Biodiversity Credits: Balancing Development and Nature

Imagine a world where every new building or road comes with a commitment to nature. That’s where biodiversity credits come in. They’re like promises to nature, ensuring that when we build something, we also give back to the planet. The Kunming-Montreal Global Biodiversity Framework (KMGBF), established at the 15th Conference of Parties (CoP15) of the Convention on Biological Diversity (CBD), sets forth ambitious targets for biodiversity conservation, sustainable utilization, and equitable benefit sharing.

What are Biodiversity Credits?

Biodiversity credits are a bit like nature’s currency. When companies build things, they often affect nature. These credits are their way of saying sorry by helping nature elsewhere. It’s about making sure that when one area loses, another gains, keeping nature’s balance. This idea isn’t just good for plants and animals; it’s a smart way to make sure our development is kind to the planet. Biodiversity credits are “𝒑𝒂𝒚𝒎𝒆𝒏𝒕𝒔 𝒇𝒐𝒓 𝒎𝒆𝒂𝒔𝒖𝒓𝒂𝒃𝒍𝒆 𝒂𝒏𝒅 𝒔𝒄𝒊𝒆𝒏𝒕𝒊𝒇𝒊𝒄𝒂𝒍𝒍𝒚 𝒗𝒆𝒓𝒊𝒇𝒊𝒆𝒅 𝒃𝒊𝒐𝒅𝒊𝒗𝒆𝒓𝒔𝒊𝒕𝒚 𝒐𝒖𝒕𝒄𝒐𝒎𝒆𝒔” which have the potential to:

• Deliver positive outcomes for nature & ecosystems,
• Shift how economic activities account for externalities,
• Mitigate disruption to businesses & their supply chains, and
• Benefit local communities & indigenous peoples.

How do they work?

• Emerging Frontiers in Conservation Initiatives

Conservation entities conduct assessments to evaluate the ecological importance and biodiversity of specific areas. Subsequently, they issue biodiversity credits as a formal acknowledgment of the conservation initiatives implemented in those particular locations.

• Financial Transactions: Credit Transactions

Individuals and businesses committed to reducing their ecological footprint can acquire biodiversity credits. These credits play a crucial role in funding conservation projects and endorsing practices that promote sustainable land management.

• Innovative Conservation Initiatives

Proceeds from the sale of biodiversity credits support tangible conservation initiatives, such as habitat restoration, reforestation, and the safeguarding of endangered species on the ground.

Benefits of Biodiversity Credits?

• Incentivizing the Conservation of Old-Growth Forests

Financial incentives in the form of biodiversity credits encourage landowners to engage in ecosystem conservation and restoration, fostering a commitment to sustainable land management practices.

• Initiatives for Reforestation and Afforestation

Biodiversity credits provide industries with a concrete means to compensate for their ecological impact, fostering a net positive contribution to the environment.

• Advancing Sustainable Logging Practices

Biodiversity credits offer an incentive for forest managers to adopt logging practices that mitigate biodiversity impacts. These practices, such as selective logging, reduced-impact logging, and extended rotation periods, not only help minimize ecological disturbances but also ensure sustainable timber harvesting, maintaining the overall health and biodiversity of forests.

• Corporate Social Responsibility (CSR)

Companies can showcase their dedication to environmental sustainability by incorporating biodiversity credits into their corporate social responsibility (CSR) initiatives.

• Community Engagement

Biodiversity conservation projects derive significant social and economic benefits, in addition to ecological gains, by actively involving and relying on the essential contributions of local communities.

“Recognising that finding enough funds for biodiversity is likely to be a stumbling block to the success of KMGBF, its target 19 stipulates that innovative schemes such as credits be used to encourage private investment. CBD estimated at least $200 billion is needed each year to protect biodiversity.”