Evaluating the impact of biodiversity offsetting on native vegetation

Abstract

Biodiversity offsetting is a globally-influential policy mechanism for reconciling trade-offs between development and biodiversity loss. However, there is little robust evidence of its effectiveness. We evaluated the outcomes of a jurisdictional offsetting policy (Victoria, Australia). Offsets under Victoria’s Native Vegetation Framework (2002-2013) aimed to prevent loss and degradation of remnant vegetation, and generate gains in vegetation extent and quality. We categorised offsets into those with near-complete baseline woody vegetation cover (“avoided loss”, 2702 ha) and with incomplete cover (“regeneration”, 501 ha), and evaluated impacts on woody vegetation extent from 2008-2018. We used two approaches to estimate the counterfactual. First, we used statistical matching on biophysical covariates: a common approach in conservation impact evaluation, but which risks ignoring potentially important psychosocial confounders. Second, we compared changes in offsets with changes in non-offset sites that were later enrolled as offsets, to partially account for self-selection bias (where landholders enrolling land may have characteristics associated with different management). Matching on biophysical covariates, we estimated that regeneration offsets increased woody vegetation extent by 1.9-3.6%/year more than non-offset sites (138-180 ha from 2008-2018), but this effect weakened with the second approach (0.3-1.9%/year more than non-offset sites; 19-97 ha from 2008-2018) and disappeared when a single outlier land parcel was removed. Neither approach detected any impact of avoided loss offsets. We cannot conclusively demonstrate whether the policy goal of ‘net gain’ was achieved because of data limitations. However, given our evidence that the majority of increases in woody vegetation extent were not additional (would have happened without the scheme), a net gain outcome seems unlikely. The results highlight the importance of considering self-selection bias in the design and evaluation of regulatory biodiversity offsetting policy. They also highlight the challenges of conducting robust impact evaluations of jurisdictional biodiversity offsetting policies.

Nature-based credit markets at a crossroads

“…A swathe of recent impact evaluations demonstrating disappointing results suggest nature-based credits are at a crossroads (4)(5)(6). Either nature-based credit markets continue to implement crediting processes replete with implicit incentives to overcredit, lose investor confidence and constrain one of our most promising tools for drawing private investment into conservation (see fig.…”

“…would not have happened in the absence of the intervention). However, multiple evaluations of voluntary credit markets have found this assumption is not consistently reliable (4)(5)(6). The economic problem common to all creditswith nature-based credits no exceptionis adverse selection (6).…”

“…However, multiple evaluations of voluntary credit markets have found this assumption is not consistently reliable (4)(5)(6). The economic problem common to all creditswith nature-based credits no exceptionis adverse selection (6). Nature-based credit markets rely on self-selection into the market, but economic theory tells us this implicitly incentivises landowners most likely to have already been implementing similar measures, or in the case of forest protection, enrolling forest that was not under threat.…”

“…The theory and statistical tools that demonstrate widespread over-crediting also provide evidence that some credits do work (5,6) and a route towards better accreditation methodologies. Evaluations of the outcomes of nature-based credits in various jurisdictions have identified specific projects that consistently outperform their control sites (derived using methods such as statistical matching or synthetic controls) (4)(5)(6).…”

Achieving biodiversity net gain by addressing governance gaps underpinning ecological compensation policies

“…Empirical evaluations of other biodiversity compensation policies demonstrate that England's BNG policy addresses some of the shortcomings identified in existing offset policies, but not others. For example, one of the key reasons behind poor outcomes in Australian offset policies has been a reliance on avoided‐loss offsets, which are based on simple and often incorrect assumptions about land clearance that would have occurred in the absence of offsets, leading to the systematic nonadditionality of offsets (Gibbons et al., 2018; zu Ermgassen et al., 2023). The English system implements biodiversity improvements relative to a static baseline, therefore, increasing the probability that the biodiversity gains are additional, a method that successfully delivers additionality in the US wetland compensation system (Inkinen et al., 2022).…”