Biodiversity Credits

Author
Alex Bingham
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What are biodiversity credits?

Biodiversity credits are the unit of value used to measure, quantify, and trade the environmental benefits of conservation activities within a biodiversity incentive scheme. They are created and sold to companies or individuals looking to offset their environmental impacts or show support for projects that align with their values. Biodiversity credits are based on supporting ecosystem by preserving or restoring another ecosystem. These credits can finance projects that protect or restore habitats and species, helping preserve the natural environment and its biodiversity.

Biodiversity credit scheme

A biodiversity credit scheme is a type of incentive-based conservation program that is designed to create incentives for landowners and businesses to promote biodiversity conservation and management on their land. This program allows landowners and businesses to generate revenue through conservation and restoration activities on their land. These credits can then be sold to other landowners or businesses that need to meet a biodiversity/conservation goal or requirement. By providing an economic incentive for landowners and businesses to conserve and restore biodiversity, these schemes can create a market for conservation and foster more sustainable land management practices.

How do you earn biodiversity credits?

Biodiversity credits are earned by undertaking activities that restore, protect, or create biodiversities, such as reforestation, wetland restoration, or habitat creation. Other activities that can earn credits include donating to conservation organisations, planting native vegetation, and participating in educational initiatives. Additionally, organisations or individuals can purchase credits from third-party vendors who have developed and managed conservation projects. Projects must be verified by an independent third party and registered with a designated biodiversity credit registry. Here are some examples of registries in Australia. Once registered, the credits can be sold on the open market and used to offset development projects' environmental impact or help meet sustainability goals.

Who buys biodiversity credits?

Biodiversity credits are typically purchased by companies looking to offset their carbon emissions or reduce their environmental footprint in other ways. Conservation organisations, governments, and individuals can also purchase them.

Who sells biodiversity credits?

A variety of organisations, including private companies, government agencies, and non-profit organisations typically sells biodiversity credits. Examples of private companies that sell biodiversity credits include The Nature Conservancy, Conservation International, and Biodiversity Offsets International. Non-profit organisations that sell biodiversity credits include the World Wildlife Fund and the World Resources Institute.

How are biodiversity credits monitored and regulated? 

Biodiversity credits are monitored and regulated by government agencies in the country and independent organisations. These organisations track and verify the credits to ensure that the funded projects provide the expected environmental benefits.

What is the purpose of purchasing biodiversity credits? 

People purchase biodiversity credits to offset the impact of their activities on the environment. Biodiversity credits are a form of environmental impact offset, where credits are purchased to fund conservation projects that protect biodiversity and ecosystems. These projects can range from restoring habitats, protecting endangered species, or creating new protected areas. The credits help offset the environmental damage caused by deforestation, overfishing, and pollution. By purchasing biodiversity credits, people are helping to reduce their environmental footprint and support conservation projects.

What is the difference between biodiversity credits and carbon credits? 

Biodiversity credits are a type of environmental credit that is designed to offset the loss of species caused by human activity. In contrast, carbon credits are a type of environmental credit that is designed to offset the impact of greenhouse gas emissions caused by human activity. Biodiversity credits are often focused on conserving endangered species and habitats, while carbon credits are often focused on reducing emissions from energy production, transportation, industry, and other sources.

What are the benefits of purchasing biodiversity credits? 

Protecting Biodiversity: Biodiversity credits help conserve important habitats and species by protecting, restoring, and managing natural ecosystems. These credits also provide incentives for landowners to manage land that benefits both wildlife and local communities.

Financial Return: Biodiversity credits can offer a financial return to investors, either through direct payment or revenue generated from the sale of credits. This can fund conservation projects and incentivise landowners to maintain and improve land management practices. 

Carbon Offsets: Biodiversity credits can also be used to offset carbon emissions. Protecting forests, wetlands, and other natural habitats can help to reduce carbon dioxide levels in the atmosphere, providing a valuable tool in the fight against climate change. 

Social Benefits: Biodiversity credits can also help improve local communities livelihoods. By protecting and restoring natural habitats, these credits can provide more sustainable sources of food and income for local people.

Examples of biodiversity projects 

Rainforest Conservation: Many organisations are working to protect and restore the rainforests, which are home to a rich diversity of species. These projects involve reforestation, the protection of endangered species, and community engagement. 

Coral Reef Restoration: Coral reefs are important habitats for many species of fish, and other marine life. Projects aim to restore and protect coral reefs around the world. 

Invasive Species Removal: Invasive species can out-compete native species, leading to a decrease in biodiversity. Some biodiversity projects work to remove invasive species and restore native species. 

Pollinator Conservation: Pollinators, such as bees and butterflies, are essential for the health of many ecosystems. Organisations are working to create habitats for pollinators and educate people about the importance of protecting them. 

Are there any risks associated with Biodiversity Credits?

Environmental Risks: Biodiversity credits may lead to increased competition for land and water resources, which may negatively impact the environment. If a project is not properly managed, it could result in habitat destruction, species loss, and other environmental degradation. 

Financial Risks: A biodiversity credit project's long-term success depends on buyers' willingness to purchase credits, which could be affected by price volatility and fluctuating demand. In addition, the cost of managing a project can be high, and the return on investment may be uncertain. 

Legal Risks: Biodiversity credits may be subject to various laws, regulations, and policies that can vary from country to country, as well as local and regional government mandates. In addition, there may be a need for clear guidelines or standards for creating and trading credits, which could create legal uncertainty and risk.

Summary

The global biodiversity crisis is one of the biggest challenges of our time, and biodiversity credits are an innovative way to help save species and ecosystems. While it is still unclear how the system will work in practice, the potential for conservation through these programs is huge. We must take steps to ensure that these credits are implemented in a way that is both effective and ethical so that we can make a real difference in the fight to protect our planet's biodiversity.

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