Environmental compensation for biodiversity and ecosystem services: A flexible framework that addresses human wellbeing.

• Presents a flexible ecosystem-based framework for compensating habitat deterioration. • Integration with cascade model allows a structured selection of compensation options. • In-kind compensation on-site is the preferred option. • Compensating ecosystem structure has best potential to capture non-instrumental values. • Considering the spatial extent of benefits may increase flexibility in compensation schemes. Environmental compensation should address negative impacts from human activities on nature, including loss of biodiversity and ecosystem services. However, successful compensation, achieving no net loss, requires broad quantitative information on different types of losses and gains. We find that the scope of compensatory schemes varies in what is considered compensable, which makes it challenging to apply a conceptual approach consistently across schemes with different needs. We propose a flexible yet structured framework for determining which values should be compensated and how. Our framework focuses specifically on habitat deterioration and is illustrated with a case study involving loss of eelgrass habitat. The framework helps identify compensation needs and selects among suitable compensation options, merging science-based information with normative issues and local concerns. By integrating the ecosystem services cascade model, it encompasses aspects from biodiversity structure to human wellbeing. The framework prefers in-kind compensation because this targets the structure level and thus meets compensation needs in all subsequent levels of the cascade model; further, it is more likely to capture non-instrumental values (i.e. in nature) and reduce exposure to uncertainty. We highlight the importance of spatial aspects of ecosystem functions, services and their subsequent impacts on wellbeing. Although our selection hierarchy assumes a "similar and nearby" principle for habitat restoration (preference for in-kind/on-site), this criterion is not universal. We underscore the hierarchy's implicit normative assumptions and suggest that apparent disagreement about who should benefit may be traced to an unresolved conflict between egalitarianism and utilitarianism. [ABSTRACT FROM AUTHOR]