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A new report by the Pollination Group, an advisory firm based in London, United Kingdom, showed that voluntary biodiversity credit markets are growing quickly. This suggests that more organisations are recognising the financial and ethical importance of supporting biodiversity initiatives.
The growth is important for protecting nature. Since 2020, both public and private sectors have been working hard to create a ‘nature-positive’ world by 2030 and voluntary biodiversity credits markets help achieve this by providing a framework through which organisations can invest in conservation projects.
Voluntary biodiversity credits are certificates that organisations can buy to support projects that help protect, restore or improve natural spaces. This system helps the environment and allows companies to show their contribution to sustainability. These credits are part of the nature-based solutions supported under target 19 of the Kunming-Montreal Global Biodiversity Framework.
Pollination Group released its second report on Voluntary Biodiversity Credit Markets on September 30, 2024. A global online survey conducted by the group and Marsden Jacob Associates (Marsden Jacob) in May-June 2024 found that interest in biodiversity credits is increasing. A total of 16 organisations working with biodiversity credits participated in the survey. Out of these, eight sell credits, with some starting as recently as 2023.
While most sold fewer than 100 credits, one organisation has managed to sell over 100,000 credits. The authors of the report estimated that by 2020, between $325,000 and $1.87 million worth of credits were sold. This money has helped projects cover about 26,000-125,000 hectares of land.
Most survey respondents expected to sell over 100,000 biodiversity credits in the next five years, with just 25 per cent unsure about future sales.
Pollination Group has been instrumental in analysing and reporting on the current state of biodiversity credit markets helping to establish frameworks for these markets and identifying key trends and developments.
This report has found out significant insights regarding pricing and buyer demographics. Prices for these credits vary widely. Some organisations sold their credits for $200-700 each (13 per cent), while others sold their credits for $25 or less (13 per cent) or $2-10 each (50 per cent). The prices depend on project costs and how much buyers are willing to pay.
The report also found that 88 per cent of respondents saw a difference between voluntary credits and offsets; their systems are not meant to support offsets. Laura Waterford, director of Pollination Group, noted that these are different trends that are visible in voluntary biodiversity credit markets compared to carbon markets.
The survey identified major buyers as large companies, banks and small businesses. Their reasons for participating included marketing and managing risks. As many as 13 per cent of respondents said big companies and banks are the main buyers.
Most buyers were located in Europe (44 per cent), followed by Latin America and the Caribbean (25 per cent) and Oceania and North America (19 per cent). The survey showed that buyers prefered credits from nearby projects. Some 81 per cent of the respondents said buyers want credits from projects close to their operations.
Buyers often prefer to make contribution claims instead of just offsetting negative impacts, though some do both. Many respondents saw these contribution claims as a major reason for buying biodiversity credits. However, 56 per cent of respondents did not answer questions about what might drive interest in these credits.
The survey also highlighted the involvement of Indigenous Peoples and Local Communities (IPLC) in biodiversity projects. Around 75 per cent said these groups take part, often helping to implement projects and share benefits. Many respondents (20 per cent) noted that credits from projects involving IPLCs tend to be more expensive, with price increases of 15-300 per cent. It is very important for these communities to be part of designing and running these markets since they help care for much of the world’s biodiversity.
The report noted that credits sold have already helped protect or restore up to 125,000 hectares of land. Regeneration projects, which aim to improve nature over time, are the most common activities supported by these schemes. All respondents confirmed their programmes help generate credits for terrestrial ecosystems (100 per cent), freshwater ecosystems (63 per cent) and coastal ecosystems (56 per cent).
Despite some uncertainties, Waterford concluded that the rising number of sold credits and improving integrity measures show growing confidence in these markets. As more people learn about voluntary biodiversity credits, they are seen as a strong tool for protecting nature and promoting sustainability.
The experience with voluntary carbon markets, however, reminds us of the complexities and potential pitfalls of such systems. There are growing concerns about transparency, effectiveness and integrity of credits. Underscoring the need for rigorous standards and governance to ensure that biodiversity credits accomplish their intended goals.