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When profitability meets conservation objectives through biodiversity offsets

Author

Listed:
  • Celine Huber

    (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

  • Luc Doyen

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier)

  • Sylvie Ferrari

    (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

Abstract

Biodiversity offsets (BOs) are increasingly used as economic instruments to manage biodiversity and ecosystem services in the context of economic development. This study investigates the sustainability conditions of BOs. It focuses especially on both the timing and pricing of BOs in development‐offset projects. To address this issue, a minimal time control model is proposed, allowing a dynamic and multicriteria approach to be combined through both ecological and economic targets. We rely here on no net loss (NNL) and positive net present value (NPV) goals. In particular, we focus on an offset marginal price, called offset sustainability price (OSP), which equalizes the NNL and payback times. We prove analytically how this OSP pricing corresponds to a win–win solution in terms of ecological‐economic synergy. We also show that this OSP pricing can be very high compared to the project rate of return, particularly when the biodiversity loss is high. More globally, a static comparative analysis shows the extent to which the economic and biodiversity parameters impact the OSP. Finally, a numerical application related to mangroves and aquaculture in Madagascar illustrates the analytical findings. For this case study, we argue that the current BO price is underestimated.

Suggested Citation

  • Celine Huber & Luc Doyen & Sylvie Ferrari, 2023. "When profitability meets conservation objectives through biodiversity offsets," Post-Print hal-04312260, HAL.
    • Handle: RePEc:hal:journl:hal-04312260
    DOI: 10.1111/nrm.12389
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04312260v1
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    References listed on IDEAS

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    1. Semaan, Josephine & Flichman, Guillermo & Scardigno, Alessandra & Steduto, Pasquale, 2007. "Analysis of nitrate pollution control policies in the irrigated agriculture of Apulia Region (Southern Italy): A bio-economic modelling approach," Agricultural Systems, Elsevier, vol. 94(2), pages 357-367, May.
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