Why 2024 may see action on biodiversity credits

Regulation is needed urgently to ensure that they are effective
Photo: iStock
Photo: iStock

Biodiversity credits or biocredits are increasingly being pushed as a means for financing work on the various targets set under the Kunming-Montreal Global Biodiversity Framework (KMGBF) adopted in 2022 at the 15th Conference of Parties (CoP15) of Convention on Biological Diversity (CBD). KMGBF has 23 targets to meet the core goals of CBD — conservation of biodiversity, its sustainable use and fair and equitable benefit sharing of the profits arising from its use. 

Recognising that finding enough funds for biodiversity is likely to be a stumbling block to the success of KMGBF, its target 19 stipulates that innovative schemes such as biocredits be used to encourage private investment. CBD estimated at least $200 billion is needed each year to protect biodiversity.

While biocredits are similar to carbon credits used to control greenhouse gas emissions, they are not designed to offset or compensate for actions with negative impacts on biodiversity. Instead, proceeds from the sale of biocredits are used to protect and restore biodiversity where it exists. 

To promote biocredits, the Biodiversity Credit Alliance was also launched at CoP15. Through 2023, efforts were made to promote them at different fora. They were discussed at CoP28 of the UNFCCC in Dubai in December. In September, the Taskforce on Nature-related Financial Disclosures (TNDF) released recommendations to help businesses shift global financial flows away from nature-negative outcomes and towards nature-positive outcomes. 

Industry can meet TNDF recommendations by purchasing biocredits, which businesses and investors can use to fund restoration and conservation projects.

As of now, biocredits are at an early stage of implementation and a comprehensive list of schemes is not available. Some examples include the “Ocean Conservation Commitments (OCCs)” launched in September 2023 by the Government of Niue and the non-profit Tofia Niue. A total of 127,000 OCCs available (based on the size of Niue’s Moana Mahu Marine Protected Area, which spans 127,000 square kilometres) and interested buyers can purchase one OCC for 20 years at the rate of $148 (NZD $250). Non-governmental organisations such as the Blue Nature Alliance, Conservation International and private donors have already come forward and invested. 

Wallacea Trust, a biodiversity and climate research organisation based in the UK, has financial commitments for 5 million biodiversity credits. “We try to sell credits around the $5 mark for ease of sale,” says Tim Coles, CEO, rePLANET and Chair and Founder of Operation Wallacea. At least 60 per cent of the issuance price of the credit is set to be paid to local stakeholders (owners, users and managers of the site).

Other schemes to look out for are biocredits sold by Besparingsskog, a forest cooperative in Sweden — Swedbank has invested an undisclosed amount to protect 13 hectares of forested area over a period of 20 years. Similarly, pharma major GlaxoSmithKline has purchased biocredits from rePLANET to protect Cusuco National Park in Honduras. 

It is too early to determine whether these efforts will be successful or not. Simon Morgan, chief biodiversity officer and co-founder of ValueNature, a company that is facilitating the development of biodiversity credits and plans to bring them to market in 2024, believes that these could generate all the required funds for biodiversity protection. “This is why we are so excited to see it move forward,” he told Down To Earth.

Clearly, the stakes are high. It is important to urgently figure out how they should be regulated and monitored. It has to be ensured that pricing is fair for sellers as well as buyers. The United Kingdom and the French governments are leading the way in creating a roadmap for a high-integrity biodiversity credits market. 

This is going to be tough considering that most of the proponents of biocredits are from the private sector and are likely to protect the interests of the corporations that are driving the biodiversity crisis and not biodiversity.

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