A new paper has outlined a series of integrity principles that could form part of a voluntary biodiversity crediting framework, likely to be key to scaling the nascent market and closing the current private finance gap.
The technical paper published last week by the UK-based The Biodiversity Consultancy proposed several guidelines across three key categories – ecological, social, and financial principles – to help scale a voluntary crediting market while preventing potentially harmful consequences.
The principles focused around ensuring units could be standardised and transparently-funded by the private sector, while also protecting local communities and fully taking into account the context of their geography.
The paper also noted the key difference between voluntary biodiversity credits as those most likely to deliver verifiable positive biodiversity outcomes assuming they are not used as biodiversity offsets. The resulting aim is to reduce impact rather than offset any negative activity.
“While biodiversity offsets and biodiversity credits share some design features, credits are distinct from offsets in terms of their role and function in delivering nature-positive outcomes,” it stated.
AS THINGS STAND
The biodiversity crediting market is still very young and as of Oct. 2022, The Biodiversity Consultancy said it was aware of over 10 initiatives already underway to develop voluntary biodiversity credit schemes with each falling under the broad definition of treating units as acquired by those wanting to drive positive biodiversity outcomes – similar to carbon credits for emissions reductions – through conservation or restoration.
This might be crediting specific local efforts, rewilding landscapes, protection of species of fauna or flora, or ecosystem conservation.
The key differential across the different initiatives, the report suggested, was the range in types of biodiversity such as those relating to these different species and ecosystems, as well as geographic scope, type of intervention, and level of monitoring and verification.
The report called for a unification of this community to drive best practice in the crediting of biodiversity outcomes that would help contribute to a nature positive future, among the key goals discussed at present in Montreal at the UN’s COP15 for biodiversity.
To reverse the current decline in biodiversity by 2030, a 5-10 fold increase in global annual spending on conservation will be required, with many regarding the private sector as a key part of this gap. But funding is vastly lacking, with many companies also unaware of their impact.
In response to these challenges, the report offered twelve guidelines across the three bands seeking to protect local communities but also enabling space to scale the market globally:
- Promote robust and verifiable positive impacts;
- Are additional to actions implementing the mitigation hierarchy;
- Contribute to recognised global conservation priorities and align with regional and local conservation plans where relevant, to promote effective targeting of conservation finance;
- Use flexible measurement frameworks that allow aggregation of context-specific metrics into globally comparable units;
- Apply cost-effective and proportionate monitoring and verification, to prioritise delivering investment to on the-ground actions.
- Are co-designed with local stakeholders through a rights-based approach to conservation;
- Produce locally-meaningful benefits that address and respect diverse local uses of nature;
- Promote equitable distribution of benefits;
- Include strong safeguards to prevent adverse social impacts.
- Enable the sustained funding of credited conservation actions;
- Ensure transparent reporting of project impacts to manage the risk to credit buyers;
- Link to clearly defined business needs, to promote scaling of investment finance.
“Biodiversity credits hold significant promise and risk – they have also not yet been tested at scale. It is critical that a wide range of stakeholders, especially those living in or using the ecosystems where credits are focused, are involved in defining appropriate principles and standards,” the paper read.
The role of credits would be to partly address the huge funding gap for biodiversity conservation and restoration as well as the increasing focus on the potential contribution of the private sector to some of the goals being discussed in Canada.
One challenge is that effective monitoring of positive biodiversity outcomes is very expensive and hard to do and therefore results in high transaction costs, a key barrier to the development of the nascent market, the paper argued.
Scale at both a local and global level will be key therefore to driving growth and attracting the much needed private finance, ensuring that communities are afforded the key safeguards to protect those in direct contact with the ecosystem.
Making full use of technological advances will be therefore key to addressing the difficulties with MRV.
The paper highlights several other risks, referring to criticism seen in the voluntary carbon market relating to lack of integrity and malpractice, and proposed solutions.
One proposal offered was to ensure the priority of prevention by using the mitigation hierarchy to ensure companies focus on avoiding negative biodiversity impacts first, part of the reason for preferring credits to offsets.
To face up to the MRV challenge, the paper suggested a tiered approach by which both the action and outcome of the biodiversity impact are measured.
Also, the required level of monitoring effort could take a tiered approach, relating the acceptable level of measurement effort to the type of intervention and intended outcomes.
For example, monitoring the presence of an endangered species would require more resources than that of a widespread and well-understood habitat type.
Overall, any framework must ensure that it can distinguish between projects that do an excellent job of protecting or restoring ecosystems and species, from those projects which make only marginal returns to avoid incentivising a “race to the bottom”.
One such approach might be to categorise the level of positive biodiversity change in the chosen indicator into different tiers such as a 1-10% gain, 11-20% and so on, to account for the likely measurement uncertainty.
The authors said that they welcomed feedback and discussion, with collaboration likely to be very important to driving the much-needed finance into the sector without compromising on integrity.
“The technical working paper was offered as an input to the many ongoing discussions about biodiversity credits and to help guide the development of a high integrity credits market,” the Biodiversity Consultancy said.
By Roy Manuell – firstname.lastname@example.org