Incentivising biodiversity net gain with an offset market

Papers - 22/07/2021

A new policy has been put forward in the fight to preserve biodiversity, calling on the private sector and borrowing from market economics.

Incentivising biodiversity net gain with an offset market

One of the main drivers of biodiversity loss is habitat destruction due to changes in land use. According to the IPBES- Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services’ report published in 2019, 75% of global land has somehow been altered by human development.

Even if the need for effective conservation policies is growing stronger, most biodiversity conservation programmes are financed only by the public purse. This is the case for habitat restoration policies in the UK, with an estimated cost of around £97 million per year.

In addition, it is no longer enough to simply reduce biodiversity loss in a given area; a global movement is now pushing for conservation policies aimed at producing a net gain in biodiversity. This means an actual increase in the biodiversity of the area.

This paper investigates the opportunities of involving the private sector in environmental conservation policies through an offset market strategy.

The biodiversity offset market works according to the economic model of marked operation based on supply and demand curves. Farmers who change their land management will earn credits that can be sold to housing developers.

Eight policy scenarios have been compared in the paper, from the complete lack of conservation policy to the request for a net gain of up to 50%. The operations, costs and biodiversity impacts have been calculated using an ecological model that links land management with the bird population.

Download the full-text paper.

Needham, K.; Dallimer, M.; De Vries, F.; Armsworth, P. R.; Hanley, N. Incentivising Biodiversity Net Gain with an Offset Market. QOpen, 2021,1,1–19.


cover photo by by Deb Barnes on Unsplash