Biodiversity Credit Market

The voluntary biodiversity credit market has gained traction as a method for funding conservation efforts and involves private companies investing in projects aimed at protecting and restoring biodiversity. However, recent research raises concerns about its effectiveness and potential drawbacks.

About Biodiversity Credits

Biodiversity credits represent measurable improvements in ecosystems and species protection. They are based on outcomes that compare conservation efforts against a baseline scenario without intervention. The market aims to channel private funds towards conservation projects.

Market Growth and Goals

The biodiversity credit market is currently valued at $8 million. Projections suggest it could expand to $2 billion by 2030 and reach $69 billion by 2050. The Kunming-Montreal Global Biodiversity Framework aims to raise $200 billion annually for conservation by 2030, promoting innovative financing methods.

Measurement and Monitoring Issues

Biodiversity credits are often measured by land area rather than standard units, complicating comparisons. Most credits are issued for five years, but this can vary. The complexity of biodiversity makes standardisation challenging, as unique ecological values differ across regions.

Current assessment methods often oversimplify biodiversity, assigning numeric values without considering species interactions or cultural significance. This can lead to inadequate evaluations of ecosystems’ health and value.

Tracking Conservation Effectiveness

Monitoring biodiversity conservation success is problematic. Short-term assessments may fail to capture fluctuations in species populations, leading to inaccurate evaluations of project outcomes.

Issues with Additionality and Leakage

Proving “additionality” is challenge, as investments must demonstrate improved outcomes compared to natural scenarios. Furthermore, “leakage” occurs when harmful practices shift to new areas instead of being eliminated, complicating conservation efforts.

The study suggests that improved regulation could enhance the market’s effectiveness. However, implementing strong oversight will require commitment from industry stakeholders, transparency, and active participation from civil society.

GKToday Notes:

1. Biodiversity Credits: These credits represent measurable improvements in ecosystems. They compare conservation efforts against baselines, aiming to channel private funds into conservation projects effectively.
2. Kunming-Montreal Global Biodiversity Framework: This framework aims to raise $200 billion annually for conservation by 2030. It promotes innovative financing methods, including biodiversity credits, to support global conservation efforts.

Month: Current Affairs - December, 2024

Category: Environment Current Affairs