Economic-ecological evaluation of temporary biodiversity offsets in Alberta's boreal forest

To conserve biodiversity on forest landscapes, it is necessary to understand how incentives in an offset market affect the dynamics of habitat loss and restoration. In this study, a model of firm behaviour in a temporary biodiversity offset market is developed to understand the impact of offset rules on the dynamics of land use and offset policy costs and benefits for Alberta's boreal forest. Policy treatments include eligibility rules for restoration versus avoided loss; time lags for crediting restoration benefits; and geographic trading restrictions. The analysis highlights the assumptions and trade-offs embedded in offset principles such as additionality. Restoration-based policies, which require biodiversity benefits to be established prior to development, are over 200 times more costly than policies that include avoided loss. Geographic trading restrictions result in a significant redistribution of policy costs and ecological risks between regions, with little impact on aggregate policy costs and benefits. Including avoided loss results in a decline in biodiversity intactness by 2% to 2.2% compared to a decline of 3.6% under a no-offset policy. Increasing time lags for crediting restoration to match ecological recovery trajectories reduces restoration effort when policies include both restoration and avoided loss.