The anatomy of a failed offset

•Biodiversity offsetting is widely applied but its effectiveness is rarely assessed.•We evaluated a nest box program intended to offset clearing of hollow-bearing trees.•The offset targeted 3 threatened species but low rates of nest box use were observed.•The offset program did not counterbalance the loss of hollow-bearing trees.•We suggest improving future offset programs with greater compliance and offset ratios.

Biodiversity offsetting is widely applied but its effectiveness is rarely assessed. We evaluated the effectiveness of a nest box program intended to offset clearing of hollow-bearing trees associated with a freeway upgrade in southern Australia. The offset targeted three threatened vertebrates: squirrel glider (Petaurus norfolcensis), brown treecreeper (Climacteris picumnus) and superb parrot (Polytelis swainsonii). Clearing led to the loss of 587 tree hollows and the offset was the placement of an equivalent number of nest boxes in nearby woodland (1:1 ratio). Of these, we monitored 324 nest boxes in six sample periods between 2010 and 2013, yielding 2485 individual checks of nest boxes.For the three target species, we found: (1) no records of nest box use by the superb parrot, (2) two records of the brown treecreeper (0-0.76% of accessible nest boxes used per survey period), and (3) seven records of use of nest boxes by the squirrel glider (0-2.1% of accessible nest boxes used per survey period). Rates of nest box use by the superb parrot and squirrel glider were markedly lower than rates of use of hollow-bearing trees observed in other investigations. Low levels of use by target species coupled with the extent of nest box attrition suggest the offset program will not have counterbalanced the loss of the hollow-bearing trees.We make suggestions for improving future offset programs including a greater emphasis on: (1) avoiding impacts on hollow-bearing trees; (2) offset effectiveness as a measure of compliance; and (3) using realistic offset ratios.