The increased urbanization and human population growth of recent decades have resulted in the loss of urban green spaces. One policy used to prevent the loss of urban green space is ecological compensation. Ecological compensation is the final step in the mitigation hierarchy; compensation measures should thus be a last resort, after all opportunities to implement the earlier steps of the hierarchy have been exhausted. The compensation should balance the ecological damage, aiming for a “no net loss” of biodiversity and ecosystem services.

In this study, we develop a simple model that can be used as tool to study the welfare effects of applying ecological compensation when green space is at risk of being exploited, both at an aggregate level for society and for different groups of individuals. Our focus is on urban green space and the value of the ecosystem service – recreation – that urban green space provides. In a case study we show how the model can be used in the planning process to evaluate the welfare effects of compensation measures at various sites within the city. The results from the case study indicate that factors such as population density and proximity to green space have a large impact on aggregate welfare from green space and on net welfare when different compensation sites are compared against each other.