Debate on whether biodiversity credits can assign value to nature at COP15 summit in Montreal

WWF members protest during COP15, the two-week UN biodiversity summit in Montreal on December 7.Kristen Muskie/Reuters

As the UN’s COP15 summit in Montreal aims to halt the rapid destruction of nature and restore degraded land, some experts are calling for the sale of “biodiversity credits” to help pay for the daunting task.

The United Nations says the $384 billion a year the world needs to protect nature by 2025 won’t be enough. Proponents argue that biodiversity credits could help bridge the gap.

The concept is based on carbon credits, where each unit represents the reduction of 1 ton of greenhouse gas emissions through efforts such as using renewable energy or planting trees.

However, when it comes to nature conservation, there is no single indicator to measure progress. Few analysts agree on what points should look like, how they should be used, or even whether they should even be called points. Some say the effort could backfire, for example by allowing companies to buy credits tied to one region to forgive disruption elsewhere.

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“There are a lot of unanswered questions. It’s too early to know where it’s going to go,” said Carbon Market Watch analyst Jonathan Crook.

The most difficult question is how to value biodiversity, the variety of life from frogs and fungi to forests. The more species an area contains, the more “rich” its biodiversity is.

How should the world put a price on a herd of deer or bacteria in forest soil? Given that each region’s biodiversity is unique, why should the market believe in these values?

price challenge

Believing that biodiversity credits could channel much-needed funding for conservation, a number of nonprofits, companies, and academics have proposed various approaches.

Some don’t even try to measure the plants or animals, but rather the cost of protecting an area by things like hiring park rangers or running monitoring systems to prevent deforestation and poaching.

Another approach attempts to quantify biodiversity gains. The Wallacea Trust, a UK-based non-profit organization, considers at least five types of animals in an area, such as aquatic invertebrates, birds or butterflies. Each category is weighted by how rare these species are in a country, and the abundance, or biomass, of these organisms is then estimated. Each 1% increase in species richness and abundance per hectare, or avoided loss, is counted as a ‘point’.

Simon Morgan, founder of biodiversity credit company ValueNature, said that given the complexity of the natural world, there may be multiple approaches. Relatively well-preserved areas may only need to assess conservation costs, while areas in need of restoration may wish to quantify species abundance or increases in richness.

company purchase

With so many questions surrounding biodiversity credits, why should companies buy them?

In some places, including parts of Australia, the government has forced companies to buy nature credits to finance conservation in one area to offset damage done in another. EU companies may also choose to do so, as new rules force disclosure of their impact on nature.

Aleksandra Holmlund, a researcher at the Swedish University of Agricultural Sciences who is attending the COP15 summit with the Biodiversity Credit Union industry group, criticized the idea of ​​allowing companies to offset damage elsewhere.

COP15 participants mainly discussed “voluntary markets” run by the private sector, rather than “compliant markets” for trading government-mandated investments. But some doubt that voluntary credit will attract enough investment.

Martijn Wilder, chief executive of Pollination, an investment and advisory firm focused on climate change, said governments must require companies to invest in biodiversity.

“Unless you’re actually forcing a company to do it, they’re not going to do it,” Wilder said.

The current draft of the COP15 agreement also mentions promoting financing schemes such as “biodiversity offsets”.

The nature of privatization

Outside of the UN talks, the Biodiversity Credit Union and the World Economic Forum (WEF) are holding separate discussions on how to implement a voluntary market.

Holmlund said the alliance, an informal group of about 10 market players, plans to formally launch next year. It will also develop a means of peer-reviewing credit issuances to ensure they meet conservation requirements.

The market needs strict standards, analysts told Reuters, noting that the scuffle in the early carbon market had resulted in many low-quality projects.

Lucy Hargreaves, head of policy at carbon credit platform Patch, said: “When you have a lot of examples of low quality or low standards in the market, it creates mistrust and it affects the whole market. integrity.”

Verra, the operator of the world’s largest carbon credit registry, said it would release its own biodiversity credit standard next year.

A report last week co-authored by the United Nations Development Program endorsed well-structured “biocredit” schemes and made recommendations. But other experts warn that biodiversity credits are an attempt by companies to “greenwash” or make false claims about sustainability.

Frederic Hache, director of the Green Finance Observatory, told Reuters that biodiversity credits are no substitute for countries enforcing strict laws against the destruction of nature.

“These markets are redefining and privatizing the concept of protection based on short-term profitability criteria,” he said.

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