A Dubai-headquartered fintech firm has teamed up with a Sri Lanka-based project developer to generate and issue biodiversity and oxygen credits within a pilot restoration project in the Belipola private forest.

In May, AQUAE Impact launched a joint venture, AQUAE Labs, in partnership with Earth Restoration to support farmers in scaling the world’s first analog forest, a restoration model focused on increasing biodiversity by recreating natural forest systems.

The pilot initiative will take place in the 17 acres (6 hectares) Belipola forest, a private nature restoration site in the South East Hill Country, started back in 1983 on an abandoned and degraded tea plantation.

The company expects to deliver biodiversity and oxygen credits next month, and plans to list them on a blockchain platform developed by AQUAE Impact.

As for credit prices, Vin Menon, co-founder and CEO of AQUAE Impact, told Carbon Pulse that the company is still in the process of engaging a third-party valuation provider, specifically an intangible asset valuer, to conduct an audit and evaluation. Revaluation will be conducted on a yearly base, he said.

OXYGEN CREDITS

“An oxygen credit is a unit of value that represents the primary ecosystem services of photosynthesis in that area,” Linju Thomas, COO at AQUAE Impact, told Carbon Pulse.

“The primary ecosystem services linked to those credits are the capture of carbon, the production of oxygen, and the purification of groundwater via transpiration.”

Contrary to a carbon credit, which is typically issued for 1 metric tonne of CO2e avoided or removed from the atmosphere, the equivalent of 1 oxygen credit can vary depending on the contract and the species that the contract is assigned to.

Menon said the company is developing its own methodologies for both the oxygen and the biodiversity units, though he declined to share project documents with Carbon Pulse.

“An oxygen credit is equal to specific tree species and their growth performance,” Thomas said.

“Our methodology specifically considers how much photosynthetic biomass each tree species accumulates over time, giving us a relative performance factor as well as oxygen output for each specific plant species.”

AQUAE Labs expects to contract 1,250 high-quality fruit trees, 1,000 timber-bearing trees, and 250 rare or endangered forest species for a total amount of 2,500 trees farmed by 250 farmers in Sri Lanka, who will implement analog forestry designs on their farms.

“This project will pay around $1,000 per farmer over four years to guarantee tree survival and for their participation as contracted producers of primary ecosystem services,” Thomas said.

“We estimated that these farmers will contribute over 24,000 kilos of contracted oxygen over the four-year period.”

As for demand, Thomas said the venture is in discussions with companies that are ready to purchase credits, including major airlines and manufacturing companies.

She said companies could use oxygen credits as a complementary alternative to carbon credits to offset their emissions since the aim is to replace the oxygen consumed in the combustion of fossil fuel.

“This initiative is significant as it will launch a global first in recognising the value of oxygen as a complementary alternative to existing carbon markets. It takes two atoms of oxygen for each atom of carbon to make carbon dioxide,” the company said in a statement.

BIODIVERSITY CREDITS

Each farm will undergo biodiversity mapping, and the resulting uplift over four years will also generate biodiversity credits.

Dejan DeZoysa, CEO of Earth Restoration, told Carbon Pulse that units will be linked to monitoring activities.

Birds will be used as the main index to measure the seral stages of each project area, but the company can be contracted to measure various taxa, he said.

“It can be the plants, it can be the reptiles, mammals, or butterflies. Everything that can tell us the state of maturity of an area in the analog forest.”

Indicator species, used to measure the environmental conditions in which they live, have been leveraged to inform different biodiversity credit methodologies.

Cercarbono, a Colombia-based credit standard, in December released a methodology based on the Indicator Species Biodiversity Methodology developed by US-based Savimbo in partnership with Indigenous Peoples and local communities in the Colombian Amazon.

Birds are considered one of the most useful indicator species, as they can provide information on a wide range of habitats.

By Giada Ferraglioni – giada@carbon-pulse.com

*** Click here to sign up to our twice-weekly biodiversity newsletter ***