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

Martin Drechsler
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Martin Drechsler: Helmholtz Centre for Environmental Research—UFZ, Department of Ecological Modelling, Permoserstr. 15, 04318 Leipzig, Germany

Land, 2021, vol. 10, issue 6, 1-10

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.

Keywords: biodiversity; bundling; conservation offsets; ecosystem services; ecological–economic model (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2021
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