A Germany-based investment vehicle is piloting its biodiversity credit methodology for endangered species within a reserve in South Africa, in a bid to increase appetite for habitat conservation in the area.

The Africa’s Most Endangered Species (AMES) Habitat fund is implementing the methodology within a 1,500-hectare reserve in the country that harbours rhinos.

The methodology assesses biodiversity integrity by monitoring the presence of the so-called indicator species, those which only live in a healthy ecosystem like rhinos, Marios Michaelides, founder of Ames Habitat fund within the non-profit AMES foundation, told Carbon Pulse.

The group is monitoring the species population in partnership with Germany-based tech startup The Landbanking Group, leveraging drones and cost-saving technologies such as camera traps and smartphones.

“The idea is to develop an affordable and simple method that anyone can use, as employing expensive technologies like environmental DNA (eDNA) would be prohibitive and unscalable in many parts of Africa,” he said.

ECOSYSTEM INTEGRITY

The fund plans to issue the first biodiversity credits, currently dubbed “Verifiable Nature Units”, in November. The pilot is expected to generate a first batch of approximately 10 units, each one representing one hectare of land monitored for a period of time that has yet to be defined.

Michaelides said that AMES and Landbanking are developing a platform that will display the score of the ecosystem condition of every monitored hectare.

Under the initiative, ecosystem integrity is ranked on a decimal scale from one to zero, where one marks the highest integrity, and zero the lowest.

“The platform will be able to show in a pixelated form the integrity of each hectare, as well as threats to ecosystems, including human activities such as deforestation and encroaching farms,” he said.

Activities aimed at improving ecosystem integrity in the reserve involve both conservation and restoration, since the organisation is constantly working on obtaining legal control over new areas, including former cattle farms.

“On the platform, you’ll be able to see quite clearly the state of different areas on the reserve,” he said.

“We hope the tool will allow buyers and investors to connect the dots and increase their willingness to fund conservation and restoration projects through innovative schemes like biodiversity credits.”

The ultimate goal is to demonstrate that the methodology can be adapted and replicated in other ecosystems across Africa and the world, Michaelides said.

BOLSTERING DEMAND

European and North American companies are still not keen to invest in biodiversity credit initiatives in Africa, preferring instead to invest in the nature closer to them, Michaelides noted.

That’s why the AMES Habitat Fund is trying to engage with more local financial institutions, as South African banks are starting to set biodiversity targets to avoid financial risks linked to habitat loss.

“Often, it happens that Africa looks to Europe to be the first mover in a bid to prove the market viability,” Michaelides said.

“But I’m seeing that local banks are showing a strong and increasing interest in preserving nature.”

AMES Foundation is one of the members of the Biodiversity Credits Incubator (BCI), an initiative launched last year by the Sustainable Finance Coalition to investigate opportunities and risks related to the development of the biodiversity credits market within Africa.

“I believe that biodiversity credits could be a game changer, and, despite all the challenges, we are excited to be the pioneer in the African market,” Michaelides said.

In a report released earlier this year, BCI said the biodiversity credit market was an opportunity to scale investments in Africa and that is sustainable over the long term.

In May, Swiss non-profit NatureFinance released a set of recommendations to bolster Africa’s biodiversity credit markets, saying that credits can represent the potential of a non-traditional revenue stream for both conservation and restoration.

By Giada Ferraglioni – giada@carbon-pulse.com

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