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Biodiversity offsets are increasingly advocated as a flexible approach to managing the ecological costs of economic development. Arguably, however, this remains an area where policy-making has run ahead of science. A growing number of studies identify limitations of offsets in achieving ecologically sustainable outcomes, pointing to ethical and implementation issues that may undermine their effectiveness. We develop a novel system dynamic modeling framework to analyze the no net loss objective of development and biodiversity offsets. The modeling framework considers a marine-based example, where resource abundance is dependent on a habitat that is affected by a sequence of development projects, and biodiversity offsets are understood as habitat restoration actions. The model is used to explore the implications of four alternative offset management strategies for a regulator, which differ in terms of how net loss is measured, and whether and how the cumulative impacts of development are considered. Our results confirm that, when it comes to offsets as a conservation tool, the devil lies in the details. Approaches to determining the magnitude of restorations required, as well as their timing and allocation among multiple developers, can result in potentially complex and undesired sets of economic incentives