New Zealand is considering establishing a domestic voluntary biodiversity credit scheme to halt and reverse the decline in natural ecosystems, and on Friday launched a broad consultation process to help shape the design of the market, including its interaction with other policies, such as the country’s carbon emissions trading scheme.

The idea of a New Zealand biodiversity credit scheme was flagged in May by a government-appointed inquiry panel looking into the devastating impact of Cyclone Gabrielle in February.

On Friday, the government published a discussion paper, seeking advice on how such a market would function and the role the government should play, in a process that will run until Nov. 3.

“We know biodiversity credit systems are being developed overseas, but it’s important we find a path that is right for Aotearoa New Zealand,” said James Shaw, the associate minister for the environment.

New Zealand is facing threats to two-thirds of its native ecosystems and one-third of native species, and Shaw sees a biodiversity credit system as a measure that can help to protect important habitats and species by providing financial incentives to manage land in a way that benefits both wildlife and local communities.

“Landowners, land managers, farmers, and Maori should be looking at their wild spaces as a taonga (treasure), but also as a valuable source of supplementary income. This can then be used to support on-the-ground conservation, like reforestation, wetland restoration, or planting native vegetation,” he said.

FUNDAMENTALS

New Zealand follows neighbouring Australia in planning a government-backed voluntary market for biodiversity credits, but where Canberra is facing difficulties in pushing its scheme through parliament amid criticism of not listening to stakeholders, Wellington is planning a broad consultative process.

Questions asked in the discussion paper include fundamental ones, such as which principles should underpin the system and whether the government should play an enabling or administrative role.

The paper also grapples with issues such as whether credits issued under the scheme could be used for offsetting purposes – NZ has a biodiversity offset scheme and expects there to be some overlap – or exclusively used to make nature positive claims, and whether they should trade bilaterally between seller and buyer, on an exchange, or via brokers.

It also proposed a credit registry be established, so as to avoid false or double claims.

“Demand for credits is expected to increase over time as businesses look to understand and address their impacts on nature and protect the environment they operate in,” the paper said.

“Business drivers for this investment include: meeting stakeholder, customer, and employee expectations, enhancing reputation and brand, addressing current and emerging industry and corporate reporting standards, and building meaningful relationships with mana whenua (the Maori) and communities.”

In its scheme, Australia is planning to issue a single credit to each registered project, regardless of its size or achievements.

New Zealand’s discussion paper does not specifically mention issuance, but notes that it is an option for the country to develop a national market with international trends in mind.

“Deciding on the best approach will be informed by the guiding principles for a BCS and a clear understanding of the risks. Any measures would need to allow the market to evolve towards promoting the best possible biodiversity outcomes and to enhance the credibility of the market,” it said.

The Taskforce on Nature Based Financial Disclosures, the Australian Nature Repair legislation, and the Biodiversity Credit Alliance were mentioned as specifically relevant sources to watch, along with other biodiversity crediting market developers.

“This will be particularly important if credits are to be traded internationally or purchased by transnational corporates that may attribute integrity to consistency with other schemes they deal with. This could be relevant in the trans-Tasman context,” it added.

CARBON CONNECTIONS

The environment ministry also asked stakeholders to consider how a biodiversity credit market should interact with other regulatory programmes, such as the carbon emissions trading scheme.

New Zealand’s ETS has relied heavily on forests to meet its carbon targets and to generate NZUs eligible for compliance in the scheme.

However, that has led to an intense focus on planting fast-growing exotic tree species instead of native ones, which experts say have brought monocultures, detrimental outcomes for biodiversity, and an accelerated conversion of agricultural land to forested areas.

The government recently launched a consultation process on how the ETS can rely less on forestry and more on emissions reductions at source, where one of the options was to split the scheme in two, with forestry as a separate market, and forestry NZUs no longer eligible for ETS compliance.

By allowing some interaction with a new biodiversity scheme and the NZ ETS, for example by letting credits for both be generated on the same plot of land – so-called stacking – the country can mend some of the negative impacts of the carbon market, the paper said.

“An NZ ETS that provides stronger incentives for indigenous biodiversity by, for example, preferentially recognising native ecosystems, including planting or assisted reversion of indigenous vegetation, could support positive outcomes for biodiversity.”

“The Climate Change Commission’s draft advice on the government’s emission reduction plan notes that, without incentives, native afforestation will be slow and small scale.”

It also noted that by the possibility of generating carbon credits that also have biodiversity benefits, New Zealand might carve out a role in the international voluntary carbon market, where the island nation so far has played little or no part.

By Stian Reklev – stian@carbon-pulse.com

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