Biodiversity Credits Research Articles

Biodiversity Conservation Strategies From No Net Loss to Net Gain. A Multidimensional Accounting Method

AbstractBiodiversity credits are increasingly recognized as a potential instrument to incentivize and bolster efforts in biodiversity conservation. Nevertheless, their efficacy is impeded by a dearth of research. To mitigate these constraints, this study introduces a comprehensive and integrated framework for appraising biodiversity credits. Drawing upon the Emergy Accounting methodology, the framework encompasses four key perspectives: Emergy‐based Ecosystem Potential (EEP), Emergy‐based Ecosystem Network (EEN), Emergy‐based “Species' to Human” contributions (ESH), and Emergy‐based Species' Significance. Furthermore, this study scrutinizes the trajectory of biodiversity credits across 31 provinces spanning from 2000 to 2050, considering 220 distinct scenarios. The findings reveal that China has attained the no net loss (NNL) objective concerning conventional area‐based conservation targets, with forest cover encompassing 27% of the total land area. However, biodiversity credits at the ecosystem level exhibit an escalating trend, with growth rates ranging from 0.73% to 1.0%, while credits at the species level depict a decremental trend, with an approximate growth rate of −0.21%. Under a scenario of moderate growth, projections for the year 2030 indicate that the EEP credit is poised to accrue approximately 4.76E + 20 solar emjoules (sej), the EEN credit is forecasted to accumulate around 1.03E + 21 sej, and the ESH credit is anticipated to decline by 1.46E + 23 sej within the context of the NNL paradigm. These outcomes underscore the necessity of delineating differentiated biodiversity goals, and furnish insights into the dynamics of supply and demand pertaining to biodiversity credits within the ambit of offsetting schemes across the nation.

A technological biodiversity monitoring toolkit for biocredits

Abstract Biodiversity is in crisis globally, and we consistently fail to hit global targets to stem its loss. Inspired by the Kunming‐Montreal Global Biodiversity Framework, the biodiversity credit market offers an avenue for vital funding for biodiversity conservation projects around the world. Various biodiversity credit methodologies and standards are becoming available, and most will require the measurement and monitoring of biodiversity at scale. Private investment in conservation through biodiversity credits entails specific needs for biodiversity data collection, including the need for biodiversity claims to be verifiable. We conceptualise these requirements around ‘SAGED’ criteria: Scalable, Accessible, Granular (data of appropriate spatial, taxonomic and temporal resolution), Evidenceable and Directly measured (where possible). Measuring and monitoring biodiversity across ecosystems, ecoregions and taxa is expensive and time‐consuming with traditional survey methods. These methods often rely on access to experts with sufficient taxonomic and survey expertise, which is challenging in many parts of the world. Accordingly, we review biodiversity monitoring technologies and assess their readiness to fulfil key requirements of assessments for the purpose of nature accounting for biodiversity credits (particularly SAGED criteria). We focus on monitoring technologies that are commonly cited by biodiversity credit methodologies, including (e)DNA metabarcoding, passive acoustic monitoring and various other remote sensing methods. We also explore the current limits of these techniques in obtaining appropriate biodiversity measures and metrics for biodiversity finance. Synthesis and applications. Technological solutions for biodiversity monitoring are not (yet) a panacea but are key for evidenceable monitoring at scale. For current use in biocredit markets, we advise these are combined with ground validation and human‐collected ecological data. Developments in automation and machine learning will rapidly make these technologies more accessible and efficient.

Close-to-nature management of tropical timber plantations is economically viable and provides biodiversity benefits

Abstract Reforestation of tropical forests is crucial to mitigate the climate crisis and restore ecosystems. However, past efforts have been criticized for establishing monoculture timber plantations with exotic tree species. Close-to-nature (CTN) practices aim to minimize negative forest management impacts on forests ecosystems by mimicking natural dynamics. So far, CTN management practices are rarely applied in tropical plantation forestry. This study evaluates the economic, carbon sequestration, and biodiversity potential of CTN management in tropical mixed-species plantations in Central America using a simulation-optimization approach. To our knowledge, this study is the first to assess the potential of tropical CTN-managed plantations on the basis of detailed process-based forest growth simulations. CTN practices such as selective harvesting, retention forestry, and shelterwood cutting of mixed-species stands were compared to even-aged mixtures and conventional monoculture practices. Results showed that CTN management was economically viable for certain species mixtures and management practices at an 8 % discount rate and had the potential to increase carbon storage and biodiversity in the modeled plantations. At current carbon prices, CTN-managed plantations may only become financially competitive with monocultures, if monocultures are excluded from carbon certification schemes that increasingly aim at co-producing non-carbon benefits like biodiversity conservation. If carbon prices increase, the sale of carbon credits could finance the transformation of monocultures to CTN-managed mixed-species stands. The competitiveness of CTN management could also be improved through performance-based biodiversity payments, such as the sale of biodiversity credits.

Habitat niches of bird species along a recovery gradient in the Chocó tropical forest

Conservation programs need improved tools to measure the recovery of animal diversity across restoration gradients. We used soundscapes and expert identifications of bird species to calculate niche position (i.e., mean of environmental conditions across all areas a species occupies) and niche breadth (i.e., the standard deviation of the species distribution) along a recovery gradient; from agriculture to early (up to 20 yrs) and late (up to 38 yrs) recovery, to old-growth forests. Our survey included 323 bird species and was conducted in 66 plots in the lowland Chocoan tropical rainforest in Ecuador where less than 11% of the forest remains intact, and large areas are currently undergoing regeneration post-abandonment. First, we validated our niche metrics by contrasting them against independent global categories of forest density dependency. We then explained the niche metrics of the bird species with different ecological traits, gathered from the literature, reflecting species-specific primary diet, morphology and distribution, and accounting for the phylogenetic relatedness of species. Finally, we explored the phylogenetic signal present in bird species’ ecological traits and recovery niche metrics. Niche position and breadth across the recovery gradient closely followed global categories of forest density dependency. However, our approach provided a more fine-scaled sorting of bird species in forest plots categorized as late recovery and old-growth. Granivorous birds occupied niche positions in active cacao and pasture plots and were replaced by frugivorous birds in older regeneration plots. Along the recovery gradient, tail length and handwing index decreased with niche position, supporting previous observations that birds in old-growth forests are less mobile. Birds in old-growth forests had smaller global distribution ranges than birds in agricultural plots. Finally, the latitudinal distribution of birds in the study area averaged south of the equator, with birds in old-growth plots averaging latitudinal centroids in wet forests north of the equator, whereas birds in agriculture plots averaged latitudinal centroids further south of the country, towards the dry and open Tumbesian forest. Frugivores, invertivores and vertivores had broader niche breadths, but these decreased (marginally) with tail length. We suggest these recovery niche metrics as a potentially powerful tool for the rapid assessment of the recovery process, which might support conservation strategies such as biodiversity credits, compensation payments, and strategic land purchases. With the increasing availability of information-intensive models for bird species identification, such as deep learning artificial intelligence, our new niche metrics open the avenue for rapid assessment of tropical biodiversity and new conservation areas at larger scales.

A metric for tradable biodiversity credits quantifying impacts on global extinction risk

AbstractThe difficulty in identifying appropriate metrics for the impacts organizations have on biodiversity remains a major barrier to the inclusion of biodiversity considerations in environmentally responsible investment. We derive and analyze a simple metric: the sum of the proportional changes in the global abundances of species caused by an organization, with a regularization to cover the case of species close to extinction. We argue mathematically that this metric quantifies changes in the mean long‐term global survival probability of species. The metric thus supports the objective “to significantly reduce extinction risk” of the 2022 Global Biodiversity Framework and allows organizations to set themselves corresponding science‐based targets. We show that in a perfect market trade in biodiversity credits quantified by our metric would lead to near‐optimal allocation of resources to species conservation. We further show that metric values are quantitatively convertible to several other metrics and indices already in use. Barriers to adoption are therefore low. Used in conjunction with metrics addressing ecosystem services and integrity, potential areas of application include biodiversity related financial disclosures and voluntary or legislated biodiversity credit or no net loss policies.

Including Methane Emissions from Agricultural Ponds in National Greenhouse Gas Inventories.

Agricultural ponds are a significant source of greenhouse gases, contributing to the ongoing challenge of anthropogenic climate change. Nations are encouraged to account for these emissions in their national greenhouse gas inventory reports. We present a remote sensing approach using open-access satellite imagery to estimate total methane emissions from agricultural ponds that account for (1) monthly fluctuations in the surface area of individual ponds, (2) rates of historical accumulation of agricultural ponds, and (3) the temperature dependence of methane emissions. As a case study, we used this method to inform the 2024 National Greenhouse Gas Inventory reports submitted by the Australian government, in compliance with the Paris Agreement. Total annual methane emissions increased by 58% from 1990 (26 kilotons CH4 year-1) to 2022 (41 kilotons CH4 year-1). This increase is linked to the water surface of agricultural ponds growing by 51% between 1990 (115 kilo hectares; 1,150 km2) and 2022 (173 kilo hectares; 1,730 km2). In Australia, 16,000 new agricultural ponds are built annually, expanding methane-emitting water surfaces by 1,230 ha yearly (12.3 km2 year-1). On average, the methane flux of agricultural ponds in Australia is 0.238 t CH4 ha-1 year-1. These results offer policymakers insights into developing targeted mitigation strategies to curb these specific forms of anthropogenic emissions. For instance, financial incentives, such as carbon or biodiversity credits, can mobilize widespread investments toward reducing greenhouse gas emissions and enhancing the ecological and environmental values of agricultural ponds. Our data and modeling tools are available on a free cloud-based platform for other countries to adopt this approach.

Closing the data gap – Automated seafloor health maps to accelerate nature-based solutions

This article delves into the pivotal role of the oceans, specifically the seafloor, in addressing climate change and food security. Despite its significance, a lack of detailed data on the seafloor hampers informed decision-making by policymakers, impedes sustainable blue economy investments, and hinders the development of blue carbon and biodiversity credit markets. PlanBlue, an innovative technology company, has devised a groundbreaking solution using advanced imaging, underwater navigation, and machine learning to automate seafloor mapping. This article explores the importance of seafloor data, the barriers to access data, and how PlanBlue's technology can improve our understanding of the ocean's potential. The discussion encompasses the significant role of the seafloor as a carbon sink, the necessity for credible data in ocean conservation, and the crucial link between seafloor mapping and effective marine spatial planning. PlanBlue's innovative approach not only adds speed and scale to data collection but also provides multi-layered insights into species health, biomass, and more, contributing to the credibility of marine conservation efforts. The article concludes with a scientific review highlighting the accuracy and meaningfulness of PlanBlue's methodology, validating its transformative impact on the blue carbon industry and seafloor habitat monitoring.

Equivalent biodiversity area: A novel metric for No Net Loss success in Brazil’s changing biomes

This study presents a new method to incorporate the No Net Loss (NNL) principle within corporate Environmental, Social, and Governance (ESG) frameworks. This principle aims to ensure that biodiversity losses from human activities are fully offset. In this context, we tackle two main challenges: managing epistemic uncertainties in environmental modeling and accurately assessing compensatory areas needed to replace lost habitats. Focusing on Brazil’s diverse biomes, which are undergoing rapid changes, we highlight the role of expert opinion surveys in addressing the uncertainties of the InVEST Habitat Quality, a model that simulates changes in landscape integrity under different land use scenarios. Our analysis across three of Brazil’s regions – Caatinga Semi-arid, Cerrado Savanna, and Atlantic Forest – leverages open-source data to reveal substantial habitat losses due to activities like wind farm development, mining, and intensive agriculture, leading to a widespread decline in habitat quality. We introduce the Equivalent Biodiversity Area (EBA) metric to support NNL and Net Gain of Biodiversity efforts, measured in hectares. Findings show a reduction in EBA across all studied areas, highlighting the need for effective compensation strategies. Such strategies should merge Legal Reserves and ecological restoration into ESG policies, encourage landholder collaboration, and align with larger environmental efforts, such as watershed revitalization and Biodiversity Credits markets.

Potential for Carbon Credits from Conservation Management: Price and Potential for Multi-Habitat Nature-Based Carbon Sequestration in Dorset, UK

Carbon offsetting is currently a major tool in managing carbon emissions and informing sustainability plans of organisations in the drive to net-zero. This study aims to identify the offsetting potential of existing conservation schemes, and whether carbon offsetting credits could provide finance these conservation activities. The results from Dorset, in the UK, indicate that many existing conservation schemes in woodlands, heathlands, and grasslands cannot only enhance biodiversity but also capture significant amounts of carbon, and while habitats differ by region and country, the general results should be applicable elsewhere. We show that the cost per additional tonne of carbon sequestered as a result of conservation activities varies considerably between different conservation projects. On average, across the conservation projects we studied, the cost of this offsetting is GBP 80 per tonne CO2e sequestered and ranging between GBP 120 and GBP 0, depending on the project and whether existing biodiversity grants would be available. However, this figure was based on adapting and refining the existing conservation projects and did not involve expensive factors, such as purchase of land, which make the prices potentially unrealistic, especially in a Global North context. While the costs identified are higher than many offsetting schemes at present, it could present a useful option for those wishing to localise their offsetting. The concept is highly scalable and could remove significant amounts of carbon dioxide. Combining the approach with biodiversity credits or other credit schemes could make the higher costs more attractive to potential buyers.

Designing a biodiversity credit accounting framework for environmental investment and financing

<p>Achieving biodiversity goals and targets poses a significant financial challenge due to biodiversity externalities. Efforts to address this challenge have focused on market-based solutions for biodiversity offsets to bridge the financial gap. However, accurately calculating biodiversity credits remains a barrier to promoting and implementing these solutions. Here, we propose an innovative accounting framework for biodiversity credits based on the emergy accounting approach. Emergy (spelled with an m) represents the biosphere work performed over time and space (ecosystem services) that supports species, human societies and economies, and is measured in units of solar equivalent energy (emergy, sej). This unified accounting method considers the perspectives of ecosystem productivity, ecosystem networks, and human well-being. We evaluated the biodiversity credits in 157 restoration projects and found several advantages in terms of differentiating project types and setting thresholds for biodiversity credit increases in restoration projects. Only 66% of the projects achieved biodiversity credit increases, and only 29% of the generated credit can be traded on the market. This study provides a scientific foundation for decision-making in ecosystem restoration management and contributes to broader biodiversity conservation solutions as well as to bridging the financial gap in achieving biodiversity goals.</p>

Beyond Carbon: Navigating the Path to Biodiversity Credits for Climate Action and Ecosystem Conservation

Beyond Carbon: Navigating the Path to Biodiversity Credits for Climate Action and Ecosystem Conservation

Society's willingness to pay its way to soil security

Soils are a crucial part of terrestrial ecosystems, holding most of the soil carbon, one-quarter of the biodiversity, and are essential for food production. Human forcings, including climate change and land use pressures, threaten the security of the soil for the provision of a whole range of soil functions. Soil capability to carry out important functions has seldom been evaluated in economic terms. Importantly, the existing economic studies have not been embedded in the soil security framework. Therefore, we have limited knowledge of how the general population values these soil functions and whether they wish to see their maintenance and improvement as part of public policy. Consequently, in this study, we aim to contribute to filling this gap by providing an estimation of the value, expressed in monetary terms, that individuals place on several soil functions and compare such values across large regions of two G20 countries. We present here an estimate of willingness to pay for two publicly-funded soil management strategies: the creation of biodiversity credits based on soil microbial diversity and soil carbon insetting for achieving net-zero agriculture. We show via a discrete choice experiment addressing 3,000 citizens that societies in the distant and contrasting regions of Veneto in Italy and New South Wales in Australia are willing to pay for soil security and financially support soil management practices that improve soil functions in their regions. Further analysis shows that the stated willingness to pay corresponds to socio-demographics and attitudes toward soil protection and general environmental concerns. The aggregated monetary value of the selected soil functions for the entire population is $244 M for Veneto and twice as much for New South Wales. Our research findings give decision-makers and resource managers insights into societies' willingness to make trade-offs in favour of increased soil security. In contrast to climate change and loss of biodiversity, soil degradation and loss of soil functions have received much less attention. In this empirical research, we provide evidence of the importance of accounting for soil functions in resource management, as societies benefit from them and are willing to pay for their conservation.

Conserving nature's chorus: Local and landscape features promoting frog species richness in farm dams

Habitat loss is a key factor in the ongoing freshwater biodiversity crisis. A promising way to help tackle the rapid decline in freshwater biodiversity is to improve the potential for artificial wetlands to provide habitat for aquatic wildlife. Farm dams (also known as agricultural ponds) are among the most abundant waterbodies in agricultural landscapes and can act as “oases” against droughts for many species. Despite their prominent role in agriculture, predictive models to evaluate their ecological potential are yet to emerge. Here we use a continental-scale data set of 104,013 audio recordings from citizen scientists to identify and locate 107 species of frogs near 8800 Australian farm dams. Frog species are among the most threatened taxa on earth and we asked: What characteristics promote higher frog species richness at farm dams? We found that the highest values of frog species richness were at old (>20 years) farm dams of intermediate size (0.1 ha in surface area), with small or medium rainfall catchments (<10 ha), and situated near other freshwater systems or conservation sites. The relationships shown here are highly generalisable and applicable on a continental scale. By identifying quantifiable features improving the ecological value of farm dams, we help identify “win-win” outcomes for agricultural productivity and conservation. In the future, “biodiversity credit” policies could incentivise large-scale ecological restoration by rewarding individuals who invest in enhancing their farm dams to support and promote local biodiversity.

Matching problems in biodiversity offset markets: a case study of the New South Wales biodiversity offsets scheme

Biodiversity offset credits in New South Wales are transacted within a regulatory environment defined by detailed trading rules and many different types of biodiversity credits that can lead to thin markets and high transaction costs. This paper describes a market designed to facilitate efficient and effective transactions. The market includes a search algorithm to identify who can exchange with whom, according to the regulatory constraints, and an online exchange tool to facilitate efficient price discovery and allocation of offset contracts.

Investigating the potential for a blue carbon economy on Australia’s northern coastline

The term ‘Blue Carbon’ (BC) recognises the ability of mangroves, saltmarshes, and seagrasses to capture and store carbon in their soils and biomass. Given their anoxic sediment, BC ecosystems can sequester up to as much as four times more carbon per hectare, and store it 30–50 times faster, than terrestrial forests. Australia has some of the world’s largest BC storage capacity, with 5–11% of global BC soil stocks and 2–7% of annual BC sequestration, based on available global estimate. Evidence indicates that mangrove and saltmarsh degradation from cyclone damage, feral damage and disease, is occurring throughout the Northern Territory (NT). This is a growing issue with feral animal populations degrading Indigenous lands and areas of conservation significance. This cumulative pressure on BC habitat means that northern Australia is uniquely positioned to expand BC methods to also account for protection and restoration of degraded coastal habitats including freshwater wetlands that have been damaged by non-native feral animals. Researchers from Charles Darwin University (CDU), University of Queensland (UQ), and the Northern Australian Indigenous Land and Sea Management Alliance Ltd (NAILSMA) recently worked to explore the opportunity and potential for economically viable BC methods in the NT. The study had a particular focus on Aboriginal Land gazetted under the Aboriginal Land Rights (NT) Act (1976) (Cth). We present the research outcomes and identify the pathway to focused research on BC stores and tailored methods for generating Australian Carbon Credit Units (ACCUs) and potentially biodiversity credits, in the NT.

Incentivising biodiversity net gain with an offset market

Abstract Most programmes that incentivise the supply of public goods such as biodiversity conservation on private land in Europe are financed through the public purse. However, new ideas for how to fund biodiversity conservation are urgently needed, given recent reviews of the poor state of global biodiversity. In this paper, we investigate the use of private funding for biodiversity conservation through an offset market. The environmental objective is to increase some measure of biodiversity in a region (‘net gain’) despite the loss of land for new housing. Farmers create biodiversity credits by changing their land management and then sell these credits to housing developers who are required to more than offset the impacts of new housing development on a specific indicator of biodiversity. Combining an economic model of market operation with an ecological model linking land management to bird populations, we examine the operation, costs, and biodiversity impacts of such a (hypothetical) market as the target level of net gain is increased. A general result is established for the impacts on price and quantity in the offset market as the net gain target is made more ambitious. For a case-study site in Scotland, we find that as the net gain target is increased, the number of offsets traded in equilibrium falls, as does the market-clearing offset price. Changes in the spatial pattern of gains and losses in our biodiversity index also occur as the net gain target is raised.

On Capital's Watch: Derivative Ecology and the Temporal Logic of Biodiversity Credits

How is it possible to profit from protecting the environment, rather than through deepening its terminal crisis? In recent years, a growing group of investors, economists and governments have answered this question with a range of market-based instruments designed to facilitate the commodification and trade of everything from carbon to wetlands. A popular approach has been to establish ecological credit schemes that allow businesses to destroy a discrete ecosystem in return for the restoration of an ecological site elsewhere. Numerous scholars have already emphasised the questionable spatial politics inherent to such initiatives. Focusing on the UK's emergent biodiversity credit policy regime, this article, by contrast, considers what effect credit schemes have on the temporal dynamics of the ecosystems they capture. Drawing on discussions of financialisation in the social sciences, we show how biodiversity credits rearticulate ecosystems as units of 'derivative ecology', which makes the future of these ecosystems actionable in the present, at the same time as it restricts their capacity to adapt to anthropogenic climate change. When discussed alongside recent currents in ecological theory that emphasise novelty, futurity and resilience through change, the gap widens between ecological and financial approaches to restoration. Consequently, we argue that market-based instruments such as biodiversity credits are constitutively unable to embrace the futurity of ecology on its own terms, because they have their own temporal logic that cannot help but petrify their bearers of value.

Better biodiversity accounting is needed to prevent bioperversity and maximize co‐benefits from savanna burning

AbstractStrategies for mitigating climate change through altered land management practices can provide win–win outcomes for the environment and the economy. Emissions trading for greenhouse gas (GHG) abatement in Australia's remote, fire‐prone, and sparsely populated tropical savannas provides a financial incentive for intensive fire management that aims to reduce fire frequency, severity, and extent, and it supports important social, economic, and land management opportunities for remote communities, conservation agencies, and pastoralists. These programs now cover &gt;20% of Australia's 1.9 million km2 tropical savanna biome, encompassing areas of globally significant biodiversity value. A common assertion is that by reducing the frequency, severity, and extent of fires for GHG abatement, these programs provide biodiversity co‐benefits. However, such biodiversity benefits have been assumed rather than demonstrated. Much better accounting of how biodiversity is responding to changed fire management is required to ensure that there are no unintended outcomes for biodiversity (bioperversity), and that biodiversity co‐benefits are maximized. Such accounting could underpin the earning of formal biodiversity credits from improved fire management, and will go a long way to understanding and improving the biodiversity outcomes of savanna fire management.

Diversity and abundance of Lepidoptera and Coleoptera in multiple-species reforestation plantings to offset emissions of carbon dioxide

ABSTRACT Multiple-species (floristically diverse) plantings of trees and shrubs in former agricultural landscapes to offset (sequester) emissions of carbon dioxide are a recent component of Australian landscapes. Although their potential to mitigate biodiversity loss is recognised, this ecological function has not been investigated, in particular with respect to insect diversity. Over two summers, we used light trapping to sample Lepidoptera (moths) and Coleoptera (beetles) in multiple-species plantings in two distinct locations in Victoria (plantings of four ages per location) as well as in nearby remnant forest and in pasture. At both locations, we found that plantings had a greater abundance of Lepidoptera than remnants but that the abundance in plantings was comparable to the abundance in pasture. The species richness of Lepidoptera in plantings did not differ significantly from that in remnants but was significantly greater than that in pasture. The abundance and species richness of Coleoptera in plantings was lower than in remnant forests but higher than in pasture. The community composition of Lepidoptera and Coleoptera in plantings was intermediate between that of remnant forest and pasture, i.e. possibly transitional between the two vegetation types. Dissimilarity between all vegetation types was nevertheless high, reflecting that the abundance of individual taxa reflects the influence of temporally and spatially dependent factors, e.g. host plant size and suitability. Greater abundances of grass-feeding Lepidoptera in plantings explained much of the dissimilarity between plantings and remnant forests. Proximity to remnant forest was an important determinant of the community composition of Lepidoptera but not of Coleoptera. Moth forewing length (relevant to vagility which is an indicator of dispersal capacity) appeared less important to proximity relationships than larval host plant specificity, i.e. whether grass or dicot-feeding. The location of sequestration plantings relative to remnant forest as well as their composition (including the persistence of pasture grasses) will determine the attractiveness of the resources provided to insect herbivores and hence the rate at which they are colonised. Plantings near remnant native forest benefit insect diversity but adoption of novel silvicultural practices could hasten the rate at which they become functional mimics of native forests and support more comparable communities of insect. Potential trade-offs between increased establishment costs and more complex carbon accounting might need to be investigated to cost biodiversity credits associated with dual accreditation schemes.

How much of a market is involved in a biodiversity offset? A typology of biodiversity offset policies

Biodiversity offsets (BO) are increasingly promoted and adopted by governments and companies worldwide as a policy instrument to compensate for biodiversity losses from infrastructure development projects. BO are often classified as ‘market-based instruments’ both by proponents and critics, but this representation fails to capture the varieties of how BO policies actually operate. To provide a framing for understanding the empirical diversity of BO policy designs, we present an ideal-typical typology based on the institutions from which BO is organised: Public Agency, Mandatory Market and Voluntary Offset. With cross-case comparison and stakeholder mapping, we identified the institutional arrangements of six BO policies to analyse how the biodiversity losses and gains are decided. Based on these results, we examined how these six policies relate to the BO ideal types. Our results suggested that the government, contrary to received wisdom, plays a key role not just in enforcing mandatory policies but also in determining the supply and demand of biodiversity units, supervising the transaction or granting legitimacy to the compensation site. Mandatory BO policies can be anything from pure government regulations defining industry liabilities to liability-driven markets where choice sets for trading credits are constrained and biodiversity credit prices are negotiated under state supervision. It is important to distinguish between two processes in BO: the matching of biodiversity losses and gains (commensurability) and the trading of biodiversity credits (commodification). We conclude that the commensurability of natural capital is restricted in BO policies; biodiversity is always exchanged with biodiversity. However, different degrees of commodification are possible, depending on the policy design and role of price signals in trading credits. Like payments for ecosystem services, the price of a biodiversity credit is most commonly based on the cost of management measures rather than the ‘value’ of biodiversity; which corresponds to a low degree of commodification.