Biodiversity Credits: A Market-Based Approach to Protecting Endangered Species

Biodiversity is the lifeblood of our planet, it sustains and nourishes every living being, providing essential services such as pollination, clean air, and water, among others. However, it’s heartbreaking to see that the very existence of these life forms and ecosystems is threatened due to human activities. From Jaguars in Peru to Polar bears in the Arctic region to plankton deep within the sea, many species are facing extinction. The recent climate crisis has only exacerbated the problem, with habitats being destroyed at an alarming rate and ecosystems collapsing.

The loss of biodiversity not only impacts wildlife but also poses a severe threat to human survival. The extinction of one species can have a cascading effect on the entire ecosystem, causing imbalances that can have disastrous consequences for the planet. The protection of our planet’s biodiversity is essential for ensuring the survival of species and maintaining the health of our ecosystems. However, funding for conservation efforts has historically been limited, and securing the resources needed to protect and restore our natural environments is becoming increasingly challenging. Biodiversity credits offer a new and innovative solution to this problem. And in this article, we look at how biodiversity credits can significantly influence the fate of species on our planet.

Why Biodiversity is Critical for the Planet?

Economic ramifications of biodiversity

Biodiversity also provides economic benefits to businesses. More than half of the world’s GDP is highly dependent on nature, with sectors like pharmaceuticals, food, and tourism relying on natural resources. However, increasing biodiversity loss poses a risk to businesses, making it essential to protect and restore biodiversity. Each dollar spent on restoring nature can result in about $9 of economic benefits and helps avoid trillions of dollars in social and environmental damages.

The importance of biodiversity extends beyond economic benefits, as it also provides more livelihoods. Estimates show that around $125 trillion of value comes from natural ecosystems each year, with agriculture employing around 60% of the working poor. Additionally, forests are the primary source of livelihood for more than one billion people in the Global South. Therefore, protecting and restoring biodiversity is vital not only for nature but also for the people whose livelihoods depend on it.

Crucial for health and food security.

Biodiversity, the variety of living organisms on Earth, plays a crucial role in our lives. It is the foundation of global nutrition and food security, with millions of species working together to provide us with fruits, vegetables, and animal products essential for a healthy and balanced diet. For instance, the number of rice varieties cultivated in Asia has fallen from tens of thousands to only a few dozen. Likewise, in Thailand, 50% of land used for cultivating rice only produces two varieties.

Combating diseases

Conservation of diverse species is critical to support human health and combat diseases. When humans encroach upon natural ecosystems, it leads to a reduction in the size and number of species living in them. Higher biodiversity rates are associated with better human health, as many essential plant ingredients for medicines are found in nature. Unfortunately, as species go extinct, we are losing the opportunity to develop new medicines.

Why is biodiversity under threat?

The World Economic Forum (WEF) published a briefing paper that stated “Over 1 million species are at risk of extinction, one-third of the world’s topsoil has been degraded, forest fires are now more extensive and destructive than at any time in the past 10,000 years and 50% of the world’s coral reefs are destroyed. With more than half the world’s GDP moderately or highly dependent on nature and the services it provides, this loss of biodiversity integrity and functionality is increasingly undermining our economy, development, health, and social stability.” The paper went on to highlight the financial implications of biodiversity loss which runs into the billions of dollars. Below are some of the most significant causes of biodiversity loss currently on our planet.

Climate change: Rising temperatures and extreme weather events are causing the loss of habitats and changing the behavior of many species. This results in reduced biodiversity as ecosystems become less diverse and less resilient.

Habitat destruction: Human activities such as deforestation, agriculture, and urbanization are destroying the habitats of many species, making it difficult for them to survive. In the last 50 years, the Amazon has lost 17% of its size, and one-third of the world’s forest area has been deforested. 

Pollution: Pollution of land, air, and water is impacting biodiversity by harming the health and reproductive success of many species. 

Over-exploitation of resources: The unsustainable use of natural resources, including overfishing, poaching, and logging, is leading to the extinction of many species. Statistics show that at least 55% of the world’s ocean area is covered by industrial fishing, and 33% of the fish stocks are overfished. 

How can Biodiversity credits tip the scale?

A biodiversity credit is a legal document that represents the environmental action made, where it took place, who developed it, under what methodologies, and that has been certified following a specific system. Biodiversity credits are similar to carbon credits in that companies can purchase them to offset their negative environmental impact. However, instead of focusing on carbon emissions, biodiversity credits focus on preserving and restoring biodiversity. By purchasing biodiversity credits, companies can offset their impact on the environment and contribute to the protection of biodiversity

Biodiversity credits can be regarded as measurable, traceable, and tradable units of biodiversity. They are instruments that offer a solution to financing the conservation and restoration of nature. There’s a huge financing gap to preserve and protect nature – that’s worth $700 billion annually. And one mechanism that individuals and firms created to plug in the gap and reverse the loss are the biodiversity credits. Through these credits, entities can invest in environmental projects that contribute to richer biodiversity.

How Biodiversity Credits Work

Biodiversity credits work by allowing companies to fund conservation projects and activities, such as habitat restoration, species reintroduction, and protected area management. These projects aim to protect and restore ecosystems, preserving their biodiversity and ensuring the survival of species. The credits purchased by companies go directly to funding these conservation efforts, providing a source of funding that might not otherwise be available.

Bottom line. 

Biodiversity credits are a solution to financing the conservation and restoration of nature, offering measurable, traceable, and tradable units of biodiversity. By purchasing biodiversity credits, companies can offset their negative environmental impact and contribute to the protection of biodiversity.  Some countries have already designed and implemented biodiversity credits. New Zealand launched “sustainable development units” in July 2022, funded by Trust Waikato, the Wel Energy Trust, and the D.V. Bryant Trust. These biocredits are purchased by supply chain business Profile Group Limited and fund the conservation management of 83 hectares at Sanctuary Mountain Maungatautari.

 Australia also introduced “EcoAustralia™ credits” in 2018, which are a combination of one “Australian biodiversity unit” and one carbon credit. Each ABU represents 1.5 square meters of habitat protection. These credits are used to fund conservation efforts and are purchased by businesses and organizations. Ultimately, biodiversity credits offer a market-based approach to protecting endangered species and preserving our planet’s biodiversity.

Rene Hennen is the Chief Executive Officer and Co-Founder of FUND THE PLANET, a blockchain-based organization dedicated to the conservation of the world’s rainforests. Rene has been at the forefront of using blockchain technology to develop a more transparent and sustainable solution for the preservation of endangered rainforests. Visit our website and documentation to learn more about FUND THE PLANET and its revolutionary approach to conservation. You can also use the Rainforest Explorer to track FUND THE PLANET’s conservation efforts of each parcel in real-time.