Biodiversity Credit

News: A study published in the journal ‘Proceedings of the Royal Society B’ highlights major uncertainties in the functioning of the biodiversity credit markets. 

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.