish institutional conditions regarding compensations and society’s norms and administrative practices, study the motivations of the market participants and develop models analysing markets for ecological compensations. The rules and principles will be piloted in practice with forerunner companies and landowners.

Photo: Riku Lumiaro

Work packages

1. Metrics for measuring biodiversity for ecological compensations

We will develop a metrics for measuring the ecological losses on development sites and gains on compensation sites. The metrics must be both ecologically sound and feasible from an economic point of view: it is open, reliable and exact. The basis for our work is a so-called ELITE index, which measures ecological value of different habitats relative to their natural condition.

2. Rights and responsibilities accepted by different actors

We will analyse both rights and responsibilities as well as practices and motivations regarding ecological compensations. What kind of expectations do different actors have? How to match practices to the Finnish society’s norms and institutions?

3. Markets for ecological compensations

We will develop a market model to analyse markets for ecological compensations: what factors affect the prices of compensations and land areas traded. Special attention is paid to trading ratios, uncertainty and discounting. Amongst other things, we will analyse the role of an intermediary guaranteeing the quality of traded compensations.

4. Piloting ecological compensations in practice

We will take compensations to practice with several pilot projects. InnoForEst will seek landowners providing compensations and EKOTEKO will find buyers, which may include companies in, for instance, infrastructure and building, energy sector or urban planning. With the pilots, we will get information regarding the willingness and capabilities of landowners to participate in producing compensations, gain first-hand experience of measuring compensations and bring ecological compensations to public knowledge.