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Growth of Voluntary Biodiversity Credit Markets
Context:
A recent report by the Pollination Group reveals that voluntary biodiversity credit markets are expanding rapidly, indicating that more organisations recognise the financial and ethical importance of supporting biodiversity initiatives.
More on News:
- This trend is crucial for protecting nature, as both public and private sectors strive for a “nature-positive” world by 2030.
- Voluntary biodiversity credits provide a framework for organisations to invest in conservation projects.
Voluntary Biodiversity Credits
- Certificates purchased by organisations to fund projects that protect, restore, or enhance natural environments.
- This system not only benefits the environment but also allows companies to showcase their commitment to sustainability.
- These credits align with nature-based solutions supported under Target 19 of the Kunming-Montreal Global Biodiversity Framework.
Key Highlights:
- It draws on a global online survey conducted with Marsden Jacob Associates that found increasing interest in biodiversity credits, with participation from 16 organisations in the biodiversity credit sector.
- Ecosystem Focus: The schemes primarily support regeneration projects for terrestrial (100%), freshwater (63%), and coastal (56%) ecosystems.
- The survey also emphasised the role of Indigenous Peoples and Local Communities (IPLC) in biodiversity projects.
- About 75% of respondents indicated that these groups participate in implementing projects and sharing benefits.
- Notably, credits from projects involving IPLCs tend to be more expensive, with price increases ranging from 15-300%.
Market Dynamics and Sales:
- While most organisations sold fewer than 100 credits, one managed to sell over 100,000.
- The report estimates that between $325,000 and $1.87 million worth of credits were sold by 2020, supporting projects across approximately 26,000 to 125,000 hectares of land.
- Most respondents anticipate selling over 100,000 biodiversity credits in the next five years, with only 25% expressing uncertainty about future sales.
Buyer Demographics and Preferences:
- The report highlights that 88% of respondents distinguish voluntary credits from offsets, emphasising their unique role in conservation rather than just compensating for negative impacts.
- Major buyers include large companies, banks, and small businesses, motivated by marketing and risk management considerations.
- Geographically, buyers are predominantly located in Europe (44%), followed by Latin America and the Caribbean (25%), and Oceania and North America (19%).
- A significant 81% of respondents reported that buyers prefer credits from nearby projects.
Implications:
- Growing Confidence: Despite uncertainties, the report indicates rising confidence in the market due to the increasing number of sold credits and improved integrity measures.
- Caution from Carbon Market Experience: Concerns regarding transparency, effectiveness, and credit integrity highlight the need for rigorous standards and governance in biodiversity credit markets.
Conclusion:
Voluntary biodiversity credits are emerging as a significant tool for promoting sustainability and protecting nature, though careful implementation is crucial to avoid pitfalls observed in carbon markets.