Complex Web of Biodiversity Rate-of-Change Accounts
Biodiversity credits, tradable certificates aimed at directing money from individuals and companies towards activities that protect and restore nature, are gaining traction as a potential solution to fund the global effort to reverse biodiversity decline.
These certificates, which are part of an unregulated international market, allow anyone to sell them and anyone to buy them. The prices of these credits vary widely, selling for anywhere between USD 2 and USD 415.
One organisation, CreditNature, allows limited secondary trading of credits in the hope it will stimulate interest by allowing them to be sold at a profit. As of September 2024, the total value of credits sold is estimated to be between USD 325,000 and USD 1.87 million.
The Nature Conservancy, a leading conservation organisation, has proposed a hybrid approach where governments could issue "strategic biodiversity certificates" that are linked to the 23 UN targets agreed to in the Global Biodiversity Framework. The Framework, a historic agreement to reverse biodiversity loss, was proposed at COP15 in 2022.
However, the use of biodiversity credits is not without controversy. Some organisations, such as Greenpeace, Survival International, WWF, Friends of the Earth, and Campaign for Nature, have expressed opposition to voluntary biodiversity credits without clear safeguards. They are concerned about potential issues such as offsetting, secondary trading, abuse of Indigenous rights, and more.
One widely discussed potential use for biodiversity credits is as offsets, similar to government schemes used in the UK and US but market based. This means that companies could pay for biodiversity credits instead of directly reducing their impact on nature.
Some organisations are also selling combined carbon and biodiversity credits, or selling both as a package, a practice known as "bundling" or "stacking". This approach is hoped to be more appealing to large private investors.
The International Association for the Protection of the Biodiversity (IAPB), a UK and France-backed initiative, lists "local compensation of biodiversity impacts" as an acceptable use for credits in its Framework for High-Integrity Biodiversity Credit Markets.
The World Bank Group has financed a sustainable marine fisheries and aquaculture project in Tanzania with a $112 million credit, but no specific biodiversity credit schemes or instruments used by other countries for biodiversity credits are mentioned in the available sources.
The Canadian-based think-tank IISD has suggested that countries negotiating debt-for-nature swaps could offer biodiversity credits to attract funding from private investors and philanthropists.
Despite the controversy, more than 50 organisations have set up nature credit schemes across the globe, including Verra and South Pole. However, the lack of a single standardised metric that can account for nature's complexity in biodiversity credit schemes remains a challenge.
The European Commission's nature credit plan, released last month, has been criticised by Friends of the Earth as a "roadmap to greenwashing". The organisation argues that without clear safeguards, biodiversity credits could be used to justify harmful activities rather than promoting conservation efforts.
In response to these concerns, the Biodiversity Compensation Alliance (BCA) has set up a communities advisory panel made up of 40 members from Indigenous peoples and local communities worldwide to provide recommendations for companies entering the market.
The WWF, however, has refused to endorse voluntary biodiversity credits without clear safeguards. The organisation estimates that reversing the global decline of biodiversity would require between USD 722 billion and USD 967 billion per year by 2030. Whether biodiversity credits can help bridge this funding gap remains to be seen.
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