The United Nations is recommending biodiversity credits as a way to generate funding for conservation.
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A joint report published last week by the UN Development Programme (UNDP) and UK-based think tank International Institute for Environment and Development (IIED) said that as biodiversity credits or “biocredits” are designed to be bought and sold, they can direct revenue “towards effective biodiversity conservation and directly support locally-led action to ensure indigenous peoples and local communities can fully participate in and realise the benefits”.
The report comes as the COP15 conference on biodiversity is underway in Montreal, Canada, which many hope will seal a bold new international deal with precise targets to commit countries to restoring nature while slowing species loss.
Marco Lambertini, director general of the World Wildlife Fund (WWF) International, said of the biodiversity agreement he hopes will be delivered at COP15: “To tackle the nature crisis, governments must agree on a nature-positive goal that unites the world in protecting more of the nature left on the planet while restoring as much as possible and transforming our productive sectors to work with nature, not against it”.
The UNDP, in the study, also attempts to differentiate the recommended mechanism with that of biodiversity offsets. The report states that both have the ability to increase funding for biodiversity conservation but offsets have sometimes been criticised for their ineffectiveness. They might not be strictly regulated and could provide a “license” for companies to degrade the environment, it said.
In the paper, the fundamental function of biocredits were defined as that to quantify and track biodiversity conservation, as well as preservation efforts and outcomes. It said that the investment into biocredits can bring about “net gain” as the process refers closely to biodiversity indicators.
On the other hand, the report explained that biodiversity offsets operate under the assumption that harm done in one location can be made up for reparations elsewhere, and such a mechanism could mean risks of further harm inflicted on biodiversity and nature.
The report touches on the challenges of implementing biocredit schemes, which it says need to be clearly understood in order to avoid greenwashing. Firstly, it says that the complexity of measuring biodiversity makes it challenging to define and quantify what a unit of biodiversity exactly is. Furthermore, the biocredits have to be cost-effective in order to incentivise demand and supply.
Historically, high transaction costs and ingrained power imbalances have also kept indigenous and local communities from benefitting from market-based conservation schemes, the report said. To overcome these hurdles, schemes must be rooted in in-depth knowledge of local ecosystems to effectively decide which indicators and metrics would be best. It said that the need to work in tandem with locals is “key to ensuring that their needs and priorities are met and to increasing the effectiveness of biodiversity conservation”.
Other than the UN, the World Economic Forum (WEF) has also expressed support for biocredits. Both explained that biocredits can be financed by different stakeholders, including investors, private resellers and intermediaries, as well as companies with corporate social responsibility policies that require them to commit to nature-positive measures. WEF called biocredits “an economic instrument that can be used to finance actions that result in measurable positive outcomes for biodiversity”.
Both the report and WEF cite the Wallacea Trust methodology and Terrasos as examples of biocredits in action.
Under the Wallacea Trust’s biodiversity and climate research organisation, Operation Wallacea, the working group developed an open-source biocredit methodology that can be applied in all 1300 eco-regions and habitats worldwide. The trust has a collection of banks that have committed to buying 3 million biocredits from new projects being developed in Central and South America. Terrasos, a Colombian biodiversity conservation and habitat banking organisation issued its biocredits at the flat rate of $30 each, to the Bosque de Niebla-El Globo Habitat Bank (also known as Spectacled Bear Habitat) in May this year to conserve the remaining native species in the High Andes.
The WWF’s Living Planet Report which studies global biodiversity trends found that monitored wildlife populations have dropped 69 per cent on average since 1970. Financial institution JPMorgan Chase, estimated that recent loss of ecosystem services amounted to US$4-20 trillion per year.
A key talking point of COP15 this year is also the commodification of nature as a solution. Agnès Le Rouzic, a digital campaigner with Greenpeace Canada said, “All parties at COP15 - especially the rich countries from the Global North who have profited the most from commodifying nature - must come to the table with the funds needed to protect biodiversity”.
