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Understanding the Performance of Biodiversity Offset Markets: Evidence from an Integrated Ecological-Economic Model

Author

Listed:
  • Katherine Hannah Simpson
  • Frans de Vries
  • Martin Dallimer
  • Paul R Armsworth
  • Nick Hanley

Abstract

Biodiversity offset markets can incentivize private landowners to take actions that benefit biodiversity. A spatially explicit integrated ecological-economic model is developed and employed for a U.K. region where offset buyers (house developers) and sellers (farmers) interact by trading offset credits. We simulate how changes in the ecological metric and geographic scale affects the performance of the offset market. Results show that the choice of the metric has a significant effect on market liquidity and the spatial distribution of gains and losses in the “target” species. The results also consistently reveal relatively higher potential welfare gains for developers than for farmers.

Suggested Citation

  • Katherine Hannah Simpson & Frans de Vries & Martin Dallimer & Paul R Armsworth & Nick Hanley, 2021. "Understanding the Performance of Biodiversity Offset Markets: Evidence from an Integrated Ecological-Economic Model," Land Economics, University of Wisconsin Press, vol. 97(4), pages 836-857.
    • Handle: RePEc:uwp:landec:v:97:y:2021:i:4:p:836-857
    Note: DOI: 10.3368/le.97.4.030420-0032R
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    File URL: http://le.uwpress.org/cgi/reprint/97/4/836
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    Citations

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    Cited by:

    1. Gerling, Charlotte & Schöttker, Oliver & Hearne, John, 2022. "The ”climate adaptation problem” in biodiversity conservation: the role of reversible conservation investments in optimal reserve design under climate change," MPRA Paper 114812, University Library of Munich, Germany.
    2. Martin Drechsler, 2022. "On the Cost-Effective Temporal Allocation of Credits in Conservation Offsets when Habitat Restoration Takes Time and is Uncertain," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(2), pages 437-459, June.
    3. Christopher J. Banks & Katherine Simpson & Nicholas Hanley & Rowland R. Kao, 2023. "Assessing the potential impact of environmental land management schemes on emergent infection disease risks," Papers 2311.07735, arXiv.org.

    More about this item

    JEL classification:

    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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