Flexibility trade-offs in conservation offsets

Conservation offsets promise cost-effective conservation of biodiversity, especially under economic and environmental change, because they represent a more flexible approach to biodiversity conservation, allowing for the economic development of ecologically valuable land provided that this development is offset by restoration of previously developed areas. The level of flexibility is determined by the trading rules. Lax rules allow for more flexibility, which promises cost savings, but will likely lead to unintended loss of biodiversity. I analyzed the trade-off between economic costs and ecological benefits (biodiversity conservation) in biodiversity offsetting with an ecological-economic model that considered the three main types of offset flexibility: spatial, temporal, and ecosystem type. I sought to examine the influence of ecological and economic conditions on offset flexibility trade-offs. Large variation in the conservation costs and small costs of habitat restoration strongly increased trading activity and reduced the ecological benefit. The ecological benefit was most sensitive to spatial flexibility when a short range of ecological interaction was considered. At a large interaction range, spatial flexibility delivered large cost savings without overly reducing the ecological benefit. Risks and time lags associated with habitat restoration favored an offsetting scheme in which credits are awarded with the initiation of restoration projects rather than their successful completion-given appropriate offsetting multipliers were chosen. Altogether, under scarce resources, the level of flexibility in an offsetting scheme should be chosen by carefully balancing ecological benefits and economic costs.