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.

Two-thirds of the world’s polar bears could be extinct by 2050 if global warming persists.

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 is biodiversity 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 help 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 the land used for cultivating rice only produces two varieties.

  • Ecosystem Functioning

Biodiversity supports the healthy functioning of ecosystems. The variety of different species interacts with and depends on one another in complex food webs and ecological processes. Removing certain species can disrupt these systems and create imbalances that impact ecological functions like nutrient cycling, water filtration, soil health, and more. Greater diversity provides more ecosystem stability and resilience, allowing environments to better withstand and adapt to changes.

  • Human Wellbeing

Biodiverse environments provide a multitude of essential ecosystem services that human health, economies, and development rely on. This includes the provision of clean air, fresh water, medicines, plant pollination for crops, climate and disease regulation, and sustenance of material needs. Declining biodiversity threatens the capacity of ecosystems to provide this intricate web of services that civilizations depend on. Preservation of genes, species, and habitat diversity is necessary for protecting human wellbeing.

  • Future Potential
Medicinal plants have been used by indigenous people for hundreds of years in curing ailments, modern medical research has extended these cures to the world.

Biodiverse ecosystems also represent essentially limitless future potential. Undiscovered medicinal properties, genetic resources, and other wisdom found in these systems remain unknown. Our destruction of habitats and species forever eliminates these possibilities before we ever understand them. Conserving biodiversity preserves future options.

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 run into 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.
  • 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. 

What are biodiversity credits, and how do they work?

A biodiversity credit is a legal document that represents the environmental action taken, 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 have the potential to redefine global conservation efforts

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 is biodiversity credits. Through these credits, entities can invest in environmental projects that contribute to richer biodiversity.

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, preserve their biodiversity, and ensure 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.


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.

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