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Environmental impacts are increasing due to human activities. The overuse of the benefits nature provides us is the direct result of our failure to put a price on these benefits. One way of addressing this is to require environmental compensation. The purpose of the study is to provide Nordic Council of Ministers and national decision-makers with an overview of key conditions for increased, flexible and cost-effective application of compensation. The study shows that for a relatively small cost society can make a significant investment in the provision of biodiversity and ecosystem services by requiring compensation. The study outlines three main recommendations on how to increase the use of environmental compensation: 1. Stimulate supply of, and demand for, compensation 2. Clarify and supplement guidelines and legal framework 3. Strengthen Nordic cooperation on compensation