AbstractEnvironmental markets are a rapidly emerging tool to mobilize private funding to support landholders to undertake more sustainable land management. One aim of such markets is to incentivize ecosystem restoration world‐wide. How we measure and subsequently trade units of biodiversity within these markets creates key challenges both ecologically and economically, since it determines whether environmental markets will be ecologically successful in delivering net gains in biodiversity, and economically efficient in lowering the costs of conservation. Our innovation in this paper is to develop and then test a new metric for such markets based on the well‐established principle of irreplaceability from Systematic Conservation Planning. Irreplaceability as a metric allows us to capture the multidimensional nature of ecosystems (e.g., habitats, species, ecosystem functioning) yet simultaneously achieve cost‐effective, land manager‐led investments in conservation. Using an integrated ecological modelling approach, we tested whether using irreplaceability as a metric is more ecologically and economically beneficial than the simpler biodiversity offset metrics typically used in net gain and no‐net‐loss policies. Taken together, our results demonstrate that irreplaceability can deliver no net loss of biodiversity, avoids the limitations of like‐for‐like trading, reduces costs of offsetting to developers and society, ensures land managers are fairly rewarded for the opportunity costs of conservation, and safeguards sites critical to achieving conservation goals. More generally, our study highlights the benefits of integrating economic data and approaches within Systematic Conservation planning as a means of incentivizing the most ecologically and economically efficient investments in nature recovery.This article is protected by copyright. All rights reserved

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