A methodology that aims to enable governments to generate marine biodiversity credits from protected areas has been launched by California-headquartered non-profit OpenEarth.
The framework aims to capture the ecological and social value of marine biodiversity, with the output of one square kilometre of protected ocean over one year.
“Our goal is to create a scientifically sound and equitable global scale of marine biodiversity whose implementation in a framework can support financial efforts for conservation,” OpenEarth said.
As natural capital assets, once issued the credits in theory could operate within guarantees in conservation finance, nature-debt swaps, tradable commodities, or as backing for environmental derivatives, it said.
The process would reward habitats that continue to function effectively, rather than seeking to measure biodiversity improvements, it said.
There is a lack of financial mechanisms to support governments and local communities in protecting the oceans, OpenEarth said.
The framework follows OpenEarth conducting a case study in a protected areas around Cocos Island, Costa Rica, home to hammerhead sharks, where financing has been a challenge.
“Many countries in the Global South that host or are expanding marine protected areas face similar hurdles,” it said.
Water-related credits have been seen in Australian reef credits and the UK’s nutrient credits, but most companies preparing projects for generating biodiversity credits for a potential market are based on land.
PILOT SERIES
OpenEarth proposed a series of pilots across other protected areas to further test its methodology.
“These pilots should involve collaboration with ecological credit registries, e.g. Regen Network, Verra, to issue a batch of credits using the test methodology,” it said.
“The credits can then be distributed to digital wallets owned by national or local governments, conservation agencies, and, importantly, indigenous or local communities, as part of their sovereign assets, if applicable.”
The pilots should explore ways of commercialising the credits, which could be held as assets by institutions such as central banks, it said.
HOW IT WORKS
For the purposes of achieving global conservation targets, the units used in the credits are scalable, while enabling comparisons between different projects in terms of whether they have continued to be protected.
The methodology only works for project areas that have been protected – rather than measuring restoration like biodiversity credits – are well-functioning, and suffer from a significant funding gap.
The framework is based on its own concept of ‘biodiversity units’, which it defines as “spatially and temporally coherent areas” for marine biodiversity evaluation.
Each of these units is calculated by a set of ‘modulating factors’ that seek to capture the ecological and social value of marine biodiversity within a square kilometre.
OpenEarth set out six modulating factors, each with their own methodology, as a starting point for its concept:
- Shannon index
- Simpson index
- Species Richness
- Endemism
- Habitat Survey
- Species Vulnerability (based on Weighted Endemism including Global Endangerment Index)
Each area generating a credit must have a baseline of at least five years prior to enable the calculation.
“There are many caveats to this methodology, least of which are the effects of exogenous changes such as climate change, ocean acidification and destruction of species corridors, all of which are likely to change the global and yearly biodiversity indices,” it said.
By Thomas Cox – t.cox@carbon-pulse.com
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