Biodiversity credits: everything you need to know
Biodiversity credits are being developed to drive public and private spending into nature restoration. Find out what they are and all about the race to develop the best method for measuring biodiversity.
First things first, what are biodiversity credits?
They are measurable units of biodiversity that can be bought by companies to measure milestones towards becoming nature positive.
Erm, like carbon credits?
Sort of, although carbon credits are offsets – making up for carbon emissions elsewhere. Biodiversity credits are improvements in biodiversity that are not tied to losses elsewhere. The idea is to develop a market to channel public and private funding into the restoration of nature.
Ok, that’s sounds like a good idea.
The IUCN estimates that $600-800 billion a year is needed to achieve the global nature restoration targets agreed in the Kunming-Montreal Global Biodiversity Framework. Boosting private investment is vital to reversing biodiversity loss by 2030.
That’s a lot of investment…
Yes, but on the bright side, the private sector is taking an increasing interest in restoring biodiversity. Have you seen the McCain ads on their commitment to regenerative farming? Companies are now making nature positive pledges on top of their net zero commitments. But they want to show measurable impact, which is why a metric to calculate biodiversity credits is needed.
Right. So how do we calculate a biodiversity credit?
A big problem for investors is that there isn’t currently a standard methodology for assessing and reporting on biodiversity. Biodiversity credits are not as simple as carbon credits; carbon has only one component that can be measured, whereas biodiversity is much more complex.
Hang on, but doesn’t Biodiversity Net Gain (BNG) try to do this?
Correct, although technically BNG delivers offsets, not credits. Biodiversity net gain comes into force in England this November. It requires developers to offset biodiversity loss AND provide a 10% gain in biodiversity. This is measured using the ‘statutory biodiversity metric’ from Natural England – Biodiversity Metric 4.0. This measures units based on habitat features including size, distinctiveness, condition, quality and location.
Not everyone is a fan, right?
Right. The tool has been criticised for being a ‘simplistic proxy for biodiversity’. Whilst some Local Planning Authorities have already implemented biodiversity net gain, a recent study found that over 90% of offsetting is being implemented on site, resulting in small, fragmented habitats and an overall loss in absolute space for nature. Study author Dr Joseph Bull says that the greatest gains for nature will only be achieved if a reasonably high proportion of the biodiversity offsets are created away from the development sites, so that nature can be restored at scale.
Ah! The Lawton principles
All together now, ‘Bigger, better, more joined up!’ Lawton principles
Is BNG the only solution on the table?
No, to meet the demand from the private sector, new companies are emerging and the race is on to develop a metric that best represents biodiversity on the ground. A reliable method is needed so that companies can trust what they are investing in and not be accused of greenwashing.
Is there general agreement on how to calculate biodiversity?
Not so much, and this makes financiers nervous to invest.
So what’s on the table so far?
The Wallacea Trust methodology defines a biodiversity credit as a 1% uplift in biodiversity, or avoided loss of biodiversity, per hectare. The company rePLANET is developing biodiversity credits using this methodology and has published it open source for others to use. Their method follows a similar structure to the consumer price index.
Ah, the basket of goods!
Exactly. To calculate biodiversity you can select a basket of at least five metrics that reflect the conservation objectives of the project, such as the species richness of butterflies or the abundance of breeding birds. For a restoration project, changes in each of these metrics is monitored over time and the median value is used to calculate the number of credits that the conservation interventions have generated. Money raised through their sale could then be reinvested into the project to cover future intervention costs. A key component of this method is that all species are weighted by their conservation status so that projects are rewarded for stimulating increase in the rarest and most endangered species.
Independent verification is vital and accreditation companies are emerging. rePLANET is planning to take an academic peer review approach through the Biodiversity Futures Initiative (BFI) – a body of academics who will be paid to verify the methodology and metrics for different projects. The BFI is currently recruiting ecologists to join its reviewer team.
Other companies are developing their own biodiversity metrics: Pivotal Future (who recently opened their method for public consultation) and the Crowther Lab at ETH Zurich, are using machine learning combined with technologies like eDNA sampling, satellite and bioacoustics data to quantify metrics at scale without ecologists on the ground.
Hmmm, I worry that technology is not a panacea…
For sure. eDNA sampling, for example, can only tell you species richness, rather than abundance and records can often be incomplete, preventing identification at species level. It remains to be seen how technological solutions can be further developed to ensure that biodiversity metrics are accurately measured.
One metric to rule them all!
Yes, some think we need just one metric, as this would ensure consistency between projects and be less confusing for investors. Ultimately, it will be the markets that decide.
But isn’t each ecosystem unique?
There is a strong argument that biodiversity offsetting should be localised and not far afield, which would potentially result in the loss of certain habitats and species. There are also social factors. If a developer offsets their biodiversity impact far from the new development in a different ecosystem, there could be a loss of green space for the local community who rely on it. And companies buying up land for conservation projects in other countries should ensure that local people are involved from the outset.
Can we learn from the carbon markets?
Hopefully. They have been plagued by accusations that they don’t represent the carbon savings promised. There are also concerns that offsetting takes the focus away from mitigation of biodiversity loss, which should be the priority for any company looking to become nature positive.
Is there the expertise and capacity to do this work?
I’m glad you ask. Local Planning Authorities desperately need expertise to deliver biodiversity net gain. Cheeringly, Defra has just announced that an extra £9 million will be made available to local councils to help recruit additional ecologists to help, so more jobs will soon be available. Companies are already starting to invest in conservation projects to work towards being nature positive, despite credits not yet being on the market. The BES invests in the Cashel Forest Trust, for example.
There is also government funding available for projects in England, including the Nature for Climate fund which Defra are struggling to spend – there just aren’t enough projects out there. Environmental NGOs have a key role to play in providing valid, robust projects for public and private investors to fund.
Thought for the day please
Valuing biodiversity is complex and feels wrong to many, but it will help fund the projects needed to reach biodiversity targets. Ecologists have a vital role to play in ensuring these credits are robust and represent conservation priorities, as well as ensuring that valid restoration projects are available to investors.
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