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Biodiversity Credits

Biodiversity credits aim to assign an economic value to efforts to preserve or restore ecosystems. They are an economic instrument that allow groups to finance activities, such as forest conservation or restoration that deliver net positive biodiversity gains. Investing in biodiversity credits is seen as a way for companies to improve the reputation of their brands and products. Biodiversity credit systems have been developed in Australia and the US. In 2023, the UK and France announced a joint plan to launch a new biodiversity credits initiative.

Why is biodiversity important – with Sir David Attenborough, The Royal Society

Description

Non-profit organizations, governments (including Indigenous governments), landowners or companies that have a primary goal to conserve or restore land may generate a supply of credits or “certificates.” One credit might be equal to a certain amount of land conserved or restored over a specific period of time. Private companies can then purchase these credits to meet their own biodiversity- or nature-based commitments (either voluntary or mandated through regulation), similar to how companies purchase carbon credits to help achieve their emissions-reduction goals.

There is an important distinction with biodiversity credit markets: biodiversity credits are intended to have a net-positive impact on nature and biodiversity; whereas biodiversity offsets, a different market-based tool, are intended to compensate for companies’ negative and unavoidable impacts on nature. There is no biodiversity credit policy in Canada yet. In BC, a policy on environmental mitigation that speaks to biodiversity offsetting has been in development for some time but it does not address biodiversity credits.

Biodiversity Credit System

A biodiversity credit system has been developed in the US. The steps involved for the biodiversity credit seller are as follows:

  1. Companies that develop biodiversity credits identify a threatened habitat and partner with the landowners (or a First Nation could partner with such a company).
  2. A biological survey is conducted to establish the habitat’s baseline condition. This survey uses factors like water quality, ecological integrity, and species richness.
  3. The land is assessed by an accredited assessor (there is no equivalent yet in Canada).
  4. The landholder applies for a Biodiversity Stewardship Agreement (BSA). A BSA typically refers to a formal arrangement or contract between landowners and relevant authorities to promote and support biodiversity conservation on private land.
  5. The credits can be sold.
  6. The landholder receives annual payments and implements a management plan.

Verra in 2024 launched the SD VISta Nature Framework, which will enable the international sale of biodiversity credits. 

Photo by orbweaver82

Challenges

A challenge for the biodiversity credit systems is how to calculate a standard value for a “unit” of biodiversity. While carbon can be traded tonne for tonne across multiple jurisdictions, the same is not true for biodiversity. There are inherent difficulties in measuring and valuing biodiversity, and trade between jurisdictions lacks ecological meaning.

Although the biodiversity credit market in Canada is still in development, First Nations might consider exploring this as an option for generating revenue on lands they own or manage.