Ecosystem Compensation

What is Ecosystem Compensation?

Ecosystem compensation (or offsetting) is a process in which natural features, such as a wetland or forest, are replaced with restored natural features.

Best practice in ecosystem compensation strives to replace lost ecological structure (the type of feature), lost ecological function (the conditions under which the feature survives and thrives), and lost land base (land area occupied by the feature) through natural feature creation and restoration.

The new natural feature is then monitored and maintained to ensure that it is successful.

TRCA-led Compensation Restoration Projects
Peel: Chrysanthemum Valley

Chrysanthemum Valley Pre-Restoration March 2020
Pre-Restoration, March 2020

Chrysanthemum Valley Post-Restoration Site Assessment June 2021
Post-Restoration Site Assessment, June 2021

Why Do We Need Ecosystem Compensation?

As development in Southern Ontario increases, so too do the stresses on natural features, affecting their ability to provide ecosystem functions and ecosystem services to the growing population.

This effect is compounded by the additional stresses of global climate change and biodiversity loss.

Toronto and Region Conservation Authority (TRCA) is committed to the achievement of safe and resilient communities. Within TRCA’s jurisdiction, ecosystem compensation has been used for several decades to help limit the impacts of development and infrastructure projects where outright protection of a feature is not achievable.

TRCA’s Natural Heritage System Strategy recommends that in our jurisdiction we need to achieve a minimum target of 35% of our land area as natural features to have a well-functioning and resilient system.

Our existing Natural Heritage System is currently comprised of 23% natural cover. With finite land and the need for housing and infrastructure increasing, we need to strategically improve and increase the number of natural areas which provide our ecosystem functions and services.

Ecosystem compensation or offsetting should only occur once all other opportunities to avoid, minimize, and mitigate the impacts of development have been exhausted. The residual unavoidable loss in area (hectares) is then calculated and action is required to restore that feature elsewhere.

Within this context, ecosystem compensation through restoration becomes an important tool to help ensure that ecosystem functions and services lost through development are restored back on to the landscape. This restoration establishes a robust and resilient natural heritage system for the betterment of communities.

TRCA-led Compensation Restoration Projects
York: Nashville Resource Management Tract
Sites 4 & 11 North Wetland

Nashville site pre-restoration October 2020
Pre-Restoration, October 2020

Nashville site post restoration site assessment August 2021
Post-Restoration Site Assessment, August 2021

What is Needed to Apply Ecosystem Compensation?


TRCA’s Guideline for Determining Ecosystem Compensation (The Guideline) was developed by an interdisciplinary team of TRCA staff experienced in land use planning and policy, ecosystem science and watershed planning, and restoration implementation.

The Guideline was originally approved by TRCA’s Board of Directors in 2018. In 2022, TRCA undertook a review of the application of the Guideline over the last four years. With the feedback received, we made updates to the Guideline intended to improve its utility and effectiveness at meeting objectives for ecosystem compensation.

The Guideline provides direction on how to determine the amount of compensation required to replace lost or altered ecosystems, in a repeatable and transparent manner, after it has been decided that compensation is required.

Within The Guideline, TRCA lays out seven principles that helped direct the development of the Guideline, and provide guidance on its application:

  1. Compensation must be considered only as a last resort within the established mitigation hierarchy of: Avoid, Minimize, Mitigate, Compensate.
  2. The compensation process should be transparent, helping to ensure accountability of all parties involved.
  3. The compensation process should strive to be consistent and replicable.
  4. Compensation outcomes should strive to fully replace the same level of lost ecosystem structure and function in proximity to where the loss occurs and, where possible, achieve an overall gain.
  5. Compensation should be directed to on-the-ground ecosystem restoration and be informed by strategic watershed and restoration planning.
  6. Implementation of compensation should be completed promptly so that ecosystem functions are re-established as soon as possible after (or even before) losses occur.
  7. The compensation process should use an adaptive management approach incorporating monitoring, tracking, and evaluation to gauge success and inform program improvements.

The Guideline specifies that the natural feature restoration project can be undertaken by either the proponent or a public agency.

In the latter scenario, the proponent provides cash-in-lieu of undertaking the project so that the municipality or TRCA can complete the work needed (including planning, design, site preparation, implementation, monitoring, and maintenance).

TRCA-led Compensation Restoration Projects
Durham: 1901 Bayly Street Wetland

1901 Bayly St Wetland Pre-Restoration November 2017
Pre-Restoration, November 2017

1901 Bayly St Wetland Post-Restoration Site Assessment July 2023
Post-Restoration Site Assessment, July 2023


TRCA further developed the Ecosystem Compensation Management Framework (The Framework) in 2019.

The purpose of the Framework is to detail the tools and procedures for when cash-in-lieu of compensation is provided to TRCA to undertake a restoration project and/or conservation land securement.

The Framework also supplies direction on how to evaluate and manage the overall compensation program.

The effectiveness of TRCA’s compensation program is evaluated based on the principles outlined in the Guideline. An annual report to TRCA’s Board of Directors further promotes the principle of transparency, outlines how the other principles have been achieved, and makes recommendations for improvements where needed.

TRCA-led Compensation Restoration Projects
Toronto: Meadowvale

Meadowvale Pre-Restoration October 2020
Pre-Restoration, October 2020

Meadowvale Post-Restoration Site Assessment July 2021
Post-Restoration Site Assessment, July 2021

How Does TRCA Implement Compensation Projects?

When impacts to a natural feature have been determined to require compensation (after all other options to avoid or mitigate impacts have been explored), TRCA can play several important roles including:

  • Directing where compensation action will be most effective
  • Undertaking restoration to restore lost ecosystem structure and functions
  • Monitoring the required restoration actions

TRCA has developed tools and approaches to support these varied and important roles, helping to ensure compensation decisions and outcomes are documented, tracked, and reported.

These tools and approaches include the Integrated Restoration Prioritization (IRP) framework and Restoration Opportunities Planning (ROP), as well as the Project Deliverables Database and the Compensation Database.

Where removal or an alteration of the natural system with compensation is proposed, discussion and time are needed to ensure a resolution that is acceptable to all parties and that is consistent with all policies, regulations, and best practices.

Once a decision has been made to go ahead with compensation and that TRCA will be undertaking the compensation actions, the Framework workflow then continues through each of the project implementation milestones.

Projects are tracked using a database throughout their life cycle.

All projects are assessed and details reviewed in a yearly summary report on the compensation program, which evaluates and highlights program compliance and areas for improvement.