Biodiversity offsets are a key mechanism for addressing unavoidable biodiversity loss resulting from development projects, once all reasonable measures to avoid and minimise impacts have been exhausted. Their core objective is to achieve no net loss – or preferably, a net gain – of biodiversity. This chapter explores the current global landscape of biodiversity offsets, highlighting the key drivers of biodiversity offsets, the range of offset types and activities, their geographic distribution and their environmental performance. Despite notable progress, offset policies and their implementation remain inconsistent across countries and sectors. The chapter identifies critical opportunities to scale up biodiversity offset requirements and presents good practices to strengthen their environmental effectiveness.
Scaling Up Biodiversity‑Positive Incentives
Abstract
Biodiversity offsets are a last resort measure within the mitigation hierarchy, used to compensate for unavoidable biodiversity loss from development. Their aim is to achieve no net loss – or ideally, a net gain – of biodiversity. Scaling up biodiversity offset requirements should seek to reinforce upfront impact avoidance and minimisation, rather than increase reliance on biodiversity offsets.
Biodiversity offsets take three main forms: permittee-led (one-off) offsets, mitigation banking and in-lieu payments. Offset activities can be broadly categorised as enhancement measures (e.g. restoration) or averted loss measures (e.g. protection of threatened habitats or species).
Biodiversity offsets have been used in all regions of the world, across various sectors and ecosystems. Offset projects cover approximately 150 000 km2 (about the area of Bangladesh). However, most offsets are relatively small and scattered, with more than 90% of offset sites occupying an area of less than 1km2.
The three main drivers of biodiversity offsets are: regulatory requirements, lender requirements (e.g. IFC Performance Standard 6 and the Equator Principles) and voluntary corporate policies. While all three can help increase application of the full mitigation hierarchy – including biodiversity offsets – government regulation and lender requirements hold the most potential.
Nearly half of all new infrastructure development by 2040 is projected to occur in countries that currently do not mandate biodiversity offsets.
Although policies mandating biodiversity offsets exist in 42 countries, their coverage is often limited and their implementation inconsistent.
Only 42% of public development banks and development finance institutions managing over USD 500 million and investing in high-biodiversity-risk infrastructure have financial performance standards addressing biodiversity. Meanwhile, many private financial institutions have yet to adopt, or effectively implement, the Equator Principles.
Global experience demonstrates considerable potential to improve the effectiveness of biodiversity offset policies and projects. This can be achieved through the following:
Strict adherence to the mitigation hierarchy, including by strengthening environmental assessment, permitting processes and spatial planning.
Strategic planning of biodiversity offsets to better achieve biodiversity objectives and enhance cost effectiveness.
Clearly defining offset objectives and reference levels to ensure measurable outcomes, prioritising absolute rather than relative no net loss or net gain.
Ensuring ecological gains are truly additional.
Applying 'like-for-like' or 'like-for-better' principles to biodiversity offsets, using metrics that are both scientifically rigorous and practically applicable.
Addressing potential temporal loss and uncertainty, e.g. through risk-adjusted multipliers.
Securing long-term biodiversity offset gains through strong governance and sustainable financing.
Implementing robust monitoring, evaluation and enforcement to ensure compliance, track progress and inform adaptive management.
Biodiversity offsets are actions to compensate for significant residual unavoidable harm to biodiversity, after appropriate steps have been taken to first avoid and minimise impacts (BBOP, 2012[1]). They are the last step of the mitigation hierarchy (Box 6.1; Figure 6.1). The objective of biodiversity offsets is to achieve at least no net loss (NNL) of biodiversity and preferably a net gain (i.e. net positive impact) (BBOP, 2012[1]).
While different interpretations exist, in this chapter biodiversity offsets are considered a subset of biodiversity (ecological) compensation. Whereas compensation often refers to a broad set of actions, including financial compensation for affected stakeholders or investment in education schemes or research and development (Bull et al., 2016[2]; zu Ermgassen et al., 2019[3]), “to qualify as an offset there must be demonstrably quantifiable equivalence between what is lost and gained [...] An offset can therefore be seen as a specific and rigorously quantified type of compensation measure (Bull et al., 2016[2]).”
Biodiversity offsets align with the polluter pays principle (OECD, 2016[4]). In theory, offsets make it more costly for developers to harm biodiversity, helping to address negative production externalities. The increased development costs help to integrate the total economic value of biodiversity into developers’ decision-making, thereby reducing biodiversity loss from development projects to the socially optimal level (OECD, 2016[4]).
The mitigation hierarchy provides a structured approach to designing and implementing development projects with the aim of limiting negative impacts on biodiversity. Implementation of the hierarchy is vital for achieving goals of biodiversity no net loss or net gain. The mitigation hierarchy involves sequential and iterative steps that begin with impact avoidance:
1. Avoidance: Avoidance is the most effective way to reduce biodiversity impacts. It requires early-stage planning and involves measures such as siting projects outside ecologically important areas (e.g. Key Biodiversity Areas) or timing development to avoid disturbing breeding species.
2. Minimisation: Minimisation reduces the duration, intensity and extent of impacts that cannot be completely avoided. Minimisation measures may include physical, operational, and abatement controls.
3. Rehabilitation/restoration of the development site: Impacts that cannot be completely avoided or minimised can be partly addressed through rehabilitation or restoration. Rehabilitation aims to return basic ecological functions and ecosystem services. Restoration aims to return an area to its original state.
4. Offset: Residual impacts may occur even after full implementation of the previous three steps. Offsetting aims to compensate for any residual adverse impacts through actions to achieve positive outcomes for the affected biodiversity features (e.g. species or habitats). The objective is to deliver biodiversity NNL or net gain.
Note: Other terms may be used for the different steps and in some interpretations of the hierarchy steps 3 and 4 are merged. For example, the United States’ wetland compensatory mitigation policy refers to three steps: avoid, minimise and compensate. The common element for all mitigation hierarchies is their sequential and iterative nature, with an emphasis on avoiding and minimising impacts.
Source: Text based on (OECD, 2016[4]), Biodiversity Offsets: Effective Design and Implementation, doi: 10.1787/9789264222519-en.
Source: Source: Figure adapted from, (Rio Tinto, 2012[5]) “Rio Tinto and biodiversity: Working towards net positive impact”, www.riotinto.com/documents/Rio_Tinto_and_biodiversity.pdf
Biodiversity offsets can be implemented through enhancement measures, averted loss measures or a combination of the two (Maseyk et al., 2021[6]; World Bank Group, 2016[7]). Enhancement offsets (also known as restoration or improvement offsets) aim to proactively repair and improve degraded ecosystems, for example by removing barriers to natural processes such as dams or dykes, reforesting and facilitating assisted natural generation and creating habitats (Maron et al., 2025[8]). Averted loss offsets (also known as protection offsets) aim to prevent projected loss of species, habitats and ecological processes by reducing pressures or threats to biodiversity through legal protection (e.g. establishing protected areas) or by changing harmful practices of local communities and businesses (e.g. reducing deforestation) (Maron et al., 2025[8]). While biodiversity offsets are often site based, they can also involve strategic or policy-based interventions (Jacob et al., 2020[9]). For example, to offset its potential impact on the local population of white-backed and Rüppell’s griffon vulture, the Kipeto Wind Farm in Kenya engaged local communities to reduce incidental poisoning risk to threatened vultures, at a landscape level (Bennun, 2021[10]).
Three mechanisms exist for implementing a biodiversity offset (OECD, 2016[4]):
One-off or permittee-responsible offsets: One-off offsets are undertaken by the developer (i.e. permittee), sometimes in collaboration with a third-party provider. The developer is responsible and liable for the outcomes of the biodiversity offset. In some cases, the location and approach for the offset is decided by the government (World Bank Group, 2016[7]).
Mitigation banking: Mitigation banking – sometimes referred to as habitat banking, species banking, conservation banking or biodiversity banking – involves a repository of offset units (or credits) managed by a public or private third party. Each unit represents a quantified gain in biodiversity resulting from actions to restore, enhance or protect biodiversity. The offset liability is transferred from the developer to the third-party.
Payments-in-lieu: A payment-in-lieu is a mechanism by which regulatory agencies levy fees on developers for their adverse impacts on biodiversity. The collected fees are spent by a government agency, non-governmental organisation or another third-party on compensatory biodiversity measures. The payment level typically reflects a cost estimate of the financial resources necessary to compensate for a development’s residual biodiversity impact. This compensatory approach often does not align with a strict definition of offset where losses and gains are based on rigorous measurement of equivalency (World Bank Group, 2016[7]).
Biodiversity offsets emerged in the 1970s, first in the United States in response to wetland loss and in Germany to address the loss of the natural aesthetic landscapes (OECD, 2016[4]). They have since been used in numerous developed and developing countries to compensate for project impacts in various sectors such as mining and extraction, infrastructure development, forestry and agriculture, and industry. While used primarily to compensate for impacts on terrestrial and freshwater biodiversity, a few examples of marine biodiversity offsets also exist.
The number of biodiversity offset projects worldwide is estimated at around 13 000. Together these span approximately 150 0001 km2 – an area comparable to the size of Bangladesh – although three large single offset projects account for about 40% of this area (Bull and Strange, 2018[11]). Approximately 19% of biodiversity offsets globally are implemented through ecological restoration, 20% through averted loss measures and 46% combine the two2 (Bull and Strange, 2018[11]). Estimating the total number of projects is subject to significant uncertainty due to limited data transparency, while assessing global expenditure on biodiversity offsets is even more challenging. A conservative estimate, based on data from five of the nine countries that have at least 100 biodiversity offset projects, suggests annual spending ranges between USD 6.3 and 9.2 billion in 20193 (Deutz et al., 2020[12]). US wetland and stream mitigation accounts for most of this spending.
Biodiversity offsets have three drivers: regulatory requirements, financial lending requirements (i.e. financial performance standards or safeguards) and voluntary corporate policies. Biodiversity offset policies exist, or are under development, in more than 100 countries.4 At least 42 countries require biodiversity offsets in some contexts (e.g. in specific sectors or habitats, or for certain types of impacts). Typically, biodiversity offset requirements are embedded within environmental impact assessment (EIA) policies (Bull and Strange, 2018[11]; OECD, 2016[4]). A further 66 countries have policies enabling or guiding voluntary offsets (GIBOP, 2024[13]).
Some biodiversity offset policies specify whether developers must meet their requirements through a one-off offset, mitigation banking or an in-lieu fee. For example, Brazil’s Forest Code and China’s Forest Vegetation Restoration Fee require payments in-lieu (OECD, 2016[4]). Other policies allow developers to choose between mechanisms. For example, the US Clean Water Act allows any of the three mechanisms to be used, but regulations prioritise mitigation banks, followed by in-lieu fee programmes and then permittee-responsible (one-off) mitigation (US EPA, 2024[14]). In Queensland, Australia, offset state jurisdiction obligations can be met through a one-off offset, a payment-in-lieu or a combination of the two (Queensland Government, 2020[15]).
Regulatory schemes exist in all continents of the world (except Antarctica) in a range of economic settings (GIBOP, 2024[13]). A small majority (52%) of countries with domestic biodiversity offset regulations are in the OECD (author’s analysis based on (GIBOP, 2024[13])), but offset regulations also exist in several large emerging economies such as Brazil, China, India and South Africa and a few least developed countries (e.g. Mozambique, Papua New Guinea and Solomon Islands). National biodiversity offset requirements exist in 58% of OECD countries (author’s analysis based on (GIBOP, 2024[13])).5 Among the most recent and ambitious schemes is England’s Biodiversity Net Gain (Box 6.2).
The UK Environment Act 2021 requires new housing, industrial and commercial developments in England to achieve a biodiversity net gain (BNG) of 10%. Planning authorities may only grant permits if a developer demonstrates through an approved Biodiversity Gain Plan that the 10% target will be achieved. The new regulation became mandatory for major developments in January 2024 under the Town and Country Planning Act 1990 and for small developments in April 2024. It is expected to extend to nationally significant infrastructure projects in November 2025. A few developments are exempt, such as those with impacts less than 25m2 on non-priority habitat. The BNG policy intends to contribute to achievement of England’s long-term legally binding habitat target “to restore or create more than 500 000 hectares of a range of wildlife-rich habitats outside of protected sites by 2042”. The Department for Environment Food and Rural Affairs (Defra) spent GBP 54 million (USD 73 million) between 2021-22 and 2023-24 preparing for mandatory BNG and expects to spend nearly GBP 200 million (USD 270 million) in total by 2032. Defra estimates the potential annual size of the BNG market at around GBP 135-274 million (USD 182-370 million).
Developers can achieve BNG through on-site activities, off-site activities, the purchase of biodiversity credits or a combination. However, applicants are expected to follow the Biodiversity Gain Hierarchy, which sets the following order of priority: 1) on-site habitat enhancement; 2) on-site habitat creation; 3) off-site habitat enhancement or creation; 4) purchase of biodiversity credits. Habitat enhancement must be maintained for at least 30 years after completion of the development project that triggered it, e.g. through a planning obligation or conservation covenants. Early experience shows that most developers aim to achieve 10% BNG entirely on-site. Studies suggest emphasising onsite gains could undermine BNG market development and biodiversity outcomes.
Developers must develop a Biodiversity Gain Plan that covers:
How adverse impacts on habitats have been minimised;
The pre-development biodiversity value of the onsite habitat;
The post-development biodiversity value of the onsite habitat;
The biodiversity value of any offsite habitat provided in relation to the development;
Any statutory biodiversity credits purchased; plus
Any further requirements as set out in secondary legislation.
Biodiversity value is calculated using the Biodiversity Metric 4.0, which is applicable to all habitat types. The Biodiversity Metric is used to calculate how many units a habitat contains before development and how many are needed to replace the lost habitat units to achieve 10% BNG. The formula for generating a biodiversity unit accounts for the size, condition, local strategic significance and habitat type. It also accounts for the difficulty of creating or enhancing habitat, the time for a habitat to reach its target condition and the distance from the habitat loss. Small developments can apply a simplified Small Sites Metric (“SSM”), unless they are in priority habitats.
Source: (Davies, 2024[16]), Implementing statutory biodiversity net gain, https://www.nao.org.uk/wp-content/uploads/2024/05/implementing-statutory-biodiversity-net-gain.pdf; (Hesketh, 2025[17]), BNG500: What lessons can we learn from analysis of 500 BNG_complian planning applications made in 2024?; (Natural England, 2023[18]), The Biodiversity Metric 4.0: A User Guide. (Rampling et al., 2023[19]) Achieving biodiversity net gain by addressing governance gaps underpinning ecological compensation policies, https://doi.org/10.1111/conl.12820; (UK Government, 2021[20]), Environment Act; (zu Ermgassen et al., 2021[21]), Exploring the ecological outcomes of mandatory biodiversity net gain using evidence from early-adopter jurisdictions in England, https://doi.org/10.1111/conl.12820.
Financial lending conditions from multilateral financial institutions also require or facilitate biodiversity offsets in some contexts. Performance Standard 6 of the World Bank Group’s International Financial Corporation (IFC), for example, explicitly recognises biodiversity offsets as the final step of the mitigation hierarchy and states that offsets are expected to achieve net gain in critical habitats and at least NNL in other habitats (IFC, 2012[22]). Other multilateral financial institutions have similar lending requirements, including the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank and Inter-American Development Bank.
Additionally, more than 130 private financial institutions have voluntarily adopted the Equator Principles, which sets a financial industry benchmark for determining, assessing and managing environmental and social risk in projects. In adopting the Equator Principles (Equator Principles, 2020[23]), financial institutions commit to requiring their clients to outline measures to avoid, minimise and offset environmental impacts. Projects in non-designated countries6 must be assessed against the IFC Performance Standards.
Voluntary offsets are generally undertaken by large firms with a significant and repeated impact on biodiversity. These are commonly firms involved in mining, oil and gas extraction and biodiversity-dependent industries including agriculture and forestry. Firms usually undertake voluntary offsets in response to internal corporate commitments of NNL or net gain (net positive impact) or a commitment to comply with performance standards as part of their corporate sustainability policy. Cited motivations for firms to engage with voluntary offsets include strengthening companies’ license to operate, managing reputational risk, accessing new market opportunities, and promoting employee satisfaction and retention (Ten Kate, Bishop and Bayon, 2004[24]). As mentioned above government policies can enable and guide voluntary offsets (see also section 6.3).
However, few companies have set NNL or net gain targets, and voluntary offsets remain rare. From 2000-16, 33 companies committed to biodiversity NNL or net gain (de Silva et al., 2019[25]), although some of these commitments were retracted or currently have an unclear status. As of 2016, at least 18 companies had active public voluntary commitments to achieve NNL or net gain of biodiversity. These were mostly companies in sectors with relatively strict environmental regulation such as mining, energy and manufacturing (de Silva et al., 2019[25]). A more recent analysis of corporate biodiversity commitments found that 24% (40) of 167 large firms7 explicitly aim to achieve positive biodiversity outcomes to compensate for their impacts, mostly by applying the mitigation hierarchy at operational sites (zu Ermgassen et al., 2022[26]). Growing momentum around the concept of “nature positive” and its implementation may see further commitments (see Section 6.3.3).
While financial lender requirements and corporate policies account for a small proportion of biodiversity offsets by number, they often lead to significantly larger offset areas than regulatory offsets. Globally, these drivers have triggered only 0.3% of the nearly 13 000 identified offsets, yet they comprise almost half of the total offset area. This contrast underscores two broad categories of biodiversity offsets: those driven by regulatory requirements, which are numerous but typically smaller in scale, and those driven by lender or corporate commitments, which are less common but tend to cover much larger areas (Bull and Strange, 2018[11]).
Despite their growing use, biodiversity offset requirements still have significant potential to be scaled up. Expanding their coverage, and effectiveness (Section 6.4), could support efforts to halt and reverse biodiversity loss by ensuring that developments such as infrastructure, mining or the expansion of agricultural land achieve at least NNL and where feasible a net biodiversity gain. Wider use of biodiversity offsets could also increase biodiversity finance, helping to achieve Target 19 of the Kunming-Montreal Global Biodiversity Framework, although it must be stressed that mobilising this finance requires biodiversity’s destruction elsewhere (see also discussion on cost-shifting and additionality in Section 6.4.4). This section examines the three key drivers for biodiversity offsets. It discusses the potential of these drivers to scale up biodiversity offsets and outlines how this potential can be fulfilled.
6.3.1. Driver 1: Biodiversity offset regulation
A priority for scaling up biodiversity offsets is to introduce clear requirements to compensate for residual biodiversity impacts of development. Regulation is the main driver of biodiversity offsets, accounting for over 99% of projects (Bull and Strange, 2018[11]), yet approximately 80% of countries do not require biodiversity offsets and 45% of countries have no biodiversity offset policies whatsoever (GIBOP, 2024[13]). About half of the world’s new infrastructure up to 2040 is projected to be built in countries that currently do not require any form of compensation for adverse biodiversity impacts (zu Ermgassen et al., 2019[3]).
Encouragingly, of the countries without mandatory offset policies, 42% already have some guidance or policies to enable voluntary offsets (GIBOP, 2024[13]) – i.e. “precursor policies” to mandatory offsets (Bull and Strange, 2018[11]). Introducing regulatory requirements in these countries could significantly increase the share of future infrastructure development under offsetting regulation (see for example Box 6.3).
An estimated 3 to 4.7 million kilometres (km) of new roads will be built by 2050. Of this, over 2 million km (~57%) will be built in countries that currently do have biodiversity offset requirements. If all countries that currently have policies that enable voluntary offsets but do not mandate offsets were to adopt regulatory requirements, then the distance of roads being built by 2050 in countries without mandatory biodiversity offset policies would drop significantly to 0.8 million km (~23% of the global total).
Source: Author’s calculation adopting the approach of (zu Ermgassen et al., 2019[3]), based on road infrastructure projections from (Meijer et al., 2018[27]) and biodiversity offset policy data from (GIBOP, 2024[13]).
In addition to increasing the number of countries with mandatory offsetting policies, scaling up of offset policies could also be achieved by extending the coverage of these policies. Although the 42 countries with biodiversity offset requirements represent 72% of global GDP (suggesting that most development globally is already subject to offsets), the coverage of these countries’ policies is far from comprehensive. Typically, offset policies cover only a subset of sectors, habitat types or land designations (Bull and Strange, 2018[11]; OECD, 2016[4]; zu Ermgassen et al., 2019[3]). For example, biodiversity offset policy in Mongolia applies only to mining and petroleum extraction (zu Ermgassen et al., 2019[3]), while policies in China and India focus on forest land (OECD, 2016[4]). At least six countries’ policies explicitly cover marine impacts (Box 6.4), and the UK launched a public consultation in 2022 to inform a possible marine net gain policy, building on its terrestrial biodiversity net gain scheme.8
Biodiversity offsets have had limited application in the marine environment. Most marine offsets have been applied in coastal ecosystems. As of 2017 at least 6 countries (US, Canada, Australia, France, Germany and Colombia) had mandatory biodiversity policies that explicitly cover some marine ecosystems, while 77 countries have policies that enable marine-based offsets. On the back of the BNG policy, the UK opened a public consultation in 2022 on the design of a future Marine Net Gain policy.
Biodiversity offsets have been used to address impacts from e.g. offshore oil and gas projects and port development. Examples of marine biodiversity offset approaches include translocating and farming coral (e.g. in the Red Sea, Jordan); establishing an artificial reef for coral colonisation (e.g. Western Australia); developing marine protected areas and restoring dunes (e.g. in the Netherlands); supporting uptake of turtle excluder devices in fisheries to reduce by-catch. Studies have also suggested that eradicating invasive alien species on islands hosting seabird colonies could be an effective way to compensate for any residual impacts on bird populations of fishing by-catch or offshore wind development.
As the ocean economy continues its rapid expansion, it will be critical to ensure adequate mitigation of adverse impacts. Biodiversity offsets could play an important role in applying no net loss or net gain principles to marine biodiversity and encouraging greater impact avoidance in the first place.
Marine offsets carry their own risks and opportunities. While the same principles for terrestrial offsets apply, the marine environment has specific characteristics to consider when designing and implementing offsets, and which may increase the complexity and feasibility of an offset. These characteristics are ecological (e.g. the high interconnectivity of marine systems), informational (e.g. relatively less data on marine biodiversity), and political (e.g. little governance of high seas).
Source: (Kotb, 2016[28]), Coral translocation and farming as mitigation and conservation measures for coastal development in the Red Sea: Aqaba case study, Jordan, https://doi.org/10.1007/s12665-016-5304-3; (Frank van der Meulen Consultancy Netherlands, 2016[29]), Environmental Compensation for Port Extension: The Case of Rotterdam Harbor and Nature Compensation, Policy and Practice; (Blakeway et al., 2013[30]), Coral Colonisation of an Artificial Reef in a Turbid Nearshore Environment, Dampier Harbour, Western Australia; (Jacob et al., 2020[9]), Marine biodiversity offsets: Pragmatic approaches toward better conservation outcomes https://doi.org/10.1111/conl.12711; (Shumway et al., 2018[31]), The Risks and Opportunities of Translating Terrestrial Biodiversity Offsets to the Marine Realm https://doi.org/10.1093/biosci/bix150; (Pascoe, Wilcox and Donlan, 2011[32]), Biodiversity Offsets: A Cost-Effective Interim Solution to Seabird Bycatch in Fisheries? 10.1371/journal.pone.0025762; (Niner et al., 2017[33]), A global snapshot of marine biodiversity offsetting policy, https://doi.org/10.1016/j.marpol.2017.04.005; (OECD, 2016[34]), The Ocean Economy in 2030, OECD Publishing, Paris, (Holmes et al., 2016[35]), The potential for biodiversity offsetting to fund invasive species eradications on islands; (TBC, 2017[36]), Marine biodiversity offsets: Briefing note. (Jacob, Thorin and Pioch, 2018[37]), Marine biodiversity offsetting: An analysis of the emergence of an environmental governance system in California, 10.1016/j.marpol.2018.04.007. (UK DEFRA, 2023[38]), Consultation on the Principles of Marine Net Gain: Summary of Responses, Consultation on the Principles of Marine Net Gain - Defra - Citizen Space
Even for regulated sectors, projects are often exempt from compensation requirements (Levrel, Scemama and Vaissière, 2017[39]; Maron et al., 2018[40]). For example, while some biodiversity offset policies cover both small and large development projects (e.g. the UK’s Biodiversity Net Gain, Box 6.2); others are limited to only major developments (e.g. Brazil’s industrial impact compensation policy) (OECD, 2016[4]). Additionally, projects may be exempt from offsets if their impacts are considered not to have passed “significance” thresholds (OECD, 2016[4]). However, significance thresholds are difficult to establish, sometimes vague (UN Environment, 2018[41]) and determined – or overruled – arbitrarily (zu Ermgassen et al., 2019[3]) (see e.g. (Murray et al., 2018[42])).
The limited coverage of offset policy and common use of exemptions means a potentially significant volume of development occurs without adequate avoidance, minimisation, restoration and offsetting of its adverse impacts even in countries with biodiversity offset requirements. This undermines the potential for biodiversity offsets to contribute to landscape or national-level objectives of NNL or net gain. For example, in Australia, the New South Wales Native Vegetation Act (2005-2015) aimed to “prevent broad scale clearing unless it improves or maintains environmental outcomes”, including with biodiversity offsets. However, policy exemptions enabled approximately 87% of vegetation clearance to occur without offsetting the loss (Gibbons et al., 2017[43]).
Furthermore, in countries with legal requirements for biodiversity offsets some development may occur without government approval (zu Ermgassen et al., 2019[3]). For example, about 80% of roads in the Brazilian Amazon have been constructed without government approval (Brandão and Souza, 2006[44]), thereby evading the country’s biodiversity offset obligations. Addressing illegal and unreported activity is therefore also necessary for extending the amount of development covered by NNL policies.
In addition to extending the coverage of biodiversity offset policies, governments also need to ensure the policies are implemented. There is no documented evidence of biodiversity offsets in 60% of countries with mandatory biodiversity compensation policy (Bull and Strange, 2018[11]). This likely reflects shortcomings in data and transparency but also implementation gaps: even in jurisdictions with relatively well-established offset policies, biodiversity offset implementation has been found to be inconsistent (Bezombes, Kerbiriou and Spiegelberger, 2019[45]; Carreras Gamarra and Toombs, 2017[46]; Kershaw, 2024[47]; VAGO, 2022[48]). The reasons for implementation gaps are uncertain and likely vary across countries. However, studies point to several factors that may prevent implementation of biodiversity offset policies. These are discussed below.
First, political pressure on governments to prioritise short-term economic growth and accelerate development can weaken offsetting practices (Bennett and Gallant, 2017[49]; Kormos, Mead and Vinnedge, 2015[50]). For example, pressure from stakeholders can lead to projects going ahead with weak application of the mitigation hierarchy, including inadequate consideration of alternative projects, and without offsets being secured (discussed further in 6.4.1).
Second, unclear or ambiguous policies can lead to subjective interpretations and render offsets more vulnerable to power dynamics (Carver and Sullivan, 2017[51]) and legal challenges (Boyle, Kotchen and Smith, 2017[52]; Dappen, 2012[53]). Without clear guidance and implementation mechanisms, biodiversity offset policies can be difficult to implement and may become essentially optional for regulators and developers (Bennett and Gallant, 2017[49]). Additionally, frequent policy change and associated uncertainty can undermine offsetting by weakening the commitment of developers and regulators to rigorously apply policies, particularly when weaker regulation is anticipated (Finnie, 2020[54]; Jenner and Howard, 2015[55]). The pivotal role of clear and stable policy for scaling up biodiversity offset markets (i.e. mitigation banking) is evident from the long-standing US Wetland Compensatory Mitigation scheme which, despite challenges, has created jobs, supported economic output and mobilised private finance (Box 6.5).
With the right policies, biodiversity offsets can generate jobs, deliver economic benefits, and attract investment from the financial sector. This is exemplified by the US Wetland Compensatory Mitigation Scheme, which restores or replaces wetland functions lost to activities like construction, agriculture, or urbanisation. Anchored in the Clean Water Act (1972), the scheme mandates compensation for wetland impacts to achieve NNL.
Federal guidance introduced in 1995 provided regulatory certainty for state agencies, local governments and private entities to operate mitigation banks. However, for three decades, the policy inadvertently favoured permittee-led compensation due to weaker monitoring and enforcement1, leading to suboptimal outcomes. The 2008 Final Compensatory Mitigation Rule addressed this by applying uniform standards across offset mechanisms and prioritising mitigation banking for its reliability. Consequently, the use of mitigation bank credits rose from 30% in 2010 to 60% in 2017, while permittee-responsible mitigation declined from 50% to 15%.
This regulatory framework has spurred a robust wetland and stream mitigation banking industry, generating annual revenues exceeding USD 3.5 billion. When indirect and spillover effects are included, the total economic impact surpasses USD 9.6 billion, supporting over 53 000 jobs. Between 2014 and 2019, the market experienced a compound annual growth rate of 5.3%, with revenues and economic impacts increasing by approximately 35% and 33%, respectively.
Mitigation banking has proven effective in mobilising private investment. Operators face significant upfront costs – typically USD 1-15 million per project, with credits marketable only after 2-5 years. Equity and debt instruments play a key role in financing these costs. Investors, including angel investors, private equity funds, and institutional investors such as the New Mexico Educational Retirement Board, have embraced this market. Beyond its environmental benefits, mitigation banking has delivered strong financial returns, with 67% of committed capital (2009-15) meeting projected internal rates of return (IRR), and 20% exceeding them.
Despite its successes, the wetland mitigation market remains vulnerable to shifting interpretations of key legislation, such as the definition of “waters of the United States.” These changes have created market fluctuations, impacting offset demand and the viability of mitigation banking firms.
1. Similarly, an analysis of England’s new Biodiversity Net Gain policy estimated that 27% of BNG units faced a high risk of noncompliance because they were associated with improvements on-site that were unlikely to be monitored or enforced (Rampling et al., 2023[19])
Source: (BenDor, Kwon and Lester, 2023[56]), Assessing the size and growth of the United States’ wetland and stream compensatory mitigation industry, doi: 10.1371/journal.pone.0285139; (Bennett and Gallant, 2017[49]), State of Biodiversity Mitigation 2017: Markets and Compensation for Global Infrastructure Development; (EPA, 2024[57]), Mitigation Banks under CWA Section 404; (Hough and Harrington, 2019[58]), Ten Years of the Compensatory Mitigation Rule: Reflections on Progress and Opportunities; (McElfish, May 26 2023[59]), What Comes Next for Clean Water? Six Consequences of Sackett vs EPA; (New Mexico Educational Retirement Board, 2021[60]), Real Asset Investment Policy Statement, New Mexico, Santa Fe; (Robertson and Hayden, 2008[61]), Evaluation of a Market in Wetland Credits: Entrepreneurial Wetland Banking in Chicago; (World Bank, 2024[62]), Blueprints for Private Investment in Ecosystem Restoration: Lessons from Case Studies.
Third, developers, governments or other third-party implementers of biodiversity offsets may face challenges securing suitable biodiversity offset sites or projects (zu Ermgassen et al., 2020[63]; Tucker, 2022[64]). For example, of AUD 9.6 million paid into Queensland’s biodiversity offset fund from 2014-18, only AUD 1.5 million had been committed or spent on offsets by 2019 (Government of Queensland, 2019[65]). An audit of the New South Wales Biodiversity Offset Scheme concluded that biodiversity offset credit supply is lacking and poorly matched. More specifically, the audit finds that 96% of developer demand for species credits could not be met by current supply (NSW Audit Office, 2022[66]). Recommendations to address these issues included:
“Implement a resourced plan to improve the operation of the biodiversity credit market, including by improving the transparency of market information and by supporting adequate credit supply. The plan should allocate roles and timeframes for: • publishing enhanced information about current and expected credit supply and demand, and credit prices • proactively identifying potential Biodiversity Stewardship Agreement (BSA) sites • reducing barriers to landholders establishing BSA sites and accelerating timeframes for the establishment of BSA sites on private land” (NSW Audit Office, 2022[66]).
Ensuring adequate supply of biodiversity offset units will be critical when establishing new biodiversity mitigation banking markets. Governments can support this effort by providing regulatory certainty and guidance (as mentioned above), supporting or developing measures to de-risk biodiversity mitigation banking (e.g. insurance schemes to cover the risk of failure to produce offset credits) and financial incentives, such as governmental grants and tax relief (TNC, 2021[67]). Flexibility in where offsets can take place (e.g. within the same local jurisdiction, adjacent jurisdictions or non-adjacent jurisdictions) can also increase supply (TNC, 2021[67]), but may undermine environmental additionality and also disincentivise efforts to avoid impacts in the first place (zu Ermgassen et al., 2020[63]). Governments should therefore seek an appropriate balance (see also 6.4.5). Stacking (layering) and bundling of ecosystem services may help diversify fundings sources for biodiversity offset suppliers, although care will be needed to ensure additionality (6.4.4 and 8.1.2).
Fourth, lack of monitoring and enforcement may facilitate non-compliance with biodiversity offset policies (OECD, 2016[4]). For example, a report by the German state of Hesse’s audit court found that 42% of audited compensation measures were incomplete or of poor quality and 17% of audited offset measures not carried out all. Authorities had only monitored completion of measures in 40% of cases. Smaller-scale projects may tend to be less well scrutinised and monitored (Vader and Gaaf, 2007[68]); however, failure to implement multiple small offsets could lead to substantial cumulative uncompensated impacts. Ensuring effective systems and requisite capacity for monitoring and enforcing biodiversity offsets is therefore critical for scaling them up and ensuring their effectiveness (Section 6.4.8).
In summary, significant potential exists to scale up biodiversity offsets through regulation. Scaling up can be achieved by increasing the number of countries with mandatory no net loss or net-gain requirements, by extending the scope of existing policies and by ensuring effective implementation of policy requirements. visualises the as applied in current NNL policies. Addressing embedded failures to address biodiversity loss at each stage of the mitigation hierarchy (Figure 6.2) is key for both scaling up and increasing the effectiveness of biodiversity offsets (Section 6.4).
Source: (zu Ermgassen et al., 2019[3]), The Role of “No Net Loss” Policies in Conserving Biodiversity Threatened by the Global Infrastructure Boom, 10.1016/j.oneear.2019.10.019
6.3.2. Driver 2: Lender requirements (financial performance standards)
Lender requirements can be a key lever to drive offsets, particularly in countries with weak or no biodiversity offset policies. For example, over 80% of the World Bank’s investment in development infrastructure between 2015-19 was in countries that do not mandate biodiversity offsets; however, World Bank financed projects must meet Environmental and Social Standards, which have provisions on the mitigation hierarchy and biodiversity offsets (zu Ermgassen et al., 2019[3]).
Despite progress globally, many financial institutions still operate without biodiversity performance standards. For instance, of 155 public development banks and development finance institutions9 with over USD 500 million in assets that invest in high-biodiversity footprint infrastructure, only 42% (n=65) have biodiversity safeguards (most of which are based on IFC PS6) (Narain et al., 2023[69]). Additionally, many private financial institutions are yet to commit to the Equator Principles. Lack of biodiversity performance standards means project developers in countries without offset regulations may be able to obtain finance without applying the mitigation hierarchy to their biodiversity impacts.
While increasing the adoption of performance standards is an important step, ensuring their implementation is also critical. A global analysis identified just 22 biodiversity offsets that had been implemented to meet financial performance standards by 2018 (Bull and Strange, 2018[11]), although these offsets tend to be larger than those responding to government requirements. This estimate of financial performance-triggered offsets is likely conservative owing to poor data transparency; however, it does suggest that IFC’s PS6, the Equator Principles and other financial performance standards have played a relatively small role in driving offsets. An optimistic interpretation of this is that financial performance standards have been effective at ensuring clients (investees apply the mitigation hierarchy so that most projects address their adverse impacts through avoidance, minimisation and on-site restoration (Bennett and Gallant, 2017[49]). A pessimistic interpretation is that performance standards are not being effectively implemented. Indeed, several issues have been identified with the effective implementation of the Equator Principles, including lack of adequate governance mechanisms (enforcement, monitoring and sanctioning) and loopholes, grey areas and discretionary leeway (Hennig and Wörsdörfer, 2015[70]).
6.3.3. Driver 3: Voluntary corporate policies
The potential for scaling up biodiversity offsets in the absence of regulatory frameworks and investor requirements is likely to remain more limited than regulation and financial performance standards. This is due to the significant time, resources, and expertise required to implement effective offsets, as well as the inherent risks of offset failure (Bennett and Gallant, 2017[49]). However, the increased private sector engagement with biodiversity conservation and sustainable use, driven by growing awareness of nature-related risks and opportunities, may indicate some scope for scaling up. Financial and non-financial companies are increasingly assessing their biodiversity impacts and dependencies, with the support of initiatives such as the Taskforce on Nature-related Financial Disclosures (TNFD) and Science-Based Targets for Nature (SBTN). Furthermore, various companies are increasing their nature-related commitments (McKinsey&Company, 2024[71]; zu Ermgassen et al., 2022[26]).
To contribute to nature-positive efforts companies must strengthen efforts to mitigate their adverse impacts while seeking opportunities to deliver positive biodiversity outcomes. Voluntary biodiversity offsets with an objective of NNL or net gain could be an important tool to operationalise nature-positive targets and commitments (Maron et al., 2025[8]). The Nature Conservancy, for example, posits that where well-functioning offset markets exist and enjoy high public awareness, voluntary demand for biodiversity offset credit could increase as companies pursue objectives of biodiversity neutrality or nature positive (TNC, 2021[67]). Voluntary and regulatory offsets could play an even more important role if the scope of offsets is also extended to include corporate value chains in addition to direct project-level footprints. One key hurdle for achieving this, however, is that life-cycle assessments often produce aspatial or coarse spatial outputs, which cannot be easily used in the biodiversity gain measures used for site-scale offsetting (Bromwich et al., 2024[72]; Maron et al., 2025[8]). Research is examining how equivalency measures could be established for diffused value chain impacts (Rossberg et al., 2024[73]).
Governments can facilitate and promote the use of voluntary biodiversity offsets and their effectiveness through good policy. While many countries have policies that enable but do not mandate offsetting, the level of detail and guidance they provide to developers is often minimalistic. Finland provides an example of a relatively well-developed policy framework for voluntary offsets, with detailed rules and guidance for those wishing to adopt the approach (Box 6.6).
Biodiversity offsetting provisions were prepared from 2020-22 as part of the revision of Finland’s law on nature conservation. A broad working group and an expert group of ecologists informed the provisions, which are underpinned by ongoing scientific research by the Finnish Environment Institute, financed by the Ministry of Environment, and by the BOOST research group, financed by the Finnish Academy. While the proposal was for voluntary and compulsory offsetting, only voluntary offsetting was adopted in the Nature Conservation Act (9/2023). The provisions in the Nature Conservation Act are complemented by a Decree of the MoE on Voluntary Ecological Compensation (933/2023). The Nature Conservation Act 2023 aims to ensure credibility, correspondence, certification and transparency, while the Decree includes more detailed rules on evaluation and rules for accounting. Law stipulates what type of offsets are allowed and the metric and measurement approach to follow. The metric is a nature value hectare which is the quantity (area) x quality of a habitat. The quality of the habitat is scored on a ten-step scale from 0 (a site that has lost its natural state) to 1 (a site in its natural state or a comparable state), based on nationally defined characteristics of each habitat type. Offsets must achieve at least NNL. A multiplier (endangerment factor) is applied where threatened nature is degraded to reduce the risk of extinction. While the scheme was designed to address common issues identified in other countries, challenges remain such as greenwashing concerns, matching supply and demand, lack of environmental experts and capacity. Finland has identified and started to implement solutions to overcome these challenges including regulations and guidance for firms to address green washing, creation of market platforms and intermediaries to match supply and demand, developing tools/calculators, building capacity and creating tax incentives to facilitate development of biodiversity offset and credit markets.
Source: (Borgström, 2024[74]), Voluntary Ecological Offsetting in Finland. Presentation at the OECD International Workshop on Scaling up Biodiversity-Positive Incentives, October, 2024.
While scaling up biodiversity offset requirements is an important objective, it will only benefit biodiversity if offset policies and projects are effectively designed and implemented. Evidence for the effectiveness of biodiversity offsets is limited due to data gaps (6.4.8), but shows mixed outcomes (Devenish et al., 2022[75]; Josefsson et al., 2021[76]). For example, from a sample of 24 biodiversity offset projects with NNL objectives, nine (38%) reportedly achieved NNL for all given outcome variables, eight (33%) achieved NNL for some outcome variables and seven (29%) failed to achieve NNL for all outcome variables10 (zu Ermgassen et al., 2019[77]). A high offset ratio was the most cited reason for success. This is consistent with the data which found that 64% of schemes with offset ratios >1 achieved NNL, compared to 17% for offsets with ratios of 1 or less (zu Ermgassen et al., 2019[77]).
Failure of projects to achieve NNL objectives may result from poor policy design, non-compliance and failure of offsetting interventions (Lindenmayer et al., 2017[78]; Maron et al., 2018[40]; OECD, 2016[4]; zu Ermgassen et al., 2019[77]). This section discusses key considerations for fostering effective biodiversity offset policy and projects. OECD (2016[4]) provides further discussion of design and implementation features of biodiversity offsets, while (Maron et al., 2025[8]) offers a summary of common critiques of biodiversity offsets and recommendations for addressing these.
6.4.1. Rigorously apply the mitigation hierarchy, including by strengthening environmental assessments, permitting processes and spatial planning
Good practice stipulates that biodiversity offsets must be implemented only as a last resort after appropriate actions have been taken to first avoid and minimise adverse impacts (IUCN, 2016[79]; BBOP, 2018[80]). No two areas have identical biodiversity and associated ecosystem service values; therefore, some biodiversity will inevitably be lost in offset exchanges (IUCN, 2016[79]). Furthermore, biodiversity offsets have inherent uncertainties and risks (Maron et al., 2016[81]). Application of the mitigation hierarchy, with rigorous efforts to avoid impacts in the first place are therefore critical. Designed well, biodiversity offset requirements can help reinforce upfront avoidance (Pascoe, Cannard and Steven, 2019[82]).
Despite its importance in managing biodiversity risks, studies show the mitigation hierarchy is often poorly implemented, particularly the first step of avoidance (Gelot and Bigard, 2021[83]; Phalan et al., 2017[84]). This may be partly due to the lack of legal requirements and guidance. Only about one-quarter of countries with policies that enable or require biodiversity offsets stipulate that they must only be used as the last step of the mitigation hierarchy (Bull and Strange, 2018[11]), while few national environmental impact assessment (EIA) policies refer to the mitigation hierarchy (UN Environment, 2018[41]).
Beyond the lack of legal requirements to adhere to the mitigation hierarchy, various other factors can undermine its application. Firstly, EIAs are often conducted too late in project planning and are not effectively integrated with permitting processes. Once considerable time and money has already been invested in a project – or a permit has already been granted – it becomes difficult to pursue EIA recommendations for alternative project scenarios such as “no-project” or adjusted siting, thereby missing important opportunities for impact avoidance (UN Environment, 2018[41]). It is also important to consider the appropriate timing for introducing biodiversity offsets into EIA processes as this can affect the quality of the mitigation hierarchy and offsets (de Witt et al., 2019[85]). Second, public bodies sometimes lack the requisite capacity or political will to oversee effective implementation of EIAs and the mitigation hierarchy (Phalan et al., 2017[84]). Third, EIAs can be influenced by project developers or government officials, thereby reducing their rigour (Williams and Dupuy, 2017[86]). For example, companies may withhold payments to EIA consultants until a favourable report is provided (Dougherty, 2015[87]). Pressure on governments to deliver economic development may make a “no project” decision politically undesirable (Clare et al., 2011[88]), even though cancellation of a project may be appropriate due to the limits to what can be offset (Box 6.7). Fourth, EIA impacts may be ignored and projects pushed forward despite risks of irreplaceable biodiversity loss, for example if they are considered to be of over-riding strategic importance (Jones and Bull, 2019[89]). Fifth, weak assessment and enforcement of biodiversity offsets can weaken the incentive for upfront efforts to avoid and minimise impacts. If developers are not held accountable for their offsets, then offsetting becomes easier and more economical than avoidance (Clare et al., 2011[88]).
Certain adverse impacts on biodiversity cannot be offset, particularly when affecting unique or irreplaceable ecosystems. In such cases, the only way to avoid irreversible biodiversity loss is to not proceed with the project as designed. While some policies define upper limits to biodiversity loss, these limits are not always binding and may allow exceptions for socio-economic benefits or lack of alternatives. Where limits are set, they are typically based on:
Qualitative assessments of biodiversity uniqueness
Quantitative thresholds of irreplaceability and vulnerability
Biodiversity retention targets from national policies.
Understanding and applying these limits is essential to safeguard irreplaceable biodiversity.
Source: (OECD, 2016[4]), Biodiversity Offsets: Effective Design and Implementation, 10.1787/9789264222519-en; (WBG, 2016[90]), Biodiversity Offsets: A User Guide, https://documents1.worldbank.org/curated/en/344901481176051661/pdf/110820-WP-BiodiversityOffsetsUserGuideFinalWebRevised-PUBLIC.pdf
Governments can play a critical role in strengthening the mitigation hierarchy. A priority is to adopt regulations to require correct application of the mitigation hierarchy (Savilaakso et al., 2023[91]). Additionally, guidance for developers, EIA assessors and regulators can help promote good practices (e.g. drawing on the fifteen principles outlined in IUCN’s Policy on Biodiversity Offsets (IUCN, 2016[79])). More prominent use of strategic land-use planning based on robust ecological data and sensitivity mapping tools could strengthen the mitigation hierarchy by clearly identifying areas to avoid in advance of developments and helping to address potential cumulative impacts from projects (Bigard et al., 2020[92]; Clare et al., 2011[88]; OECD, 2024[93]). For developers, more effective land-use planning and prioritisation of high-value habitats for protection increases certainty and decreases risks associated with permitting process (Clare et al., 2011[88]). Additionally, it is important to ensure that public bodies have both the capacity and the political will to verify and enforce the effective application of the mitigation hierarchy. As challenges may vary across countries, governments could benefit from evaluating their own experience with the mitigation hierarchy and identify opportunities to improve its application.
6.4.2. Promote strategic planning of biodiversity offsets to better achieve biodiversity objectives and enhance cost effectiveness
The effectiveness and efficiency of biodiversity offsets can be significantly enhanced through strategic site selection and landscape-scale coordination. Regulatory biodiversity offsets are often small, scattered, and implemented with limited consideration of broader ecological networks (Bull and Strange, 2018[11]; Gelot and Bigard, 2021[83]). Globally, more than 90% of offset sites occupy an area of less than 1km2 (Bull and Strange, 2018[11]). Yet the potential success and benefits of restoration heavily depend on the scale and spatial configuration of offset projects (Gawecka and Bascompte, 2021[94]; Lawton, 2010[95]; Plumlee, Yeager and Fodrie, 2020[96]; Vozzo et al., 2024[97]).
A more strategic approach to biodiversity offsets involves integrating impact mitigation into landscape- or seascape-level planning and aggregating offset sites (see also discussion on equivalence 6.4.5). This can help enhance ecological connectivity and improve the ability of offsets to meet biodiversity conservation objectives (Grimm, Köppel and Geißler, 2019[98]; Kennedy et al., 2016[99]; Saenz et al., 2013[100]). For example, modelling in France illustrates that aggregating biodiversity offsets at a larger scale could increase overall habitat connectivity by 103% on average, with additional improvements achievable through spatially optimised site selection (Tarabon, Dutoit and Isselin-Nondedeu, 2021[101]). Additionally, pre-identifying biodiversity offset sites through national or subnational planning frameworks could reduce the transaction costs and administrative delays associated with site identification, permitting and feasibility verification (Grimm, Köppel and Geißler, 2019[98]; WBG, 2016[90]).
Various biodiversity offset frameworks can facilitate the strategic siting and aggregation of projects (WBG, 2016[90]). One approach is government-led site selection, where authorities determine where offsets must be sited (and potentially what actions must be undertaken) but developers remain responsible for delivering the offset. This approach has been implemented in Colombia. An alternative model involves governments implementing offsets with the support of developers, typically by expanding or enhancing protected area networks. This strategy, considered in the Biodiversity Offset Road Maps of Liberia and Mozambique, is particularly suitable for countries with uncertain land tenure, as it focuses on public lands. A third approach is mitigation banking (e.g. the US Wetland Mitigation Bank), which is most applicable in countries with significant privately-owned land, strong land tenure and regulatory oversight. Mitigation banks can effectively pool different offset projects and achieve efficiency gains; however, compared to the other two examples, governments may have less ability to strategically site offset projects while ensuring a viable market.
6.4.3. Clearly define and communicate objectives and reference levels
Biodiversity offsets pursue an objective of either NNL or net gain of biodiversity. To determine achievement of this objective is it necessary to set a reference level. Reference levels can be static (i.e. relative to a fixed value of biodiversity, e.g. the baseline or a policy target), or they can be dynamic (i.e. a counterfactual scenario e.g. based on what is likely to have occurred in the absence of the project and the offset) (IUCN, 2016[79]; Maron et al., 2018[40]). What constitutes NNL – and therefore biodiversity outcomes from offsets – vary significantly depending on the reference level. The exact same biodiversity offset could achieve theoretical net loss, NNL or net gain just by changing the reference level (Bull and Brownlie, 2015[102]).
In practice, biodiversity offset reference levels are typically dynamic (Simmonds et al., 2019[103]) and therefore seek relative rather that absolute NNL or net gain. Developing counterfactuals for biodiversity offsets can be challenging and has risks. For example, for averted loss offsets, using declining baselines risks overestimating or underestimating biodiversity’s decline, owing to uncertainties (Maseyk et al., 2016[104]). Overestimating the baseline rate of decline, which commonly occurs, can entrench biodiversity loss and incur societal costs (Maron et al., 2015[105]). Underestimating declines may benefit biodiversity by increasing the size of offsets seeking NNL but increases developers’ costs (Maseyk et al., 2016[104]).
Some offset policies, however, require absolute outcomes across impact and offset sites implying that a static reference level must be used. For example, offset policy in South Africa requires absolute NNL. Policy in Australia’s Northern Territory and in England, requires biodiversity offsets to achieve an absolute net gain in biodiversity (Maron et al., 2025[8]). The objectives and reference level used have implications for the type of biodiversity offset activity that may be suitable. For example, averted loss activities alone cannot achieve an absolute net gain in biodiversity; this requires enhancement offsets, which actively restore or improve ecosystems (Maron et al., 2025[8]).
Despite its importance, biodiversity offset policies tend not to explicitly communicate the reference level against which NNL or net gain should be achieved. This opacity is deepened by using NNL to describe two interlinked but distinct policy goals (Maron et al., 2018[40]). The first is an overarching goal applied at the jurisdictional level to achieve NNL of biodiversity by a given time, accounting for all impacts. The second is a project or impact-specific goal to compensate for loss from a specific type of development impacts using biodiversity offsets. These objectives may have different reference levels (e.g. one may be static and the other dynamic). While NNL at a project level may contribute to NNL at a jurisdictional level this will depend on how each of the reference levels is defined.
Specifying and providing guidance on reference levels could increase transparency, clarity for developers and public acceptance (Maron et al., 2016[81]). Furthermore, it would facilitate efforts to evaluate progress towards broader policy goals (Maron et al., 2018[40]). The complexity of establishing counterfactual scenarios is also one argument for a change to the prevailing biodiversity offset paradigm (Box 6.8).
Most biodiversity offsets seek an outcome of relative NNL of biodiversity, measured against a dynamic reference scenario of continued (business-as-usual) biodiversity decline. Such an approach is misaligned with biodiversity objectives of achieving overall NNL or net gain of biodiversity (i.e. compared to a static baseline). Biodiversity experts have proposed a new framework for compensating for biodiversity losses from development projects to better align with national and subnational targets (jurisdictional targets), such as those set by countries in their National Biodiversity Strategies and Action Plans to implement the Kunming-Montreal Global Biodiversity Framework. In the framework, targeted conservation outcomes such as desired species populations or minimum ecosystem extents are set in absolute terms at the jurisdictional level. Jurisdictional targets for specific biodiversity features are achieved via one of three pathways depending on the state of the biodiversity feature when the target was set:
1. Net gain: required when a biodiversity feature is below its target level, so the biodiversity feature must increase in absolute terms to at least the target level.
2. No net loss: required when a biodiversity feature is approximately at the target level. All losses would need to be balanced by proportionate gains to maintain the target level.
3. Managed net loss: may be appropriate in exceptional circumstances when a biodiversity feature is above its target for example in a situation where: a) the particular biodiversity feature is common and widespread; b) jurisdictional level losses can occur without compromising the ecological integrity and function of the feature (e.g. population viability, intactness); c) continued, strictly managed drawdown to a predetermined target level is socially acceptable.
Project level actions under the mitigation hierarchy are then designed to contribute to achievement of these objectives.
The authors outline how to set the appropriate type (i.e. “maintenance” or “improvement” measures) and amount of ecological compensation. For example, the amount of compensation required for any given project is determined by both how much residual loss a particular biodiversity feature experiences from a development project, and the pathway (e.g. NNL) required to achieve a target, along with several additional considerations (outlined below) that are factored into the calculation of a compensation ratio. Both target-based ecological compensation and counterfactual-based offsetting require strict adherence to the mitigation hierarchy, quantification of residual losses, and determination of compensatory requirements. The key difference lies in the calculation method for required compensation: the alternative approach bases the calculation on overall jurisdictional biodiversity targets and policy choices for achieving them, rather than project-specific assessments based on complex counterfactual scenarios. It seeks to move from a reactive, ad-hoc approach to a more systematic and strategic one.
Source: (Simmonds et al., 2019[103]), Moving from biodiversity offsets to a target-based approach for ecological compensation, 1111/conl.12695.
6.4.4. Ensure that biodiversity offsets deliver additional ecological improvements
Biodiversity offsets aim to compensate for ecological losses at development sites by delivering measurable biodiversity gains (usually elsewhere). For offsets to be effective, they must generate additional conservation or restoration outcomes that would not have occurred without the offset. This principle of additionality ensures that offsets deliver genuine biodiversity benefits beyond what is required by existing laws and regulations, and beyond what is being achieved through other initiatives. Despite its importance, additionality is sometimes lacking or unproven in biodiversity offset schemes. For example, an assessment of Victoria’s biodiversity offsetting market from 2006 to 2018 found that 47% of offsets provided no additional conservation benefit compared to a well-defined counterfactual. Meanwhile, 22% resulted in negative additionality, 30% delivered positive additionality and seven offsets were identified as highly effective (zu Ermgassen et al., 2023[106]).
The principle of additionality is widely recognised and enforced through diverse measures across jurisdictions. In the Netherlands, New South Wales (Australia), and Sweden, offset actions must exceed minimum legal obligations. Similarly, under the US Conservation Banking Programme, land already designated for conservation cannot be used as an offset.
Financing from biodiversity offsets should go over and above what governments already provide to biodiversity. Using offsets to fund pre-existing conservation commitments, such as protected area management, risks 'cost shifting', potentially reducing overall biodiversity finance, including public budgets. While avoiding cost shifting is a core principle for biodiversity offsets (IUCN, 2016[79]; OECD, 2016[4]), debate exists as to whether it is appropriate in some circumstances to use offset finance to support management of underfunded protected areas or their expansion to meet international commitments (Githiru et al., 2015[107]; Maron et al., 2016[108]; Pilgrim and Bennun, 2014[109]; World Bank Group, 2016[7]).
In some countries, the source of funding is used as a measure of additionality and to avoid cost-shifting. The use of public funds to finance the creation of a biodiversity offset is usually not allowed. For example, under German Impact Mitigation Regulations and Environmental Compensation for Land-Use Change in Forested Areas Program in Mexico, publicly funded restoration projects are unable to subsequently become offsets (ICF GHK and BIO Intelligence Service, 2013[110]). In the US Conservation Banking Programme, the use of federal government money to establish a bank does not preclude its participation in the scheme, but the number of credits allocated for sale is made pro rata according to the level of private funding (USFWS, 2003[111]).
While it is important to ensure additionality, opportunities may exist to integrate different incentives mechanisms with biodiversity offsets. This could help address the low supply of biodiversity offset credits sometimes facing nascent mitigation banking markets, by making conservation and restoration economically more attractive and diversifying risks. In England, for example, a landholder can sell biodiversity units, nutrient credits and simultaneously receive funding from agri-environment schemes but must follow certain rules designed to ensure additionality. For example, to receive agri-environmental payments on land selling biodiversity or nutrient credits, the landholder must show they are on different parcels of land or are on the same parcel but are not for creating, enhancing or maintaining habitat for BNG or nutrient mitigation (DEFRA and Natural England, 2023[112]). Clear rules and accounting and measurement protocols can help ensure the benefits of stacking are realised while maintaining ecological integrity (see also section 8.1.2).
6.4.5. Apply offset exchanges that are ecologically “like-for-like” or “like-for-better”, based on scientifically robust yet operational metrics
Generally, good practice principles indicate that an offset should strive to be ecologically equivalent to what is lost. This is often referred to as “like-for-like” or equivalency. In some circumstances an offset to conserve or restore different biodiversity values than those that were lost may be justified if they are of higher priority (i.e. “like-for-better”). For example, guidance for selecting offset sites in South Africa has shifted away from a strict like-for-like approach to a more holistic landscape approach with an aim to have offsets better contribute to its biodiversity goals and priorities (Kershaw, 2024[47]).
Designers of offset policies should explicitly consider and clearly define the spatial service area for offsets. Decisions on where offsets can be located should account for environmental, social and economic impacts (Grimm and Köppel, 2019[113]), and seek to promote like-for-like or like-for-better exchanges. The rules determining where offsets can be sited can influence both their environmental and cost effectiveness. Guidance generally promotes spatial proximity of offset sites to development sites (Shumway et al., 2022[114]; BBOP, 2012[115]). This is because spatial proximity can promote ecological equivalence (BBOP, 2012[115]) and better address the social impacts of development projects (Bull et al., 2018[116]). However, studies also suggest that some spatial flexibility may in certain contexts achieve better environmental outcomes (Mancini et al., 2024[117]; Shumway et al., 2022[114]), for example, where projects adversely affect migratory species, measures tailored to protect or restore breeding grounds and overwintering sites in other geographies may be more environmentally-effective and cost-effective. Spatial flexibility can also improve the efficiency of mitigation banking markets (Simpson et al., 2021[118]).
However, spatial flexibility brings clear risks and downsides (Shumway et al., 2022[114]). First, equivalency is likely to decrease with increased distance between a development and offset site. Second, if offsets are far from the project site, then local stakeholders may not be compensated for their loss of ecosystem service values. Third, governance can become more complicated when offsets are in different administrative or political boundaries. Fourth, by reducing the cost of offsets by increasing offset supply, spatial flexibility may weaken the incentive for developers to avoid impacts in the first place (zu Ermgassen et al., 2020[63]). Where biodiversity offsets seek like-for-better or are clearly linked to jurisdictional level targets and strategic landscape/marine planning (as in South Africa), then greater spatial flexibility may be justified (see also discussion in 6.4.2). Hybrid approaches could be envisaged where NNL is achieved locally, ensuring that social impacts resulting from ecosystem service loss are also accounted for, while net gains are achieved through strategic investment in priority biodiversity at a spatially larger level. The governance implications and administrative costs of such an approach would, however, need to be carefully examined.
Irrespective of the degree of spatial flexibility, achieving like-for-like or like-for-better outcomes in biodiversity offsets requires robust measurement approaches to quantify both the (projected) biodiversity losses at development sites and the corresponding gains at offset sites. However, measuring ecological equivalence is inherently complex, as no single metric can fully capture the multidimensional nature of biodiversity. Effective offsets therefore require defensible metrics that provide a proxy for total biodiversity and any priority biodiversity values, such as rare, threatened, or particularly important components of biodiversity (IUCN, 2016[79]). The choice of metrics significantly influences outcomes from biodiversity offsets and the likelihood of achieving policy targets (Bezombes et al., 2017[119]; Bull et al., 2014[120]; Marshall et al., 2024[121]). For example, using England’s current biodiversity metric (Box 6.2) to define 10% biodiversity net gain would translate to just small gains for plant species and negligible gains for other taxa such as birds, butterflies (Marshall et al., 2024[121]) and invertebrates more generally (Duffus et al., 2024[122]). Furthermore, while the metric works well to incentivise avoidance of biodiversity impacts, it may not effectively incentivise creation of diverse habitats aligned with strategic priorities (Miles et al., 2025[123]).
Various biodiversity metrics and measurement approaches have been adopted for biodiversity offsets. These metrics range from coarse measures that facilitate simpler exchanges but poorly represent biodiversity (e.g. “habitat area”), to more complex composite metrics that better represent biodiversity but are harder to operationalise. A common measurement approach is to use either habitat area and type as a proxy for biodiversity loss or to develop aggregated metrics combining habitat area with measures of habitat functionality (e.g. Canadian Fish Habitat Framework) or quality (e.g. Habitat Hectares in Victoria, Australia) (Carreras Gamarra, Lassoie and Milder, 2018[124]; Marshall et al., 2023[125]). While metrics combining habitat extent and quality (condition) are often combined, these tend not to adequately represent species, requiring complementary species metrics (Mancini et al., 2024[117]; Marshall et al., 2024[121]; Marshall et al., 2022[126]; Marshall et al., 2020[127]). Other offsetting metrics include measures of ecological function and ecosystem services (e.g. South Africa (Jacob et al., 2016[128])), the latter of which is important for capturing the impacts of developments and their offsets on local communities (Bull et al., 2018[116]; Griffiths et al., 2018[129]) (Box 6.9).
Biodiversity offsets and the projects for which they compensate can impact people in different ways. it is therefore important that offset policies and projects consider not only ecological outcomes but also the social impacts of interventions. Offsets often occur in areas where local communities rely on natural resources for their livelihoods, cultural identity, and well-being. Without careful design, offsets risk displacing harm onto vulnerable populations, exacerbating inequality. Global good practice states that biodiversity offsets should achieve not only a minimum of NNL of biodiversity but also ensure that people are “no-worse-off” or preferably better-off than before the project. This requires protecting and, where possible, enhancing the rights, benefits and participation of affected communities. Integrating social safeguards, such as free, prior, and informed consent, inclusive consultation, and equitable benefit-sharing, can help mitigate risks and foster legitimacy.
Source: (Bull et al., 2018[116]), Ensuring No Net Loss for people as well as biodiversity: good practice principles; 10.31235/osf.io/4ygh7; (Maron et al., 2016[81]), Taming a Wicked Problem: Resolving Controversies in Biodiversity Offsetting 10.1093/biosci/biw038.
The challenge when developing metrics is to balance the benefits of scientifically robust and comprehensive biodiversity assessments against the efficiency of simple measures that may be more easy to operationalise (Bezombes et al., 2017[119]; OECD, 2016[4]). Given the variety of metrics and measurement approaches and their influence on environmental outcomes, biodiversity offsets would benefit from clear guidance. An analysis (Marshall et al., 2023[125]) of 108 countries with policies for mandatory or voluntary biodiversity offsets identified found that just 22 jurisdictions across 14 countries have guidance on measurement approaches to adopt for biodiversity offsets. Three of these jurisdictions do not specify what measurement approach to take. While government guidance should seek consistency, it is important to recognise that a metric designed and applied in one context (e.g. ecosystem) may not be appropriate in another context (Bull et al., 2014[120]; Carreras Gamarra, Lassoie and Milder, 2018[124]).
6.4.6. Account for and manage temporal losses and uncertainties
Due to the inherent complexity of biodiversity, all biodiversity offsets involve some degree of uncertainty. Determining the exact biodiversity loss at an impact site or the corresponding gain of an offset is challenging. Both enhancement (restoration) and averted loss offsets face distinct uncertainties. For restoration offsets, despite advancements in restoration science, success is not guaranteed, and the timing of benefits can be unpredictable (Moilanen et al., 2009[130]). Averted loss offsets depend on assumptions about what would have happened without intervention, making it difficult to quantify the gains that can be credibly claimed (Section 6.4.2). Additional uncertainties apply to both types, including the effectiveness of protection measures in preventing loss, potential impact leakage (Moilanen and Laitila, 2015[131]), and the long-term enforcement and permanence of offsets (Section 6.4.7).The uncertainty of outcomes is also exacerbated by climate change (Maron et al., 2012[132]).
Furthermore, there is a risk of temporal loss of biodiversity. Temporal loss may arise for two main reasons. First, development impacts may occur before an offset has been implemented. This may occur, for example, where there are delays in securing offsetting sites or initiating conservation and restoration activities and where policies are weak regarding the timing of development activities vis-a-vis offset implementation. Temporal loss is often observed in offsets that rely on in-lieu fee mechanisms. For example, globally in 2017, at least USD 7.1 billion paid into offsetting funds had yet to be spent despite project impacts already occurring (Bennett and Gallant, 2017[49]). Second, the biodiversity benefits of offset activities can take time to accrue. For example, fully restoring a degraded ecosystem may take decades or centuries (Jones and Schmitz, 2009[133]; Rydgren et al., 2019[134]), whereas the adverse impacts of a development project may occur immediately.
Potential temporal losses and uncertainties should be made explicit, accounted for in offset calculations, and carefully managed throughout the lifespan of an offset. Several steps can be taken to help manage uncertainty and reduce temporal losses. First, offset multipliers can be used to factor in uncertainty or temporal loss into offset ratios (Moilanen et al., 2009[130]; Moilanen and Kotiaho, 2020[135]). Studies indicate that much higher-than-practiced offset ratios are necessary to factor in uncertainty and time lag to achieve NNL policies (Gibbons et al., 2015[136]; Moilanen et al., 2009[130]). The use of multipliers is mentioned in 19 of 22 policies covering offset measurement, but specific values are only defined in 11 policies. The values range from zero to thirty, depending on the policy (Marshall et al., 2023[125]). Second, biodiversity offsets could be required to be implemented prior to development starting to reduce temporal losses and uncertainty about the offset outcome. This can be facilitated by promoting mitigation banking as an alternative to one-off offsets or payments-in-lieu (OECD, 2016[4]). Third, offsets could include both restoration and averted loss measures (while recognising the additionality challenges associated with the latter) (Maron et al., 2012[132])and apply a hedge-betting approach with multiple interventions (Moilanen et al., 2009[130]). Fourth, the ecological outcomes from biodiversity offsets should be closely monitored and offsets should be managed adaptively (McKenney and Kiesecker, 2009[137]). Fifth, to address time lags, time discounting could be used to value future gains in current units and to account for risk (Maron et al., 2012[132]). The formulae for net present value presented by Gibbons et al. (2015[136]) provides a practicable example of how discounting could be applied.
6.4.7. Secure strong governance and long-term financing to sustain offset gains
Biodiversity losses at development sites can be long-lasting, if not permanent. To achieve NNL, biodiversity benefits provided by offsets should last at least as long as the impacts they seek to address. This is known as the principle of permanence (Maron et al., 2025[8]; OECD, 2016[4]). While the need for biodiversity offset benefits to be sustained is a key requirement in a number of countries’ biodiversity offset policies (e.g. in Australia, Brazil, EU, US), its implementation faces challenges (Jenner and Howard, 2015[55]; McKenney and Kiesecker, 2009[137]). Furthermore, the time frames specified by offset programmes do not match most ecological time frames needed to achieve NNL (Damiens, Backstrom and Gordon, 2021[138]).
Ensuring longevity of biodiversity offsets requires strong governance, including secure property rights. One approach is to donate offset sites to public conservation estates. For instance, Rio Tinto QMM’s project in Madagascar converted six offset sites into protected areas under Malagasy law, ensuring legal protection against land-use changes (IUCN and ICMM, 2013[139]). Conservation covenants or easements can help to ensure the longevity of an offset (but do not per se guarantee permanence (Commonwealth of Australia, 2014[140]; Jenner and Howard, 2015[55])). Covenants or easements are used in various countries. For example, in the US, conservation banking mandates permanent land protection through fee title or conservation easements. In Victoria, Australia, offset site landowners can permanently protect their sites through three legal on-title security agreements, including an offset covenant with the Trust for Nature, under the Victorian Conservation Trust Act 1972 (VAGO, 2022[48]). Alternatively, landowners can transfer freehold land to the Crown to manage under a memorandum of understanding with the Department of Environment, Land, Water and Planning (VAGO, 2022[48]).
In addition to securing the legal protection of an offset site, long-term financing is necessary to implement the interventions required for achieving biodiversity gains and ensuring these gains last. Proper application of the polluter pays principle would entail developers covering the full costs of offsets for their duration (Damiens, Backstrom and Gordon, 2021[138]). To ensure long-term financing, some offset programmes require financial assurances from offset suppliers (OECD, 2016[4]). Financing mechanisms, such as non-wasting endowment funds, are commonly used for perpetual land management, where the annual interest funds ongoing actions for biodiversity (OECD, 2016[4]). In the US Compensatory Wetlands Mitigation scheme, financial security is demonstrated through interim investment funds and trust funds that finance the bank over time.
6.4.8. Implement robust monitoring, evaluation and enforcement of biodiversity offsets
Monitoring and evaluation are central to effective biodiversity offsetting. They help inform adaptive management and policy and assess compliance. In some cases, biodiversity offsets may meet regulatory requirements but fail to meet either project or policy objectives due to issues with policy or project design, implementation and uncertainties about ecosystem responses (Bezombes, Kerbiriou and Spiegelberger, 2019[45]; Carreras Gamarra and Toombs, 2017[46]; Lindenmayer et al., 2017[78]; zu Ermgassen et al., 2019[77]). Monitoring and evaluation provide information necessary to adapt the offset project to better deliver on its objectives. They can also generate insights for projects and policy developments to limit future failures. However, data transparency for biodiversity offsets tends to be poor, undermining evaluations of effectiveness and accountability (Box 6.10).
While the situation varies across jurisdictions, overall transparency around offset calculations and the effectiveness of offset implementation tends to be poor. Well-designed public registers can increase transparency, facilitating evaluation of biodiversity offset policies and public scrutiny of their effectiveness. However, a global analysis found just nine public biodiversity offset registers. Jurisdictions with registers account for approximately 25% of the world’s biodiversity offsets but the registers do not cover all offsets in these jurisdictions. No register contains public data sufficient to assess whether NNL of biodiversity has been achieved. Seven registers do not cover the size of losses to be offset, five do not specify impacted biodiversity features and three do not allow identification of what development was being offset.
Kujala et al. suggest the following information requirements for a credible register: 1) impacted biodiversity features and their status or condition before the development; 2) estimate of loss for those features; 3) the size, type and duration of offset actions; 4) estimate of gains produced by the offset; 5) assumptions regarding counterfactual scenarios for the development and offset site(s) when estimating losses and gains; 6) the performance measure(s) used to evaluate offset effectiveness; and 7) the parties responsible for delivering the offset.
Source: (Bezombes, Kerbiriou and Spiegelberger, 2019[45]), Do biodiversity offsets achieve No Net Loss? An evaluation of offsets in a French department, 10.1016/j.biocon.2019.01.004; (Kujala et al., 2022[141]), Credible biodiversity offsetting needs public national registers to confirm no net loss, 10.1016/j.oneear.2022.05.011; (Maron et al., 2016[81]), Taming a Wicked Problem: Resolving Controversies in Biodiversity Offsetting, 10.1093/biosci/biw038.
In other cases, biodiversity offsets may fail because they fall short of regulatory requirements (Bezombes, Kerbiriou and Spiegelberger, 2019[45]; Quigley and Harper, 2006[142]; VAGO, 2022[48]). Non-compliance can arise for various reasons, and the compliance regime should reflect this diversity. Some landowners may intentionally breach contracts to minimise costs, while others may do so unintentionally (OECD, 2016[4]). The design of an offset supply agreement significantly impacts the likelihood of compliance, with key factors including the specification of landowner liability, the opportunity costs of compliance, the probability of detecting non-compliance, and the penalties for violations (OECD, 2016[4]).
If monitoring, reporting, and verification activities identify breaches, remedial actions may be necessary. These actions are feasible only when the agreements are enforceable and include penalties for violations. Initial enforcement measures, such as requests for remedial action, warning letters, and inspections, can be low-cost steps to identify co-operative suppliers willing to quickly return to compliance with minimal regulatory intervention (OECD, 2016[4]). For persistent non-compliance, stronger enforcement actions are required. For example, the US Army Corps of Engineers has the power to impose a variety of penalties in the Compensatory Wetlands Mitigation programme, depending upon the style of environmental compensation that was used (i.e. who is legally liable for the compensation). They may issue compliance orders, levy administrative penalties, require security bonds to be forfeited, and suspend or revoke planning permission. In cases where the non-compliance is “wilful, repeated, flagrant, or of substantial impact”, the US Army Corps of Engineers may refer the case to the Department of Justice to seek an injunction and the possibility of civil penalties (OECD, 2016[4]). Identifying and remedying non-compliance may require building capacity of regulators and ensuring sufficient powers to prosecute (Maron et al., 2016[81]; VAGO, 2022[48]).
In addition to MRV of individual projects, periodic audits of offset schemes or policies can help ensure biodiversity offsets are scaled up effectively. Audits can provide valuable information on the performance of biodiversity offset policies and programmes and recommendations for their improvement. Audits have been conducted for various state and federal level schemes including in Australia, Germany and the US, and have helped inform policy change. For example, a report by the New South Wales (NSW), Auditor-General (NSW Audit Office, 2022[66]) and an independent review of the Biodiversity Conservation Act 2016 (Henry and et al., 2023[143]) highlighted major deficiencies in the state's biodiversity offsets scheme, accompanied by several recommendations for reform. In response, the NSW government introduced extensive reforms in November 2024 to strengthen the credibility of the offset system. Key measures include ensuring the scheme delivers a net positive impact on nature, establishing public registers to monitor developers' obligations, and restricting the reliance on monetary payments as a form of offset.
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← 1. Uncertainty bounds: +25 013 km2 and -64 223 km2.
← 2. This leaves 7% of offsets that take ‘other’ approaches and 8% for which the approach is unknown.
← 3. Nine countries have implemented a significant number of biodiversity offset projects – defined as more than 100. This conservative global estimate of biodiversity offset expenditure is based on five of these countries for which data were available. The estimates were based on different years and adjusted to 2019 values. The countries and years of the original estimate are: Australia (2017), Brazil (2016), Germany (2010), Mexico (2011), and the United States (2007, 2017). The other four countries that have implemented a significant number of biodiversity offset projects are: Canada, France, the Netherlands and Spain.
← 4. The global statistics in this chapter on country offset policies are based on the (GIBOP, 2024[13]), which is the most comprehensive database of biodiversity offsets but takes an inclusive definition that includes broader compensation actions. As stated by (Bull et al., 2016[2]), “to qualify as an offset, there must be demonstrably quantifiable equivalence between what is lost and gained [...] An offset can therefore be seen as a specific and rigorously quantified type of compensation measure.”
← 5. See footnote above.
← 6. Most countries are non-designated. To become designated a country must be both an OECD member and appear on the World Bank High Income Country list. Designated countries are deemed to have robust environmental and social governance, legislation systems and institutional capacity. The Equator Principles - Equator Principles (equator-principles.com).
← 7. All 100 of the 2016 Global Fortune 100, an additional 27 firms from the 2021 Global Fortune 100, and an additional 40 firms from the 2016 ‘net impacts’ commitment tracker.
← 8. Consultation: https://consult.defra.gov.uk/defra-net-gain-consultation-team/consultation-on-the-principles-of-marine-net-gain/ List of suggested strategic interventions in consultation response: https://www.gov.uk/government/consultations/consultation-on-the-principles-of-marine-net-gain/outcome/summary-of-responses.
← 9. Identified from this database: http://www.dfidatabase.pku.edu.cn/.
← 10. Note that evaluations were based predominantly on area-based outcomes, which are heavily criticised.