Biodiversity Offset Schemes for Indonesia: Pro et Contra

Stanislav Edward Shmelev ()
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Stanislav Edward Shmelev: Environment Europe Foundation, Fluwelen Burgwal 58, The Hague Humanity Hub, 2511 CJ The Hague, The Netherlands

Sustainability, 2025, vol. 17, issue 14, 1-38

Abstract: Global biodiversity is in crisis, with wildlife populations declining 69% since 1970 (WWF). Preserving and restoring ecosystems is essential for sustaining life on Earth. However, many countries rely on market-based instruments like biodiversity offsets, despite little evidence of their effectiveness. This study critically examines biodiversity offsets, identifying institutional, data, ecological, economic, and social failures that undermine their success. Using Indonesia, a global biodiversity hotspot, as a case study, we develop an econometric model to analyze key drivers of deforestation. The findings reveal that biodiversity offset schemes are fundamentally flawed: they lack scientific credibility, rely on arbitrary ratios, lack auditing and transparency, create value conflicts, and fail to achieve “No Net Loss” even over a 100-year timeframe. Offsets do not compensate for lost biodiversity, especially for affected communities, and are rarely supported by ecosystem mapping or robust valuation metrics. Without major reforms, they cannot halt or reverse biodiversity loss. A stronger, evidence-based approach is urgently needed. Rather than relying on ineffective offset schemes, the global community must prioritize genuine ecosystem restoration and sustainable conservation strategies to protect biodiversity for future generations.

Keywords: ecosystems; nature; biodiversity; offsets; Indonesia; policy design (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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