Blog
By Chris Stone & Michael McGreevey
The United Nations estimates that funding for nature must at least triple by 2030 [1] to meet established targets to combat climate change, support biodiversity, and reverse ecosystem degradation. To that end, the Blue Nature Alliance, with pro bono analytics support from McKinsey & Company, is working to develop new funding models for marine conservation.
We have identified biodiversity credits as a promising approach to enable direct investment in verified positive outcomes from nature conservation with an emphasis on the rights and interests of Indigenous Peoples and local communities. This idea was inspired both by our collaboration on innovative sustainable financing mechanisms with the remote Pacific Island nation of Niue, specifically Ocean Conservation Credits to help fund marine conservation, and by increasing corporate interest in pursuing “nature positive” efforts.
“Biodiversity credits” envision a global credit that could apply across marine and terrestrial ecosystems and provide an avenue for corporations, bilateral donors, and even the general public to meaningfully and effectively invest in nature conservation. The concept of biodiversity credits, while promising, leads to a number of challenging questions: should a credit incorporate all of biodiversity or focus on key at-risk species? What is the appropriate and equitable balance between the needs of human populations for sustainable use and the needs of natural ecosystems? How should biodiversity credits interact with carbon markets? And can we define a fundamental unit that serves as the common currency of a credit market?
To further develop this approach, the Blue Nature Alliance is holding workshops and seeking advice from scientists, finance experts, corporate partners, and conservation practitioners. Based on these conversations, we believe biodiversity credits should be designed around three fundamental principles:
Quality. A credit should encourage high-quality conservation that achieves positive outcomes in priority areas of biodiversity.
Equity. A credit should ensure equity and fairness by balancing human and conservation needs, empowering and engaging local rightsholders and stakeholders, and distributing costs and benefits equitably.
Scalability. A credit should engage many new players in conservation. This requires having a framework that is flexible enough to scale across geographies, ecosystems, and project types and setting entry criteria that are strict enough to guarantee positive outcomes but do not create unnecessary barriers to entry for project proponents.
While more work still needs to be done to make this idea a reality, the recent success of carbon markets demonstrates the potential for developing a robust biodiversity credit market. We also recognize that demand for such a product is starting to emerge from consumers and corporate executives who increasingly expect businesses to be sustainable and nature positive.
Toward that end, in addition to its collaboration with McKinsey & Company, the Blue Nature Alliance is joining forces with Verra, The Biodiversity Consultancy, the Conservation Finance Alliance, and others to further develop the biodiversity credit concept.
Designing, ensuring equity, and operationalizing this innovative idea will require a diverse, broad-based coalition. But with the right partners at the table, it may be possible to turn a challenge into a huge opportunity – and a big win for people and nature.
[1] State of Finance for Nature (UNEP) 2021