Buyers of biodiversity credits should purchase multiple units at once to overcome the issue of some single initiatives not offering actual nature uplift, a researcher has said.

Many biodiversity initiatives will not be able to prove nature benefits over time with scientific credibility, including additionality, predicted Sophus zu Ermgassen, an ecological economist at the University of Oxford.

“A scientifically credible biodiversity credit investment system would recognise that many credits will not work,” said zu Ermgassen, during a webinar organised by a thematic group within the International Union for Conservation of Nature (IUCN)’s Commission on Ecosystem Management.

“But if you buy a portfolio of credits, you can assume that on average, some will work. That should be the way that we do it – to overcome this problem of being not confident that an individual conservation intervention will actually deliver an additional conservation gain.”

The concept of biodiversity credits has gained increasing traction over the last couple of years, as private and public markets look to plug the nature financing gap, but few actual trades have happened. Many private initiatives have launched projects around the world that seek to prove credible ways of evidencing nature uplift.

WHY CREDITS WILL NOT WORK

Many biodiversity credits will not work due to the fundamental problem that gains would have happened without intervention, in many project cases, zu Ermgassen said.

“[Some] people who opt in to delivering biodiversity offsets, carbon credits, are people who for whom the cost of doing so is low – people who would have been doing it anyway,” he said.

“I would better describe most ‘credits’ as ‘certificates’, potentially ‘stewardship credits’, or just plain ‘private sector investment in conservation’.”

Biodiversity credits are often said to differ from offsets, by not implying harm to nature in another location while boosting ecosystems. Initiatives have embraced other terms such as certificates in a bid to avoid greenwashing while indicating uplift.

Markets need to use cutting-edge science to enable the attribution of genuine causality to projects, something which is “near impossible today”, zu Ermgassen claimed. The closest market actors can get is by combining on-the-ground monitoring with remote sensing.

Standards alone are not enough to ensure that biodiversity markets deliver additional permanent gains, meaning “there’s a strong need for independent governance”.

NEED FOR A PORTFOLIO

A portfolio of biodiversity initiatives could enable investors to be “absolutely certain” that their assets overall have positive nature impacts over time, even if some projects fail, zu Ermgassen said.

Projections about nature uplift should be “very conservative”, to mitigate the risk of greenwashing, with investors rewarded for initiatives exceeding biodiversity-related expectations.

“I would love it if biodiversity credits scaled, and did it in a scientifically credible way so that we were able to draw a lot more private investment into conservation, in a way that we knew was contributing towards biodiversity conservation goals,” he said.

“But if this is not built on the correct scientific foundation, then it has the risk of following the same kind of upscaling trajectory as the carbon market, which after 20 years is sitting at around $2 billion in value.”

MARKET PARADOX

Biodiversity markets have a “kind of paradox” where organisations need to be able to use units to offset harm elsewhere, to incentivise sufficient investment to enable scale, zu Ermgassen said.

Science needs to improve before biodiversity initiatives can credibly offset corporate supply chain impacts, due to the latter being measured in different metrics using lifecycle assessment methods, he added.

“We haven’t yet developed the science to translate between these site-based units, and these supply chain units in my view. And then we also have the scientific deficiency on the actual impact of biodiversity credit investments.”

However, zu Ermgassen was “in awe of the explosion of entrepreneurship that has characterised the biodiversity credit market” through innovation.

Last week, Brussels-based Green Finance Observatory (GFO) highlighted risks for Indigenous Peoples in biodiversity credit markets.

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

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