Using natural capital accounting for biodiversity offset policy: a case study from the Australian Capital Territory

Biodiversity offsetting aims to balance biodiversity conservation against demand for land required for development, while natural capital accounting (NCA) is an information system for integrated environmental-economic decision-making. Many countries use both, but to date, NCA is untested for biodiversity offset policy. We rectify this using the Australian Capital Territory (ACT), a subnational jurisdiction using offsetting and facing global challenges common to offset implementation and biodiversity conservation. Hybrid land cover, land use and ecosystem extent accounts for offset areas, development areas, and protected areas were produced for 2010 to 2020. These identified 2217 ha of offsets required for 26 developments, mainly impacting natural temperate grasslands (NTG) and box-gum grassy woodlands (BGGW). Assessing net biodiversity changes was challenging because changes in ecosystem extent based on land cover are open to interpretation, and ecosystem condition accounts couldn't be produced. Between 2010 and 2020, land cover associated with NTG and BGGW declined across the ACT: 3011 ha fall in BGGW-short vegetation and 5761 ha fall in BGGW-open woodland. ACT offset areas were typically within land zones unlikely to be developed, and the area for new offsets is limited (9828 ha). While the data challenges of assessing offset policy identified in this study and others are a barrier to account production and use for offset policy, we conclude that accounting could inform offset policies in the ACT and globally by systematically linking biodiversity offsets to ecosystem extent and condition, allowing consistent net biodiversity changes assessment and providing a path to international standardisation of offset measurement and reporting. • Biodiversity offset policy lacks regular assessment. • Ecosystem accounting provides an evaluation framework for offsets. • Ecosystem accounts for offsets were prepared for the Australian Capital Territory. • Poor data mean ecosystem accounts were inconclusive about the success of offsets. • Ecosystem accounting provides an offset evaluation framework but is limited by data.