Development activities such as mining, land conversion, or housing and road projects, frequently result in negative impacts on biodiversity. Environmental regulations typically require these impacts to be first avoided, minimized or remediated at the impact site, but residual impacts usually remain. To compensate for these residual impacts, a biodiversity offset that will at least deliver a ‘no net loss’ outcome for biodiversity may be required. Offset actions may occur at some distance from the impact site, and can include actions that protect biodiversity in a certain area, maintain biodiversity condition or enhance the condition of the biodiversity features of interest at an offset site.

One of the most common ways that offsets can be secured is by protecting areas of habitat already present within the landscape. These offsets are called ‘averted loss offsets’ (or avoided loss offsets) and can prevent the future loss of an area of biodiversity, the condition of biodiversity, or both. Averting the future loss of biodiversity can be an appealing option. For example, the protection of biodiversity (such as by changing land tenure) can be achieved relatively quickly, especially when compared to the often time consuming, costly and uncertain process of creating new habitat.

Left: Biodiversity offsets have been used to compensate for residual impacts on the Critically Endangered Swift Parrot in Australia. Photo: Heather W. Flickr CC BY-NC-2.0. Right: Biodiversity offsets have been used to compensate for residual impacts on the Endangered Forest Red-Tailed Black Cockatoo in Australia. Photo: Sunira Moses CC BY-SA 4.0 Wikimedia Commons.

Although logically appealing, averted loss offsets have been shown to actually do more harm than good for biodiversity (see for example Maseyk et al., 2017; Maron et al., 2015). An expected future loss of biodiversity can only be averted by an offset when there is a genuine threat of loss to avert. If there is no likely future threat, no benefit can be achieved for biodiversity simply by protecting the site. And in most cases the actual risk of loss at a site if it were not protected is much lower than we may think. Therefore, to be confident that averted loss offsets are achieving the biodiversity benefits they claim, the ‘likelihood of future loss’ needs to be calculated, such that the true gain from protecting the site (and averting the anticipated loss) can be estimated.

Predicting the future is inherently difficult, and because humans tend to be risk-averse, estimations of loss are often overestimated (commonly referred to as the loss-aversion cognitive bias). Our work has shown that decision-makers responsible for evaluating offset options are highly prone to this bias (Maron et al., 2015; Maseyk et al., 2017). Overestimating the likelihood of future loss has detrimental consequences for biodiversity because this leads to an overestimation of the anticipated gains from an averted loss offset. This means that the actual offset gains are less than anticipated, and the loss of biodiversity values at the impact site remain unaccounted for (Fig. 1). This is why averted loss offsetting is actually a high-risk endeavour—biodiversity losses end up being greater than the offset gains, and we fail to meet policy objectives (such as ‘no net loss’).

Fig. 1 Conceptual illustration showing how miscalculating gains from preventing loss of area effects the adequacy of the total offset package.

To address these issues and improve current offsetting practice, our team from the Threatened Species Recovery Hub1 worked with the Australian Department of the Environment and Energy to develop a robust process to estimate the likelihood of future loss of biodiversity under various offsetting scenarios. We developed a step-by-step framework to guide these calculations and to increase confidence that the benefit of an offset proposal is at least equal to the impacts resulting from development activities.

Our method for estimating the biodiversity benefit of an averted loss offset action involves calculating the likelihood of future loss of a proposed offset site under two future scenarios:

  • The offset scenario, where the proposed offset action (protection) has been implemented
  • The counterfactual scenario, where the proposed offset action has not been implemented (‘business as usual’)

To calculate the likelihood of loss under each of these scenarios, there are three important factors to consider:

  • Site-specific influences on the likelihood of loss
  • Policy and legislative requirements likely to be triggered by any impact to the proposed offset site
  • Recent rates of loss at similar sites

For the offset scenario (where the offset is implemented), we must additionally consider whether the site protection will be strong enough to exclude future impacts.

Biodiversity offsets can also be used to address residual impacts on habitat such as the Central Hunter Valley Eucalypt Forest and Woodland ecological community pictured here. Photo: Tony Rodd Flickr CC BY-NC-SA 2.0.

In our article, we provide a decision tree to guide decision-makers on how to develop likelihood of future loss estimates under the offset scenario and the counterfactual scenario. These calculations are challenging, and are prone to the influence of various cognitive biases (i.e. loss aversion bias, the availability heuristic and the probability neglect bias).

Our work shows that offsets that protect existing biodiversity will be most effective when the future risk of loss is genuinely high, and this is the case much less frequently than we intuitively think. It also highlights the importance of a robust, transparent and defensible process for estimating the likelihood of future loss that can guide decision-making and improve future biodiversity offset policy and practice.


Maron, M., Bull. J.W., Evans, M.C. & Gordon, A. (2015) Locking in loss: Baselines of decline in Australian biodiversity offset policies. Biological Conservation, 192, 504–512.

Maseyk, F.J.F., Evans, M.C., Maron, M. (2017) Guidance for Deriving ‘Risk of Loss’ Estimates when Evaluating Biodiversity Offset Proposals under the EPBC Act. Report to the National Environmental Science Programme, Department of Environment and Energy. Threatened Species Recovery Hub, Project 5.1 ‘Better offsets for threatened species’. Centre of Biodiversity and Conservation Science, University of Queensland.

1The Threatened Species Recovery Hub’ is funded by the Australian National Environmental Science Programme, and brings together leading ecological experts to carry out research that improves the management of Australia’s threatened species. This research was conducted under Theme 5.00: Enhancing threatened species policy; Project 5.1: Better offsets for threatened species.


The article Improving averted loss estimates for better biodiversity outcomes from offset exchanges is available in Oryx–The International Journal of Conservation

Fleur is the Practice Leader—Conservation Science at The Catalyst Group, New Zealand where she blends research and client-based projects, linking science, policy, and on-the-ground actions to solve crunchy resource management problems. Her areas of expertise include biodiversity offsetting, natural capital and ecosystem service approaches to natural resource management, biodiversity policy development, and integrating biodiversity conservation into farm planning processes.

Megan is a Lecturer in Public Sector Management at the University of New South Wales – Canberra, an Honorary Fellow at the University of Queensland, and an Australian Research Council Discovery Early Career Research Award (DECRA) Fellow. Her expertise sits broadly within environmental policy, governance and economics, with a particular interest in the use of market-based and financial instruments for biodiversity conservation and climate change mitigation and adaptation.

Martine is a Professor of Environmental Management at The University of Queensland and an Australian Research Council Future Fellow. Her research foci include avian community ecology, conservation ecology, and environmental policy – particularly biodiversity offsets policy. She is Deputy Director of the National Environmental Science Program’s Threatened Species Recovery Hub, Vice-President of BirdLife Australia, a Governor of WWF-Australia and a member of the Wentworth Group of Concerned Scientists, as well as several governmental and non-governmental organisation advisory bodies.