[Re-Post from 3/11/25] Primer on Biodiversity/Nature Credits

Biodiversity and nature credits are increasingly a hot topic in casual conversations across the agroforestry and regenerative agriculture space. However, we’ve noticed that these conversations don’t tend to last too long…due to broad-based confusion on current marketplace dynamics, active stakeholder involvement, framework progress, and more. In this report, we share what we know (and don’t know) about the current state of a voluntary biodiversity & nature credit market, along with what we’re hearing (and not hearing) from corporates and investors interested in our agroforestry work.

An estimated $9.5 trillion in cumulative funding is needed from 2022-2050 to keep global warming below 2°C, while stabilizing biodiversity levels and achieving net neutrality on active land degradation. While most attention has thus far been paid to carbon dioxide (CO2) and greenhouse gas (GHG) emissions (i.e., climate goals), a growing contingent of stakeholders is forcing an adjacent conversation on biodiversity, given human dependence on nature for everything from the oxygen that we breath, to the medicine that we use, to the food that we eat, to the water that we drink, to the materials we rely on for clothing, housing, and much more. To be sure, it is estimated that $700 billion in annual funding is required by 2030 to close the financing gap on reversing dangerous declines in biodiversity alone. Perhaps starker is the estimation that the “ecosystem services” of nature named above can be valued at $125-$140 trillion per year (declining at a rate of $3.5-$19T annually), exceeding global GDP value of $100-$110 trillion. Don’t think it’s possible for the value of nature to exceed the value of GDP? Ask yourself what value you put on oxygen (we hope it’s high).

The idea of biodiversity — or nature — credits is a relatively new construct, appearing recently in Target 19 of the Kunming Montreal Global Biodiversity Framework (GBF). The GBF was agreed to at the 15th UN Nature Conference of the Parties (COP), or COP15, held in Montreal, Canada in 2022 after being postponed from its original site in Kunming, China in 2020 because of COVID-19. The GBF has been referred to as the “Paris Agreement of Nature,” due in part to its aspirational targets on reversing biodiversity loss, which include all signatories designating 30% of their terrestrial and aquatic areas as “protected” by 2030. The GBF also calls on the public and private sectors to mobilize at least $200 billion annually, through 2030, for biodiversity protection. And as a part of Target 19-d, it states a goal to “[stimulate] innovative schemes such as payment for ecosystem services, green bonds, biodiversity offsets and credits, benefit-sharing mechanisms, with environmental and social safeguards.”

What is a Biodiversity/Nature Credit? First, let’s acknowledge biodiversity as the variety of all lifeforms on Earth, including bacteria, fungi, insects, plants, animals, etc. According to the Biodiversity Credit Alliance (BCA), “a biodiversity credit [or nature credit] is a certificate that represents a measured and evidenced-based unit of positive biodiversity outcome that is durable and additional to what would have otherwise occurred.” In other words, such a credit is intended to be a financial instrument that effectively attaches value to the conservation of nature, measured by specific activities or outcomes, over a certain area, over a certain time period.

Although in early stages itself, the voluntary carbon market (VCM) is much further along compared to the nascent biodiversity/nature credit market. We have written a primer on the VCM, previously, which can be accessed here. Today, not much exists in the way of formal trade of biodiversity/nature credits themselves. BloombergNEF estimates that the current footprint of the most developed biodiversity crediting schemes amounts to a little more than 800,000 hectares (1.9 million acres) globally, equating to roughly $8 million pledged so far, as of 2023. As with many nascent industries, a diverse list of unregulated entities acting as all-in-one biodiversity and nature crediting schemes/frameworks/brokers/project developers is now in place, effectively forming the footprint named by BloombergNEF above. This list includes the following:

• Botanic Gardens Conservation International

• Ekos

• CreditNature

• GreenCollar

• RePLANET and Wallacea Trust

• Savimbo

• South Pole

• Terrasos

• Terrain NRM

• ValueNature

• Wilderlands and Cassinia Environmental

There are also many independent pilot projects currently in place being monitored under the umbrella of the International Advisory Panel on Biodiversity Credits (IAPB), which will go a long way in helping to construct a more formal, regulated market approach similar to that which is evolving for carbon. To this end, existing carbon registry providers themselves have moved to build biodiversity and nature frameworks/standards for the future listing of related projects. Verra has been working on its Nature Framework, now fully active as of October 2024. Plan Vivo is still working on the development of its Biodiversity Standard (PV Nature), at this time, as is Gold Standard on its Biodiversity Impact Framework. Finally, numerous governments around the world have implemented jurisdictional biodiversity offset schemes, to include England’s Biodiversity Net Gain program and Australia’s Nature Repair Market.

A working group has been established to build a unified formal biodiversity credit market (BCM), or what others refer to as a nature credit market (NCM). A joint Biodiversity Credit Alliance (BCA) - International Advisory Panel on Biodiversity Credits (IAPB) - World Economic Forum (WEF) working paper aims to guide the development of a functional marketplace for biodiversity and nature credits. Early principles cover three broad themes:

1. Ensure verified positive outcomes for nature

2. Equity and fairness for people

3. Good governance for high-integrity markets

Working Group Participants. The Biodiversity Credit Alliance (BCA) was created to help provide guidance for the establishment of a credible and scalable marketplace. Its Secretariat body is comprised of people from UN agencies, alongside a community advisory panel (includes indigenous community members) and a task force. Its task force is made up of 19 members, including Pollination, Conservation International, the World Business Council for Sustainable Development (WBCSD), Plan Vivo, the HBAR Foundation, Climate Impact Partners, and others. The International Advisory Panel on Biodiversity Credits (IAPB) is an initiative established by France and the UK to help create and grow high-integrity biodiversity credit markets around the world. A governance panel and five working groups help to guide the IAPB, comprised of business, government, and NGO members from more than 25 countries, together with representatives from indigenous communities and the Task Force on Nature-related Financial Disclosures (TNFD). The World Economic Forum (WEF) is a long-standing NGO based in Switzerland that has historically worked to bring public, private, and civil sector actors together on challenging topics to improve the world.

Will a formal BCM or NCM be created any time soon? A centralized market seems unlikely over the near-term. According to the Biodiversity Credit Alliance’s strategic plan, it is hoping to help complete a scoping paper on independent market oversight and review mechanisms by the end of 2025. It also wants stakeholders to agree on minimum standards and an assessment framework on this timeline, as well. A formal oversight and review mechanism is anticipated to be established by the end of 2026. Conversations with indigenous people and local communities are ongoing. From our experience, such coordinated work will likely take longer than expected. Other options like Verra, Plan Vivo, and Gold Standard are potential nearer-term options for project developers, in addition to the quasi-market makers bulleted above.

What type of pricing should participants expect when it comes to biodiversity or nature credits? It depends. RePLANET and Wallacea Trust are aiming to price their initial credits at $5-$10 each. Same with Savimbo. However, others like Terrasos have been realizing something closer to $40 per credit. Then there are instances like that of Botanic Gardens Conservation International offering credits up to $500,000/piece. Some quantification of biodiversity and nature is already actively being embedded into existing carbon offset products too. These carbon offsets with attached biodiversity benefits can currently be verified according to Verra’s Climate, Community & Biodiversity (CCB) Standards. The combined carbon/biodiversity offsets have been shown to garner approximately a 30% premium to plain vanilla carbon offsets; however, it is questionable whether such dynamics will flow through to future pricing expectations inside any dedicated BCM/NCM. Biodiversity and nature credits (henceforth referred to as voluntary biodiversity credits, or VBCs) inside a centralized market are expected to operate with a cost-plus pricing structure, based on the cost to implement underlying activities plus a premium incorporating buyer demand, effectively (this dynamic won’t necessarily hold in other distributed private market offerings, like early pricing referenced directly above). It is further anticipated that varying types of credits will be able to be issued from the same project and/or piece of land. In what is referred to as “stacked credits,” emerging standards are thus far pushing to allow for the sale of carbon credits and VBCs from one project and/or piece of land.

Challenges. One of the biggest challenges of any VBC market will be that of standardization, evaluation, measurement and, ultimately, trade (fungibility). In the voluntary carbon market, one carbon credit is standardized as one ton of CO2 equivalent. However, when it comes to a VBC, how do we efficiently compare the credits of practices associated with terrestrial habitat restoration with those that support ocean fish stocks? How do we compare positive practices in one location with negative actions in another…if in case a corporation wants to use biodiversity or nature credits to offset negative externalities from their operations (we note here that strong opinions exist on corporations not being able to use any centralized marketplace as an “offset” market and instead only be able to pay for “credits” associated with restoration, preservation, and the like)? Redundancy is another key concern of any crediting scheme related to biodiversity or nature. Are activities associated with this work redundant against that which would be captured in the carbon markets? Are we double counting the “value” inherent in the sale of stacked credits? Finally, as many indigenous peoples and local community members are presently responsible for overseeing much of today’s biodiversity globally, how will their rights and concerns be taken into account on the value enhancement work that comes from protecting these areas?

What is Agroforestry Partners Seeing in the Marketplace? We’re not currently having any conversations with corporate buyers on biodiversity credits. There remains an intense focus on carbon offsets, however, with very strict due diligence and high demands on abundant forward volume delivery. That said, investors remain keenly focused on receiving both carbon and biodiversity co-benefits from their participation in our projects. However, instead of any direct value creation on biodiversity enhancement, they are instead desiring effective reporting on our progress in mediums like our annual impact reports. For an update on how our fund measures and reports on biodiversity improvement from our agroforestry work, please visit the Impact section of our website to download our 2023 and 2024 reports.

A significant amount of investment is required to beat back the negative effects of human activities that are accruing to our planet and its protective atmosphere. To date, most of the focus has been on climate-related outcomes like lowering CO2 emissions. But the conversation is quickly turning towards the protection of nature and biodiversity, given estimates that their “ecosystem services” are quickly eroding, putting our economy and planet at risk. The valuation of protections for nature and biodiversity in the form of voluntary market credits — similar to that for carbon — are a potentially attractive way to foster private-sector capital into the space, however there are numerous challenges to making this a reality. There is some semblance of a biodiversity/nature credit market now in place, but it is tiny, distributed, and unregulated. A more centralized, regulated effort is now in the works, but this will take time to develop, if it happens at all.

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