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News: A study published in the journal ‘Proceedings of the Royal Society B’ highlights major uncertainties in the functioning of the biodiversity credit markets. Biodiversity Credit Explaination
About Biodiversity Credit
- Definition: World Economic Forum defines Biodiversity Credits as verifiable, quantifiable and tradeable financial instrument that rewards positive nature and biodiversity outcomes through the creation and sale of either land or ocean-based biodiversity units over a fixed period.
- Goal: They are designed as innovative financing mechanisms to attract private investments in conserving and restoring biodiversity.
- Mechanism:
- Just like carbon markets, they generate funds by selling credits, with proceeds being directed towards biodiversity protection and restoration.
- Credits are generated by non-profit organisations, governments, landowners or companies, which are purchased by private companies to meet their biodiversity commitments.
- Examples: Common biodiversity credit schemes include ValueNature, Terrasos, CreditNature, GreenCollar.
- Market Value Estimation: As per the World Economic Forum, the current value of biodiversity credit market is $8 million, with projections indicating a surge to $2 billion by 2030 and $69 billion by 2050.
Biodiversity Credit Alliance
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