The LEEPout series is designed as a platform for hosting a line-up of internationally recognised researchers to showcase their work at the cutting edge of environmental and resource economics.
Markets for biodiversity offsets are emerging as a new tool to manage the conflicts between “development” and conservation. Consideration of the incentives facing both landowners as potential biodiversity offset providers, and developers as potential buyers of credits, is critical when considering the real-world policy implications of choosing a specific offset metric and the resultant impacts on biodiversity. We developed an ecological-economic model to compare the ecological and economic outcomes of offsetting for a habitat-based metric and a species-based metric. We were interested in whether these metrics would adequately capture the indirect benefits of offsetting on species not defined under the no net loss policy. We simulated a biodiversity offset market for a case study landscape, linking species distribution modelling and an economic model of landowner choice based on economic returns of the alternative land management options (restore, develop, or maintain existing land use). The biodiversity offset markets for the habitat and species metrics achieved no net loss of the intended metric. However, the underlying species distributions, layered with the agricultural and development rental values of parcels, resulted in very different landscape outcomes depending on. Neither metric adequately captured the indirect benefits of offsetting on related habitats or species. Where policymakers are aiming for the metric to act as an indicator to mitigate impacts on a range of closely related habitats and species, then a simple no net loss target is not adequate.