In an age of NFTs and other non-physical currencies, almost anything can be monetised, even nature. Carbon credits have been slowly increasing globally, however, a new horizon of nature meritocracy is emerging: biodiversity credits.
Similar to carbon credits and emissions-reductions, companies can purchases biodiversity credits to meet their own biodiversity or nature-based commitments [1]. The difference between these two markets is small, but impactful. Carbon credits allow companies to offset their emissions, whereas biodiversity credits are intended to have a net-positive impact on nature.
The International Advisory Panel on Biodiversity Credits [2] alongside the French and UK Governments released a ‘Global Roadmap to Harness Biodiversity Credits for the Benefit of People and Planet’ in June 2023 [3]. The aim of the roadmap is to facilitate the creation and growth of high-integrity biodiversity credit markets that deliver measurable positive biodiversity impacts and equitable outcomes. The Advisory Panel was established to lead the global implementation of biodiversity credits, to hopefully avoid a lot of the greenwashing that has emerged within carbon credit markets, especially from countries with a High Development Index [4].
Figure 1: Image of a plant with money coming out of it.
Biodiversity Credits in the UK
The Department for Environment, Food and Rural Affairs (DEFRA) has released guidance for developers and local planning authorities on statutory biodiversity credits [5]. Buying statutory biodiversity credits can count towards the mandatory 10% Biodiversity Net Gain (BNG) required under Schedule 7A of the Town and Country Planning Act 1990 (inserted by Schedule 14 of the Environment Act 2021) [6]. However, buying these statutory credits should be a last resort option, where developers are unable to use on-site and off-site units to deliver BNG.
Biodiversity credits are priced in tiers, with diverse habitats in separate tiers to reflect the value of different habitats. Tiers ‘A1 to A5’ refer to area habitats, tier ‘H’ refers to hedgerows, and tier ‘W’ refers to watercourse habitats. One credit is worth 0.5 units, and a ‘spatial risk multiplier’ is applied to statutory credits, so they are treated the same as off-site biodiversity units from a different local authority to a development. Applying the spatial risk multiplier means statutory credits do not compete with the development of the off-site market (sales across different local authorities) [7].
Prices of biodiversity credits are updated every six months. Currently, they range from £42,000 for tier ‘A1’ habitats, to £650,000 for tier ‘A5’ habitats [8]. Contributions from the sale of biodiversity credits will be used to fund biodiversity enhancements across England [9].
Within the UK biodiversity credits appear to be a well regulated and restricted currency, in contrast to the massive growth and growing issues within the carbon credit markets. Massive financial investment in climate change and biodiversity loss is needed to tackle the core issues causing them. Biodiversity credits could help to bridge this financial gap, provided they remain well regulated.
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References
- https://www.wri.org/insights/biodiversity-credits-explained#:~:text=Biodiversity%20credits%20are%20intended%20to,and%20unavoidable%20impacts%20on%20nature.
- https://www.iapbiocredits.org/about-us.
- https://oneplanetsummit.fr/sites/default/files/2023-06/230622-aglobalroadmapforscalinguphighintegritybiocredits-final-en.pdf.
- https://hdr.undp.org/data-center/human-development-index#/indicies/HDI.
- https://www.gov.uk/guidance/statutory-biodiversity-credits.
- https://www.gov.uk/guidance/understanding-biodiversity-net-gain#:~:text=In%20England%2C%20BNG%20is%20mandatory,than%20there%20was%20before%20development.
- https://www.gov.uk/guidance/statutory-biodiversity-credits.
- https://www.gov.uk/guidance/statutory-biodiversity-credit-prices.
- https://www.gov.uk/guidance/statutory-biodiversity-credits.
- Image – is AI generated
