In the two years since biodiversity credits garnered a prominent mention in the 2022 Global Biodiversity Framework (GBF) aimed at halting the loss of wildlife, a flurry of projects and methods that underpin those credits have sprung onto the scene.
Numerous reports have tried to keep up with these new initiatives, including the Biocredit Catalogue, which documents nearly a dozen developers working on methods. But less than a year after it was published, the authors say it’s already out of date. Another recent report from Switzerland-based nonprofit organization NatureFinance found more than 30 biodiversity credit projects at some stage of development on the African continent alone.
Just as these projects have proliferated, so too have the methods used to monetise them. The umbrella term “biodiversity credit” encompasses a wide range of approaches for calculating the value of those credits that can seem impenetrably complex, making them magnets for criticism.
In part, that’s because these approaches attempt to peg a value to the conservation benefits a credit might provide — or, as critics put it, “put a price on nature” — across widely varied landscapes, ranging from mountain forests in Colombia to mangroves in Kenya.
According to proponents and critics, this variation makes comparisons between ecosystems nearly impossible — and inadvisable in most cases. But the wave of activity around biodiversity credits, including a prominent role in discussions at the 2024 UN biodiversity conference (COP16) in Cali, Colombia, demonstrates that many have pinned their hopes on this strategy to help tackle the dire biodiversity crisis.
Recent analyses have made clear just how severe the situation is for life on Earth. A recent report from the Zoological Society of London and WWF found that global wildlife populations are around a quarter of what they were in 1970. And nearly 35 per cent of the world’s tree species could go extinct, according to an IUCN report. To address these challenges, the GBF calls for an additional US$700 billion a year.
And yet, the market has led to the sale of credits worth no more than US$2 million to this point, a September 2024 report from the Australia-based Pollination Foundation found.
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Hypothetically, you could destroy flamingo habitat in Spain and compensate by recreating a habitat for bats in Bangladesh. [It] doesn’t make any sense from an environmental integrity perspective.
Frédéric Hache, co-founder, Green Finance Observatory
Although more optimistic figures from the World Economic Forum suggest they could reach values of US$7 billion by 2030 and US$180 billion by 2050, key questions remain about whether markets can offer comprehensible biodiversity credits that come with the assurance that they’re making a meaningful impact on conservation in time to help close the gap in funding.
“To have a market, you need to have trust [and] confidence in the way products are sold,” Sylvie Goulard, co-chair of the International Advisory Panel on Biodiversity Credits (IAPB), said at a press briefing. The IAPB released a guidance document at COP16 for approaches to biodiversity credits.
In its framework, the IAPB uses the basic, if wonky, definition put forth by the Biodiversity Credit Alliance, which, like the IAPB, is providing guidance on the market. A biodiversity credit is “a certificate that represents a measured and evidence‐based unit of positive biodiversity outcome that is durable and additional to what would have otherwise occurred.”
Essentially, the idea is that someone or some entity will pay for an activity to benefit conservation. For example, the resulting credit could be tied to restoring a hectare of forest over several decades. It might also represent the strengthening of land rights for an Indigenous community, which is expected to improve conservation outcomes. The revenues help fund the work, and the buyer can claim to be supporting conservation.
And it turns out that such “credits” can seem as diverse as the ecosystems they aim to conserve and protect.
Many methods
Monique Atouguia and her colleagues at NatureFinance had noticed a gaping hole in the conversations around biodiversity, despite the focus on them as a potential funding stream since COP15 in 2022.
“We realised that African voices were quite absent,” said Atouguia, a program manager with NatureFinance. “For a very nature-rich continent, we just weren’t hearing African voices in these fora.”
In research for a report on biodiversity credits in Africa, however, Atouguia said they came across more than 30 projects across the continent across various ecosystems. Carbon projects tend to focus on tropical forests because they contain the greatest densities of carbon, which are needed to make them profitable. Not so with biodiversity credit projects, she said.
“We’re seeing what I think is an unmatched range of investment opportunities to invest in ecosystems and species and different landscapes, which carbon markets just don’t offer,” Atouguia said. Proponents often cite this potential for biodiversity credits to capture the value of a range of ecosystems as a novel element they bring to conservation finance.
At present, many different methodologies exist for measuring conservation tied to a paid-for credit.
Two of the most prominent certification bodies in the voluntary carbon market, U.K.-based Plan Vivo Foundation and Switzerland-based Gold Standard, are using an open-source method for biodiversity credits developed by the Wallacea Trust, a U.K.-based charity focused on biodiversity. Plan Vivo launched its standard in December 2023, and Gold Standard has projects releasing its framework by the end of 2024.
Wallacea’s approach to measurement is similar to the “basket of metrics” that economists use to assess inflation, but instead of the prices of a “basket of goods and services,” they use a set of indicators aimed at evaluating changes in the health of biodiversity at a given site.
These metrics could include the number of species of pollinators, for instance, or changes in the species makeup of bats. As this is measured over time — in Wallacea’s case, 25 years — biodiversity credits are issued when there’s a 1 per cent boost in restoration of a site or when a 1 per cent loss has been avoided. The method also calls for sharing revenues with Indigenous peoples and local communities living at the site of the projects.
In late October 2024, the project certifier Verra launched its framework for its version of biodiversity credits, which it calls “Nature Credits.” Verra uses indicators to determine an ecosystem’s health and how it’s changing over time. Each credit derives from 1 per cent of the biodiversity outcomes measured by what the organization calls “quality hectares.” Verra says its methods engage with Indigenous peoples and local communities and require benefit sharing.
Colombia-based carbon project standard-setter Cercarbono recently certified a project by Savimbo, a company based in the U.S., that relies on the documented presence of an indicator species such as the jaguar to generate a credit. Savimbo says the project draws on the ways Indigenous peoples often monitor the health of their surroundings. Communities use camera traps to track the presence of the selected species in a 1-hectare (2.5-acre) patch of land over a one-month period to measure the impact of conservation efforts.
Elsewhere in Colombia, the Switzerland-based carbon finance consultancy South Pole recently began issuing credits for efforts to restore the ecosystems of Alto de Ventanas in the Andes. Alto de Ventanas is a global Key Biodiversity Area, but logging and cattle ranching have levied a toll on the ecosystem and the life it supports. Across 168 hectares (415 acres), South Pole and its local partner, Colombian NGO Corporación Salvamontes, are working to root out invasive plant species and then planting native varieties in some spots while allowing natural regeneration to take over in others.
The project uses the Colombian government’s habitat banking framework, and it has already begun to sell credits, the revenues of which will be ploughed back into the project.
“With the funding received from that, we initiate the implementation of the restoration activities that … are quite expensive,” Carolina Jaramillo, regional director of certificates in Latin America with South Pole, said in an interview.
Later, credits available for sale will depend on the results of monitoring required under Colombian law carried out every six months for the 20-year life of the project. Part of that process will be looking for the presence of IUCN Red Listed species, including birds, amphibians and plants such as orchids.
Steve Edwards, global director of biodiversity with South Pole, said there’s been “an explosion of capacity in nature tech and ways to monitor what is going on” in recent years, ranging from environmental DNA and bioacoustics to camera trapping and remote sensing, along with the rise of artificial intelligence. These capabilities provide for “clear and transparent measurements” of progress, said Edwards, who has also been part of the supply working group with the IAPB.
The question of offsets
Whether a market-driven credit should be allowed to compensate, or “offset,” a harmful activity in one place with an environmentally beneficial one in another is a question that has bedevilled the carbon markets since their early days. However, the debate takes on a new dimension with biodiversity credits because comparisons between different ecosystems are so challenging.
Frédéric Hache, the director and co-founder of the Green Finance Observatory, a think tank, gave an “extreme” example of what biodiversity offsets might look like.
“Hypothetically, you could destroy flamingo habitat in Spain and compensate by recreating a habitat for bats in Bangladesh,” Hache said at a press briefing hosted by Survival International before COP16. This sort of exchange “doesn’t make any sense from an environmental integrity perspective,” he added.
Whereas a ton of carbon has the same overall impact on the global climate regardless of where it’s released or sequestered, the same can’t be said for the effects on biodiversity. That lack of “fungibility” has led several certifiers, including Verra and Cercarbono, to explicitly disallow international offsets in their standards.
IAPB co-chair Goulard said 18 months of discussions revealed “resistance against international offsetting” from scientists and Indigenous and community representatives. The group’s framework discourages the practice but keeps an avenue open for a narrower version in which a company could compensate with “local-for-local and like-for-like” exchanges.
South Pole’s Jaramillo said the Alto de Ventanas project uses the Colombian government’s Habitat Banks mechanism. With investments in biodiversity and habitat conservation like those in Alto de Ventanas, companies can meet their obligations to offset harm elsewhere in the country as Colombian law requires.
And partly because the project isn’t certified by any other standard than the Colombian government’s that don’t allow offsetting, she said South Pole is “open to voluntary biodiversity credits for other reasons beyond the Colombian compensation obligations.”
Headwinds of criticism
Like carbon credits before them, biodiversity credits have been the subject of intense criticism. These threads follow similar lines of concern that, contrary to the stated goals of the IAPB and other groups, biodiversity markets could repeat many of the problems of carbon markets.
Fawcett said one of the roles of the IAPB that is “critically important, particularly for the confidence in the markets, is that we secure fair rewards and support for nature’s stewards, which was clearly not the case in the carbon markets.”
Still, there are worries that Indigenous groups have not been adequately included in the debate. Emil Sirén Gualinga, an Indigenous Kichwa from Ecuador, was part of two IAPB working groups, and he said he was frustrated with the process.
“It was already predetermined from the start that the intention was to scale the biodiversity credit market, but there was never the question on whether it’s an adequate mechanism,” he said, “in terms of effectiveness, human rights risks, environmental integrity and so forth.
“I wouldn’t consider it to be meaningful participation,” he added during a press briefing.
The IAPB did not respond to this critique from Sirén. However, in a speech during COP16, IAPB co-chair Amelia Fawcett said that Indigenous peoples and local communities were “at the heart of our work.”
More broadly, critics of biodiversity credits say the emphasis on biodiversity credits is diverting attention away from other solutions and, at best, only contributing millions to a multibillion-dollar set of problems.
“We think it’s a distraction, and we think there’s an opportunity cost,” Mark Opel, finance lead with Campaign for Nature, said in an interview.
Opel also pointed out the limited time and resources available to take on biodiversity loss.
“It’s not like we’ve all got infinite time to work on ‘all of the above,’” he said. “We’ve got to go where we can be most effective.” To his thinking, that means ensuring governments meet their financing commitments and don’t see biodiversity credit markets as a replacement for part of their commitments to nature financing, resulting in less public money for conservation.
Whether biodiversity markets can contribute meaningfully to the billions needed for conservation and if they are indeed necessary remain open questions. Opel said he sees credits as akin to donating money to adopt a whale or a patch of rainforest.
“There’s nothing wrong with that,” Opel said, “but you don’t need a biodiversity credit to do that.” And if they’re not trying to offset destructive practices, companies don’t need markets to make nature-positive philanthropic contributions.
Proponents of biodiversity credits argue that delivering conservation funding necessitates various approaches, with biodiversity credits as “one tool among many in the toolbox that we can apply at different landscape levels,” according to South Pole’s Steve Edwards.
And without the certification integral to the biodiversity credit market, fewer assurances about the integrity and impact of conservation projects exist, Paul Steele, chief economist with the U.K.-based International Institute for Environment and Development (IIED), said.
“Typically, they’re rather general development projects which aren’t, frankly, terribly well-monitored,” Steele said. And it’s that monitoring that proponents say will increase integrity, confidence in, and ultimately, the demand for credits. But many agree it’s not yet keeping up with the supply.
This story was published with permission from Mongabay.com.
