Guidelines for selecting an appropriate currency in biodiversity offset transactions

When designing biodiversity offset transactions, selecting the appropriate currency for measuring losses and gains to biodiversity is crucial. Poorly designed currencies reduce the likelihood that the proposed offset will sufficiently compensate for the development impact on the affected biota. We present a framework for identifying appropriate offset currencies for terrestrial biodiversity features, either vegetation communities or particular species. The guidelines were developed based on a review of issues and solutions presented in the existing literature, including government policies and guidance. We assert that while benchmark-based condition scores provide a suitable offset transaction currency for vegetation communities, this approach is also commonly applied to individual species based on the often-unproven assumption that vegetation quality is a proxy for the value of a site to that species. We argue that species are better served by species-specific currencies based on either species abundance, or the suitability and amount of the habitat available. For species where it is practical and meaningful to measure the abundance on site, an abundance-based currency using either directly observable or proxy indicators is the most representative measure of the net impact on the species. In other instances, such as when species are difficult to locate, or not reliably present on site, a currency based on the quality and amount of habitat is preferable. The habitat-quality component should be measured relative to its value for the species, with the most important attributes weighted accordingly. Ensuring the currency used in biodiversity offset transactions is practical to measure, and relevant to the species or vegetation community is an important step in minimising the net biodiversity losses from unavoidable impacts.