Ecological compensation of stochastic wetland biodiversity: National or regional policy schemes?

The aim of this study is to compare policy schemes for ecological compensation applied at national and regional levels, using exploited inland wetlands as an example. We study whether uncertainty, due to natural variability and measurement difficulties, motivates compensation that is carried out in the same region as that of the exploited site, or whether it rather motivates nationwide compensation schemes. For this purpose, we develop an empirical, chance-constrained programming model of cost-effective wetland management. The model is spatially differentiated and accounts for heterogeneity in wetland quality across wetland types and regions. Wetland quality is defined by three alternative biodiversity indices: species richness, population-weighted species richness, and red-listed species richness, estimated from voluntarily reported data on breeding bird species observations. Results show that regional schemes are more expensive, in particular if the policy maker dislikes uncertainty and wants to prioritize uncommon species. Contrary to expectations from the theoretical analysis, regional schemes would lead to a higher risk-adjusted level of biodiversity at the national level. However, regionalization also implies that targets cannot be achieved if a high safety margin is imposed. Trading ratios are robust to the choice of wetland quality index. •We compare ecological compensation schemes at national and regional level.•We study agricultural wetlands with stochastic bird diversity.•Policy makers are assumed to be risk averse and minimize costs for no-net-loss.•Results show that regional schemes are more expensive.•Costs are the highest when prioritizing rare species and high safety margins.