A UK-France led international panel said a survey on the supply of biodiversity credit projects found a need for access to finance at all stages, technical capacity, and tenure rights to help scale the market, in results published on Friday.

The International Advisory Panel on Biodiversity Credits (IAPB) survey received 60 responses from project developers of biodiversity credits, and/or nature-based carbon credits, from 31 countries in spring this year.

Access to finance at all stages of development is key to a project’s success, the survey found. Finance from private and business sources (46 respondents) was the most common source of funding, followed by international foundations and NGOs.

“Some respondents noted that for projects receiving funding from bilateral sources, donors tend to prefer one-time investment for short- to mid-term results,” the IAPB said.

Few donors “committed to the multi-year support required for the often long lag-times between project inception and income generation from the sale of credits”, it said.

Other respondents noted that public funding was not available in their region for developing biodiversity credits, for example in Indonesia.

Projects being developed by, or with, Indigenous Peoples and local communities (IPs and LCs) said they had found a lack of directly accessible finance.

Grants were the most common types of financing instruments selected by the respondents, however these were closely followed by market-based instruments – such as carbon trading or the sale of ecosystem services or products:

Source: IAPB

Lack of financial resources was stated by 39 respondents as the most common challenge to the development of biodiversity credit schemes, followed by technical challenges.

“Availability of finance sources for project development to get to the crediting stage is an essential element of the enabling environment … this was especially noted by NGOs,” IAPB said.

“Respondents cited the lack of a robust market and insufficient demand for biodiversity credits as a primary constraint to project development and the scaling of a credit market.”

The survey from IAPB’s supply working group aimed to help identify the conditions necessary to develop a pipeline of biodiversity credits.

OTHER KEY FINDINGS

The IAPB published a range of other findings from the survey about biodiversity credit projects:

• Ensuring sufficient technical capacity for robust biodiversity measurement, monitoring, verification, and reporting is key to project success
• Tenure rights to land or water are also critical for success, but these can be complex
• Proving additionality is essential, in ways fit for the diverse approaches to biodiversity credits
• Ensuring permanence has been tackled through a range of approaches, such as legal agreements
• Benefit sharing has an array of methods, with IPs and LCs-owned initiatives having the most direct transactions
• Bundling and stacking has the potential to improve finance flows for biodiversity and help project developers achieve scale

The results follow IAPB publishing reports earlier this year on challenges to scaling the market and market models.

The IAPB aims to facilitate the growth of high-integrity biodiversity credit markets, while encourage enabling policy and regulatory mechanisms.

The UK-France led initiative is being closely monitored ahead of the COP16 UN biodiversity summit in Cali, Colombia, where it is expected to release a set of final recommendations with practical and actionable outcomes for the emerging market.

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

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