Should the biodiversity bank be a savings bank or a lending bank?

Abstract

Conservation offsets are increasingly used as an instrument for biodiversity conservation on private lands. Since the restoration of degraded land often involves uncertainties and time lags, conservation biologists have recommended that credits in conservation offset schemes be awarded only with the completion of the restoration process (“savings bank”). These arguments, however, ignore that such a scheme design may incur higher economic costs than a design in which credits are already awarded at the initiation of the restoration process (“lending bank”). Here a generic agent-based ecological-economic simulation model is developed to explore the cost-effectiveness of savings and lending banks. The economic model compartment considers spatially heterogeneous and dynamic conservation costs and time preferences in the landowners. The ecological compartment considers uncertainty in the duration and the success of restoration process, and in the metapopulation dynamics of a species described by the rates of local population extinction and the colonisation of empty habitat patches. By this the widely used offset metric of “habitat hectares” is replaced by “metapopulation viability” which is commonly used in conservation biology. It turns out that whether credits should be awarded at the initiation or with completion of restoration depends on the ecological and economic circumstances. Larger colonisation and extinction rates, e.g., tend to favour the awarding of credits with the initiation of habitat restoration.