Perverse incentives risk undermining biodiversity offset policies

Offsetting is emerging as an important but controversial approach for managing environment-development conflicts. Biodiversity offsets are designed to compensate for damage to biodiversity from development by providing biodiversity gains elsewhere. Here, we suggest how biodiversity offset policies can generate behaviours that exacerbate biodiversity decline, and identify four perverse incentives that could arise even from soundly designed policies. These include incentives for (i) entrenching or exacerbating baseline biodiversity declines, (ii) winding back non-offset conservation actions, (iii) crowding out of conservation volunteerism and (iv) false public confidence in environmental outcomes due to marketing offset actions as gains. Synthesis and applications. Despite its goal of improving biodiversity outcomes, there is potential for best-practice offsetting to achieve the opposite result. Reducing this risk requires coupling offset crediting baselines to measured trajectories of biodiversity change and understanding the potential interaction between offsetting and other environmental policies.