Offsets (also known as mitigation banks, compensatory habitat, set-asides) is a policy instrument recently introduced in several States in Australia to permit some land clearing while striving for no net loss in the extent and condition of native vegetation overall. Offsetting is criticized with respect to the amount of gain required to compensate for losses from clearing, the equivalence of losses and gains, the time lag between losses and gains, and a poor record of compliance. Despite these criticisms, we conclude that offsetting is a useful policy instrument while governments continue to permit some clearing of native vegetation. However, offsets will only contribute to no net loss if (i) clearing is restricted to vegetation that is simplified enough so that its functions can be restored elsewhere with confidence or clearing is restricted to vegetation that is unlikely to persist and is not practicable to restore irrespective of clearing; (ii) any temporary loss in habitat between clearing and the maturation of an offset, or differences between the habitat lost from clearing and gained through an offset, does not represent a significant risk to a species, population or ecosystem process; (iii) there will be gains of sufficient magnitude on the offset site to compensate for losses from clearing; (iv) best practice adaptive management is applied to offsets; (v) offsets are in place for at least the same duration as the impacts from clearing, and (vi) there is adequate compliance. Land clearing with offsets outside these parameters is inconsistent with ‘no net loss.
