Biodiversity credits are a relatively new financial mechanism designed to incentivize the protection and restoration of ecosystems. They function similarly to carbon credits but focus on conserving biodiversity rather than reducing greenhouse gas emissions. These credits are generated when specific actions are taken to protect, enhance, or restore ecosystems, habitats, or species. Entities that negatively impact biodiversity, such as developers or companies, can purchase these credits to offset their environmental footprint, providing a market-based solution to fund conservation efforts.
The concept of biodiversity credits aims to address the alarming rate of biodiversity loss globally by providing a financial incentive for conservation. Through this mechanism, the value of biodiversity is quantified, allowing for the trade of credits in a regulated market. This can involve activities like reforestation, protecting endangered species, restoring wetlands, or conserving forests. The sale of biodiversity credits offers a new revenue stream for landowners, indigenous communities, and conservation organizations engaged in preserving ecosystems.
One of the advantages of biodiversity credits is that they promote private sector involvement in conservation by making it financially viable. Corporations and governments can offset the biodiversity impacts of their projects while contributing to global conservation goals. However, there are challenges associated with biodiversity credits, such as establishing clear standards, ensuring that credits represent real, measurable benefits to ecosystems, and preventing the potential for “greenwashing” where companies may misuse credits to mask ongoing environmental harm.
Biodiversity credits can play a critical role in complementing other conservation finance mechanisms, such as carbon markets, by integrating ecosystem services beyond carbon sequestration. As the global community focuses more on nature-based solutions to environmental challenges, the development and regulation of biodiversity credits could be a key driver in protecting the world’s remaining ecosystems and reversing biodiversity loss.
Cercarbono, a Colombia-based certifier of carbon projects, has approved a methodology that can be used to generate voluntary biodiversity credits, an emerging finance scheme aimed at supporting biodiversity conservation. This methodology, developed by U.S.-based company Savimbo in collaboration with the Indigenous peoples and local communities in Colombia’s Amazon, is the first of its kind to be approved.
“The methodology created by Savimbo is a significant advancement for our Indigenous communities,” Fernando Lezama, co-founder of Savimbo, traditional medicine doctor and Pijao tribal leader, said in a statement. “It is a simple, practical, and effective methodology developed by local people to benefit the health of the planet.”
Voluntary biodiversity credits are meant to be a way for companies to voluntarily invest in those who protect or restore nature, without any expectation of offsetting their environmental damage elsewhere. Every “unit” of habitat that gets preserved using the buyer’s money earns them a voluntary biodiversity credit.
However, various advocacy and Indigenous peoples organizations have concerns about the new scheme, as Mongabay has previously reported. Concerns include the lack of a demand for voluntary biodiversity credits, potential for greenwashing and problems coming up with a “value” for nature. Moreover, some Indigenous groups worry that the voluntary biodiversity credit scheme could suffer from the same issues as the carbon credit market, including unjust contracts with Indigenous communities, unscrupulous middlemen, funds that don’t ultimately reach the communities and complex science.
Savimbo’s methodology counters some of these problems by monitoring a predecided indicator species that communities think is valuable for the health of their ecosystems. To generate a credit, community members must document the presence of the species through photographic or video evidence in a given area of land over a set period of time. This scheme is functional in the Colombian Amazon, where some communities use the jaguar (Panthera onca) as their indicator species and generate biodiversity credits without any middlemen.
“Indigenous Peoples in every ecosystem monitor their forests with totemic animals,” Drea Burbank, co-founder of Savimbo, said in the statement. “We just translated that to science and automated it, then made it open-source to really fix the climate justice problem.”
According to Cercarbono, Savimbo’s methodology issues voluntary biodiversity credits “that can never be used to provide offsets of any kind.”
Mark Opel, a finance lead with the U.S.-based advocacy group Campaign for Nature, which came out with a report critiquing the voluntary biodiversity scheme in January, told Mongabay that while he wasn’t familiar with Savimbo’s methodology, he was skeptical that any methodology could overcome the fundamental issues with voluntary biodiversity credits.
“Biodiversity credits remain a distraction from the need for governments to increase public funding for nature and implement the policies, regulations and incentives that will drive more private investment in nature,” Opel said.
