Biodiversity offsets are increasingly being used for securing biodiversity conservation outcomes as part of sustainable economic development to compensate for the residual unavoidable impacts of projects. Two recent New Zealand examples of biodiversity offsets are reviewed-while both are positive for biodiversity conservation, the process by which they were developed and approved was based more on the precautionary principal than on any formal framework. Based on this review and the broader offset literature, an environmental framework for developing and approving biodiversity offsets, comprising six principles, is outlined: (1) biodiversity offsets should only be used as part of an hierarchy of actions that first seeks to avoid impacts and then minimizes the impacts that do occur; (2) a guarantee is provided that the offset proposed will occur; (3) biodiversity offsets are inappropriate for certain ecosystem (or habitat) types because of their rarity or the presence of threatened species within them; (4) offsets most often involve the creation of new habitat, but can include protection of existing habitat where there is currently no protection; (5) a clear currency is required that allows transparent quantification of values to be lost and gained in order to ensure ecological equivalency between cleared and offset areas; (6) offsets must take into account both the uncertainty involved in obtaining the desired outcome for the offset area and the time-lag that is involved in reaching that point.