The UN-backed Biodiversity Credit Alliance (BCA) on Wednesday released a paper seeking to give a definition of biodiversity credits and associated terms, in an attempt to avoid the market making a false start.

The paper aims to provide those working with biodiversity credits with a common set of definitions with which to build the market, seeing as the term has been defined in a myriad of ways so far.

“It’s a team effort across the Biodiversity Credit Alliance to develop robust agreement on key issues in the development of a supply of credits and a market in which they can be used. Agreeing on a definition of a credit and related terms is one of the hardest and most important things we could do,” said Timothy Male with US-based Environmental Policy Innovation Center (EPIC), who participated in the process.

“This effort provides the world with a definition for a biodiversity credit that should be familiar to anyone who works with carbon, ecosystem, water, and other types of environmental outcomes but has specific features that should make it useful in building a reliable and trustworthy market for measurable biodiversity outcomes.”

The BCA Definition Working Group includes representatives from biodiversity market actors RePlanet, Ekos, Terrasos, ValueNature, and CreditNature.

Launched at the COP15 biodiversity talks in Montreal in Dec. 2022, the BCA has established a forum that acts as an advisory body with some 100 participants across industry and research organisations.

“One of the purposes of BCA’s work is to help biodiversity crediting avoid a ‘false start’ from crediting efforts, or transactions, that set out with the best of intentions yet end up being criticised because they do not really succeed in helping biodiversity,” it said in the paper.

“As BCA creates definitions and norms around biodiversity credits, it is with the aim of focusing on the types of lower-risk credits, methodologies, and systems that are most likely to be successful in the early years of biodiversity crediting.”

The market is at a stage where some early movers are already issuing their own credits at the same time as fundamental discussions are taking place on the basic principles that should guide the market.

Stakeholders will likely have in mind different definitions of those credits, be they a farmer in Australia looking to reap the benefits of the government’s planned nature repair market, a Scandinavian banker trying to meet their ESG targets, or a local community group in the Caribbean exploring opportunities as authorities lay out new marine protected areas.

The BCA’s definition hinges on the meaning of four terms it contains:

• Outcome
• Measured and evidence-based
• Durability
• Additionality

OUTCOME AND EVIDENCE

“A positive biodiversity outcome is an improvement in measures of biodiversity, a reduction in threats to biodiversity, or prevention of an anticipated decline in measures of biodiversity,” BCA said. This can be achieved through activities that seek uplift, avoided loss, or maintenance.

Credit methodologies must always include a measure of geographic area, alongside multiple metrics of habitat condition, BCA said. Markets need different types of credits in accordance with buyers’ needs and local conditions.

“While methodologies must be evidence-based, it is recognised that some level of uncertainty is likely to remain an inherent factor, and ‘evidence-based’ doesn’t necessarily mean demonstrated in the absolute,” it said.

Multiple metrics can make methodologies more accurate at showing the biodiversity benefits of credits. Evidence can be based on peer-reviewed science and traditional ecological knowledge, presenting an opportunity to engage with Indigenous Peoples and local communities, said the paper.

Credit methodologies should go through consultation with a public review process, before a verification process conducted by independent third parties, according to BCA.

DURABILITY

“Durability means the ability of a project to ensure that biodiversity outcomes on which credits are based are likely to endure for an extended period,” BCA said.

This can include measures such as:

• Increased legal and customary protection status of the project site, including through protected areas, and Other Effective Area-based Conservation Methods
• Improvements in the measures of social, economic, cultural, and spiritual well-being of Indigenous Peoples and local communities
• Restrictions on the use or extraction of specific groups of species or habitats

The time period necessary to restore ecological integrity depends on the site. The minimum durability period should be 20 years, BCA said.

ADDITIONALITY

“Additionality means a requirement that credits can only be assigned to biodiversity outcomes that are attributable to the project intervention, and would not have otherwise happened,” the alliance said.

Project additionality may vary greatly, even across similar types of interventions, it said. The additionality requirement seeks to ensure that buyers of biodiversity credits can be confident their money directly leads to intervention.

WHAT NEXT

The definition paper is the first result of work from the BCA that is set to also tackle demand side concepts, and the inclusion of Indigenous Peoples and local communities, by August.

In April, BCA released an issue paper on the process of developing a review mechanism for the emerging biodiversity credit market in a bid to quell concerns over nature risks related to credited projects.

The BCA Secretariat is facilitated by UN Development Programme, UN Environment Programme Finance Initiative, and the Swedish International Development Cooperation Agency.

Read a Carbon Pulse interview on BCA’s work.

By Thomas Cox – t.cox@carbon-pulse.com

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