Biocredits could break logjam over finance to conserve and restore nature

IIED and UNDP study of three biocredit schemes shows tradeable units of biodiversity can finance conservation by Indigenous People and local communities.

Press release, 05 December 2022
UN biodiversity conference (COP15)
A series of pages related to IIED's activities around the 15th Convention on Biological Diversity conference (COP15)

The trade of biocredits could help solve the challenge of finding finance for the conservation and restoration of the world’s biodiversity – its plants, animals and marine life, according to new analysis from IIED and the United Nations Development Programme (UNDP) released ahead of global negotiations known as COP15 aimed at halting and reversing the loss of nature. 

Biocredits are a new kind of financial asset identified as units of biodiversity which are measurable and traceable and so can be traded and sold to individuals, corporates and government. The majority of the revenues are being channelled to Indigenous People and local communities who are often most effective at conservation while also living on the frontlines of biodiversity loss. 

Biocredits need to be carefully designed to avoid the pitfalls illustrated by carbon credit or carbon offset schemes, which were devised as a way of incentivising reductions in carbon emissions. Carbon credits have, in some instances, been used as 'greenwashing' to avoid the need to decarbonise, and without proper safeguards can harm communities by depriving them of their land. 

In 'Biocredits to finance nature and people: emerging lessons', researchers analysed three existing biocredit schemes being developed in Africa, Latin America and globally. The schemes differ in how they define a unit of biodiversity, set prices, generate sales and distribute revenue to local communities and Indigenous People. But all set out to preserve biodiversity that is under threat, restore an ecosystem or landscape or reward conservation efforts taking place at pristine sites.

Earth’s rich biodiversity is under threat with many species already extinct and nearly a third of those currently being monitored at risk of dying out. World leaders meeting at the COP15 negotiations, which get under way in Montreal this week, need to agree a global biodiversity framework (GBF) to achieve protection of 30% of the world’s land and seas by the year 2030.

Billed as 'nature’s Paris Agreement’ after the landmark treaty on climate change agreed in 2015, the GBF is currently held up by disagreement over finance. Biocredits offer a novel opportunity to scale up private and public finance for conservation in ways that benefit marginalised people at the frontline of conservation. 

IIED executive director Tom Mitchell said: “Biocredits offer a tangible solution to the challenge of how to finance the conservation and restoration of nature. Evidence of biocredit schemes already shows they could help to preserve precious plants, animals and ecosystems, but also meaningfully channel finance to local communities and Indigenous People who are the most effective custodians of biodiversity.”

UNDP's assistant secretary general, Haoliang Xu, said “Equitably engaging Indigenous People and local communities in the design and delivery of biocredits is key to ensuring their needs and priorities are met and to increasing the effectiveness of biodiversity conservation. Developers need to ensure transparency over where the money is going and should ensure the majority of the finance reaches Indigenous People and local communities.”

UNDP and IIED have a number of recommendations for biocredit schemes going forwards. Schemes need to make sure that the metrics they use to define a unit of biodiversity includes its social and cultural value. This is particularly important in the case of lands and seas managed by Indigenous People and local communities, given the valuable traditional and cultural knowledge these groups hold.  

Developers of biocredit schemes need to generate more sales and they could best do this through targeted marketing to potential buyers. But they need to avoid becoming party to greenwashing. Buyers should be screened to ensure they are not using the credit to offset damage elsewhere, and that the investment in the purchase of the biocredits maximises the social and biological impact compared to other potential investments.

Notes to editors

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