Introducing wetland offset markets under development-restoration conflicts: The role of public offset credit supply

Wetland offset markets (WOMs) are increasingly applied worldwide as powerful tools for mitigating conflicts between wetland development and restoration. Reducing benefit uncertainty is key to promoting private restoration and introducing WOMs, which necessitates sufficient and stable price signals. Given that governments are important suppliers in WOMs, this article aims to explore the role of public offset credit (OC) supply in delivering and adjusting price signals during WOM formation and evolution. A general spatial agent-based wetland offset market model is built to simulate landowners' behavior, price dynamics, and WOM evolution under different public OC supply schemes. The results show that the spontaneous formation of WOMs is a time-consuming process. Price signals of public OCs reduce price fluctuations at the early stage of WOMs. This price stabilizing effect can cause a long-term reduction in benefit uncertainty perceived by landowners. Therefore, public OCs can facilitate WOM formation either through the supply side with high supply prices or through the demand side with low supply prices. During the entire WOM evolution process, due to landowners' readaptation, cheap public OCs can cause significant market fluctuations following the ceasing of cheap public supplies. The impacts of public OC on wetland development and restoration might change over time, and the suitability of public OC supplies under different long-term wetland management preferences was analyzed. These findings can further the understanding of the process of introducing a new market mechanism, such as WOMs, and the role of the government as a supplier. The research results provide insights for WOM practices, public restoration and OC supply scheme design, and wetland development-restoration conflict coordination.