Indirect leakage leads to a failure of avoided loss biodiversity offsetting

Abstract

Biodiversity offsetting has quickly gained political support all around the world. Avoided loss (averted risk) offsetting means compensation for ecological damage via averted loss of anticipated impacts through the removal of threatening processes in compensation areas. Leakage means the phenomenon of environmentally damaging activity relocating elsewhere after being stopped locally by avoided loss offsetting. Indirect leakage means that locally avoided losses displace to other administrative areas or spread around diffusely via market effects. Synthesis and applications. Indirect leakage can lead to high net biodiversity loss. It is difficult to measure or prevent, raising doubts about the value of avoided loss offsetting. Market demand for commodities is on the rise, following increasing human population size and per capita consumption, implying that indirect leakage will be a rule rather than an exception. Leakage should be accounted for when determining offset multipliers (ratios) even if multipliers become extremely high.