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Bundling of Ecosystem Services in Conservation Offsets: Risks and How They Can Be Avoided

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  • Martin Drechsler

    (Helmholtz Centre for Environmental Research—UFZ, Department of Ecological Modelling, Permoserstr. 15, 04318 Leipzig, Germany
    Brandenburg University of Technology Cottbus-Senftenberg, Chair of Economics, in Particular Environmental Economics, 03046 Cottbus, Germany)

Abstract

Conservation offsets are increasingly used as an instrument to conserve biodiversity and ecosystem services on private lands. Bundling ecosystem services (ES) in the market transactions saves costs but implies that only the bundle of ES is conserved while individual ES may decline. This paper presents a simple model analysis of a conservation offset scheme to identify conditions under which bundling can lead to such undesired declines. As it turns out, these are favoured by rarity of the ES as well as a positive correlation between their abundance and the cost of their conservation. A market rule is proposed that is able to avert undesired ES declines. Rather than on sums or means of ES, this market rule focuses on the least abundant ES. Systematic variation of model parameters shows that this trading rule is most effective in those cases where the likelihood of undesired ES losses is highest.

Suggested Citation

  • Martin Drechsler, 2021. "Bundling of Ecosystem Services in Conservation Offsets: Risks and How They Can Be Avoided," Land, MDPI, vol. 10(6), pages 1-10, June.
    • Handle: RePEc:gam:jlands:v:10:y:2021:i:6:p:628-:d:573564
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    References listed on IDEAS

    as
    1. Vaissière, Anne-Charlotte & Quétier, Fabien & Calvet, Coralie & Levrel, Harold & Wunder, Sven, 2020. "Biodiversity offsets and payments for environmental services: Clarifying the family ties," Ecological Economics, Elsevier, vol. 169(C).
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    4. Boyd, James & Wainger, Lisa, 2003. "Measuring Ecosystem Service Benefits: The Use of Landscape Analysis to Evaluate Environmental Trades and Compensation," RFF Working Paper Series dp-02-63, Resources for the Future.
    5. Drechsler, Martin & Hartig, Florian, 2011. "Conserving biodiversity with tradable permits under changing conservation costs and habitat restoration time lags," Ecological Economics, Elsevier, vol. 70(3), pages 533-541, January.
    6. Drechsler, Martin, 2021. "Impacts of human behaviour in agri-environmental policies: How adequate is homo oeconomicus in the design of market-based conservation instruments?," Ecological Economics, Elsevier, vol. 184(C).
    7. Kemkes, Robin J. & Farley, Joshua & Koliba, Christopher J., 2010. "Determining when payments are an effective policy approach to ecosystem service provision," Ecological Economics, Elsevier, vol. 69(11), pages 2069-2074, September.
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