The full or partial purchase of land has become a cornerstone of efforts to conserve biodiversity in countries with strong private property rights. Methods used to target areas for acquisition typically ignore land market dynamics. We show how conservation purchases affect land prices and generate feedbacks that can undermine conservation goals, either by displacing development toward biologically valuable areas or by accelerating its pace. The impact of these market feedbacks on the effectiveness of conservation depends on the ecological value of land outside nature reserves. Traditional, noneconomic approaches to site prioritization should perform adequately in places where land outside reserves supports little biodiversity. However, these approaches will perform poorly in locations where the countryside surrounding reserves is important for species' persistence. Conservation investments can sometimes even be counterproductive, condemning more species than they save. Conservation is most likely to be compromised in the absence of accurate information on species distributions, which provides a strong argument for improving inventories of biodiversity. Accounting for land market dynamics in conservation planning is crucial for making smart investment decisions.