Ecological damage caused by infrastructure projects or other development activity may, in some cases, be compensated by restoring or protecting habitats elsewhere. This process, which resembles the "polluter pays" principle, is often called biodiversity offsetting or ecological compensation. The frequently-cited goal of offsetting is ecological no-net-loss, which means that all ecological losses must be fully balanced by corresponding ecological gains produced by offsetting actions.This publication reviews the principles of offsetting and summarizes a dozen decisions that effectively determine the credibility, feasibility and costs of offsets. These decisions cover the three major axes of ecology, biodiversity, space and time as well as additional considerations inherent to implementation of offsets via habitat restoration and protection measures. Compensation will necessarily take place some distance away from the damage, it will come with uncertainties and a time delay, and lost biodiversity will never be replaced by exactly the same thing, which means that up-front treatment of the degree of flexibility allowed should be fundamental to any offsetting project.As ecosystems are different, the twelve design questions described here should be systematically addressed when offsets are suggested for a new type of environment. Doing so will facilitate well-informed and transparent design and evaluation of biodiversity offsets.