Biodiversity offsetting aims to achieve at least no net loss of biodiversity by fully compensating for residual development-induced biodiversity losses after the mitigation hierarchy (avoid, minimize, remediate) has been applied. Actions used to generate offsets can include securing site protection, or maintaining or enhancing the condition of targeted biodiversity at an offset site. Protection and maintenance actions aim to prevent future biodiversity loss, so such offsets are referred to as averted loss offsets. However, the benefits of such approaches can be highly uncertain and opaque, because assumptions about the change in likelihood of loss as a result of the offset action are often implicit. As a result, the gain generated by averting losses can be intentionally or inadvertently overestimated, leading to offset outcomes that are insufficient for achieving no net loss of biodiversity. We present a method and decision tree to guide consistent and credible estimation of the likelihood of biodiversity loss for a proposed offset site with and without protection, for use when calculating the amount of benefit associated with the protection component of averted loss offsets. In circumstances such as when a jurisdictional offset policy applies to most impacts, plausible estimates of averted loss can be very low. Averting further loss of biodiversity is desirable, and averted loss offsets can be a valid approach for generating tangible gains. However, overestimation of averted loss benefits poses a major risk to biodiversity.

The objectives of No Net Loss and Net Gain have emerged as key principles in conservation policy. Both give rise to mechanisms by which certain unavoidable biodiversity losses associated with development are quantified, and compensated with comparable gains (e.g. habitat restoration). The former seeks a neutral outcome for biodiversity after losses and gains are accounted for, and the latter seeks an improved outcome. Policy-makers often assume that the transition from one to the other is straightforward and essentially a question of the amount of compensation provided. Consequently, companies increasingly favour Net Gain type commitments, and financial institutions make lending conditional on either objective, depending on the habitat involved. We contend, however, that achieving Net Gain is fundamentally different to achieving No Net Loss, and moving from one to the other is less trivial than is widely realized. Our contention is based on four arguments: (1) the two principles represent different underlying conservation philosophies; (2) ecological uncertainties make it difficult to know where the threshold between No Net Loss and Net Gain lies; (3) different frames of reference are more or less appropriate in evaluating the ecological outcomes, depending on the principle chosen; and (4) stakeholder expectations differ considerably under the two principles. In exploring these arguments we hope to support policy-makers in choosing the more appropriate of the two objectives. We suggest that financial institutions should provide greater clarity regarding the explicit requirements for each principle. We conclude by highlighting questions of relevance to this topic that would benefit from focused research.