A financial technology platform has released a methodology for creating tokenised biodiversity credits, with details on how to ensure projects meet integrity standards and units are tradeable.

Biota Nexus outlined its blockchain-based approach in a white paper, which covered steps from the selection of project developers to the credit sales and was drafted in collaboration with Costa Rican conservation monitoring NGO Fundacor.

The two organisations partnered last year on a conservation project in the north of Costa Rica.

“Our approach is designed to be scalable and replicable across different regions and ecosystems,” said the white paper.

“This allows Biota to address biodiversity conservation on a global scale, adapting our methodology to suit local conditions and requirements.”

Biota Nexus’ approach involves five stages – NGO engagement, technical site characterisation, development of pricing and business models, data management, and market launch.

REQUIREMENTS

NGOs seeking to generate Biota’s biodiversity credits must demonstrate a history of successful conservation projects as well as active engagement with local communities and Indigenous Peoples, said the white paper.

Biota Nexus pointed out that under the scheme, project developers must also assess ecological, social, and political risks and opportunities while leveraging available data sources to get a thorough understanding of the site’s characteristics.

These include national and regional geographic information systems, international platforms such as those provided by the World Resources Institute and the UN Environment Programme, and country-specific databases like national biodiversity inventories, forest registries, and environmental monitoring systems.

“This approach also ensures alignment with national or local official data, which is crucial if governmental support is needed,” said the white paper.

While Biota Nexus did not recommend any particular third-party validators, it encouraged project developers to arrange for an independent certification body that verifies project achievements.

“The choice of certificates and third-party validators is important in establishing the credibility and marketability of biodiversity credits,” it said.

“The selection largely depends on the target market and the specific conservation goals of the NGO.”

SETTING THE PRICE

Price-wise, the paper emphasised the need for a strategy that allows landowners to receive adequate compensation for their conservation efforts while making the credits attractive to buyers.

Early biodiversity credit initiatives so far have yielded erratic prices, reflecting the diverse nature of each unit.

Although Biota Nexus said a standardised price should be established at a global level, it acknowledged this is impractical due to each site’s diverse components and varying environmental, social, and economic factors.

“All available data and site-specific indicators are considered to construct a robust and fair pricing model,” it said.

“This includes ecological data, social impact metrics, and economic indicators that reflect the true value of the land and its conservation potential.”

Under the scheme, pricing is determined by assessing potential buyers’ willingness to pay and the acceptable price range for landowners, according to the paper.

BLOCKCHAIN INFRASTRUCTURE

Projects are listed on Biota’s platform, which aims to connect developers with investors, with blockchain – a digital transaction tracker – providing the “backbone” for validating the sale and impact of the biodiversity credits.

Blockchain is increasingly seen as a go-to solution for verifying and trading units, with environmental credit platform Regen Network among the early movers in the space.

Biota’s scheme leverages the blockchain infrastructure provided by LACChain, a global alliance led by the Inter-American Development Bank’s Innovation Lab seeking to scale blockchain technology in Latin America.

“Biota ensures that the engagement between investors and the NGO is conducted transparently,” said the paper.

“This includes providing platforms for interaction, ensuring clear communication, [and] assisting investors in their due diligence processes by providing accurate and comprehensive data about the projects and the potential impacts of their investments.”

Following the release of its methodology, Biota said it plans to create dedicated special purpose vehicles to attract more capital to conservation projects and provide opportunities for investors interested in engaging in the biodiversity credit market.

The company is also exploring partnerships with nature tech firms to enhance its monitoring, reporting, and verification (MRV) framework through integrating advanced technologies such as remote sensors, drones, and AI-driven analytics.

By Sergio Colombo – sergio@carbon-pulse.com

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