Trading biodiversity credits through agents, rather than directly from project developers, would create more obstacles for the market to overcome, data consultancy CDC Biodiversite has said.
A market with intermediaries to enable the trading of credits more than once after issuance would risk driving buyers away from project developers, CDC Biodiversite said in its response to a consultation from the International Advisory Panel on Biodiversity Credits (IAPB).
“A secondary market … could make credit models more complex and raises many questions. One of the main difficulties is how the gain associated to each credit should be attributed then transferred to different buyers,” CDC Biodiversite said in a response seen by Carbon Pulse.
CDC Biodiversite, the nature data-focused arm of French public financial institution Caisse des Depots et Consignations, has been involved in the IAPB working groups, it said in a post on LinkedIn.
The IAPB closed its second consultation on the emerging biodiversity market, on possible basic models, on May 24.
In primary markets, transactions are made directly with the buyer. In secondary trading, credits can be resold independent of their initial value via intermediaries, IAPB said.
CDC Biodiversite said: “When a transaction occurs between a buyer and a seller, the more direct the link the better to ensure a true, credible commitment from buyers to positive biodiversity outcomes.”
“It enhances the relation between buyers and sellers by ensuring the respect of ecological equivalency when required, risk sharing, [and] project follow-up in the long-term.”
Informed by work published by non-profit Nature Finance, the World Economic Forum, and advisory group Pollination, IAPB consulted on six basic models for the emerging market:
- Voluntary insetting in value chains
- Voluntary offsetting for residual impacts
- Compliance offsetting of biodiversity loss
- Corporate voluntary contributions related to Corporate Social Responsibility (CSR), a pure contribution to nature separate from one’s own impacts
- Provision of consumer products/services bundled with nature improvement contributions
- Regulatory-driven requirements/targets for CSR
The consultation asked respondents to rate the desirability of primary and secondary trading for each of the six models.
“We believe that credits should help organisations to reduce their impact and make a positive contribution to the preservation of nature as part of the mitigation hierarchy,” CDC Biodiversite said.
“That is why credits of all archetypes ought to promote the restoration or renaturation of ecosystems close to their activities and value chains.”
Financing methods beyond the six proposed options include users of ecosystem services paying landowners, and financial transactions aimed at reducing national debt in return for conservation funding, the data consultancy said.
By Thomas Cox – t.cox@carbon-pulse.com
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