COMMENT: Carbon copy – Biodiversity markets need to avoid repeating past mistakes

Published 09:10 on December 15, 2022  /  Last updated at 16:05 on December 15, 2022  /  Biodiversity, Contributed Content, Other Content  /  No Comments

Financing for biodiversity is about to take off with the launch of biodiversity markets. They have the opportunity to learn from the successes and mistakes of the Voluntary Carbon Market by creating an effective biodiversity metrics framework, writes Torrey Sanseverino, a natural capital research associate with offset ratings agency BeZero.

By Torrey Sanseverino, Natural Capital Research Associate, BeZero Carbon

Financing for biodiversity is about to take off with the launch of biodiversity markets. They have the opportunity to learn from the successes and mistakes of the Voluntary Carbon Market by creating an effective biodiversity metrics framework.

Biodiversity is at a crucial tipping point. Approximately 69% of wildlife populations have been lost between 1970 and 2018 and about 28% of all species are threatened with extinction. However, financing for protecting and restoring biodiversity is currently missing the mark, the gap is predicted to be over $600bn per year by 2030.

Biodiversity markets are in development and could supply a source of voluntary finance.

The Voluntary Carbon Market (VCM) in the meantime has picked up some of the slack in financing biodiversity actions that also have carbon benefits. But this has not been a seamless solution.

Representing co-benefits is a particularly challenging endeavour as social, economic, and environmental benefits are often intangible, complex, and constantly changing. Thus, developing an entirely new system is a daunting task. The VCM has overcome this by adopting the UN Sustainable Development Goals (SDG) framework, designed for country-level use, to illustrate the co-benefits of carbon projects. The SDGs are widely recognised and are thus used by almost 50% of VCM projects to represent co-benefits.

However, the application of the SDG framework to a smaller scale comes with hurdles, some have yet to be overcome in the VCM. The difficulties with using the UN SDG framework to illustrate co-benefits has led to potential misrepresentation of the impacts behind the claims including those related to biodiversity. Biodiversity co-benefits in the VCM are commonly thought to be represented by SDG 14 (Life below water) and SDG 15 (Life on land).

As we show in our report on SDG 14 & 15 and biodiversity, the indicators for SDG 14 & 15 tend not to measure changes in biodiversity as they primarily focus on measuring socioeconomic development. While socioeconomic impacts are invaluable, the perception of SDG 14 & 15 as biodiversity indicators can lead to buyers misinterpreting the impacts behind the SDG claims as primarily for biodiversity.

There are a few conservation related indicators under SDG 14 (such as 14.5.1 ‘Coverage of protected areas to marine resources’), but no indicators directly measuring biodiversity loss or monitoring. Similarly SDG 15 has a few indicators that cover afforestation, conservation, and species distinction, but a significant number are economically focused targets (like 15.6.1 ‘Number of countries that have adopted legislative, administrative and policy frameworks to ensure fair and equitable sharing of benefits’).

Additionally, each accreditor has their own systems to process SDG claims as demonstrated in our report on the SDG claim lifecycle. Thus, there are not standard evidence types and levels of detail between accreditors.

Despite this variation, projects making SDG 14 & 15 claims tend to attach the SDG 14 and/or 15 symbol(s) to credits on their associated registries. The universal use of the symbol without consistent evidence and detail can lead to misinterpretation of the claims by buyers and unintentional financing of lower-quality actions.

As biodiversity markets scale, they can support transparency by creating a new universal framework. One that is tailored to the nascent market and effectively measures biodiversity impacts. Inspiration for robust evidence requirements can come from looking at biodiversity metric frameworks like STAR (Species Threat Abatement and Restoration Metric) and IPBES (Intergovernmental Science Policy Platform on Biodiversity and Ecosystem Services).

Time is running out for natural ecosystems and the species they contain but, if biodiversity markets act on lessons from their older sibling the VCM, they can make a significant impact.

Any opinions published in this commentary reflect the views of the author(s) and not of Carbon Pulse.