Biodiversity offset conditions contributing to net loss of koala <i>Phascolarctos cinereus</i> habitat

Abstract Australia's offset framework requires that permitted development impacts on nationally threatened species should be fully counterbalanced using biodiversity offsets. The current offsets framework was established in 2012, the same year that the iconic koala Phascolarctos cinereus was listed as threatened. We examined every development impact on koala habitat that was permitted under national biodiversity laws (the EPBC Act 1999) from 2012 until the end of 2021, shortly after which the koala was uplisted from vulnerable to endangered ( n = 98). We analyzed the application of the national environmental offset framework in each case. In this period, more than 25,000 hectares of koala habitat were approved for removal, most in the state of Queensland (96%) and for mining (76%). Although most clearing of koala habitat is attributable to agricultural activity and ostensibly requires approval under the EPBC Act, we found zero referrals for agricultural clearing. A total of 62 projects included offset requirements for koalas, but for only 14 projects could we find details used in the offset calculation. All but one appeared to include implausibly optimistic assumptions or logical errors that inflated the estimated benefit from the offset. After modifying the calculations to align with best practice guidance, we found only two of the 14 projects were likely to fully offset their impacts on koalas (average 55% of impact offset). The most common issues were overestimated benefits from averted losses and double‐counting of benefits. We conclude transparency around offset requirements is generally poor, and most biodiversity offsets for koalas are unlikely to fully counterbalance losses. Despite sound, long‐established policy, poor implementation means that even offsets for impacts on a highly valued species, for which offsets are ecologically plausible, are prone to failure.