top of page

Financing the Future: The Role of Biodiversity Credits in Conservation

Writer: William Daniel, Jonathan PHILLIP

Social Media Team: George K. KIONGSON

Image by storyset on Freepik

Nature can’t work alone. Nature is part of a complex interconnected system that works together in harmony to create balance. One of the keys to this balance is called Biodiversity. Biodiversity is the variety of life found in place on Earth[1], and its importance cannot be underestimated. Lack of Biodiversity could lead to catastrophic consequences.

For example, Cavendish Bananas face an extinction-level threat due to a fungal infection[2]. Monoculture has prevented plants from adapting or evolving to protect themselves from such threats. The loss of biodiversity will also affect us because we rely on insects as pollinators for our crops, coral reefs to regulate our planet's temperature, and forests to clean the air. Since the 1970s we have lost an average of 69% of our wildlife[3], and it is estimated that we need around US$ 722 billion to US$967 billion a year to finance an effective global biodiversity effort[4].

A new scheme called biodiversity credits has been introduced. Biodiversity Credits are an economic instrument used to finance actions that result in measurable positive outcomes for biodiversity through the creation and sale of biodiversity units[5]. While biodiversity credits are similar to carbon credits, they differ in keyways. One carbon credit accounts for 1 ton of CO2 or equivalent gasses avoided or removed[6]. In contrast, one Biodiversity credit represents units of biodiversity restored or preserved[7]. Although, there are no standard “biodiversity units” yet, one unit currently represents a 1% biodiversity uplift in one hectare per year. 

There are 2 ways of measuring biodiversity uplift[8]:

1.        Restoration

This involves restoring an area’s lost biodiversity. For example, a wildflower meadow that existed two decades ago but lost its biodiversity due to farming could be restored. Biodiversity uplift is measured by population growth in the measured area.  

2.        Preservation

This involves preserving an area threatened by development, degradation, or exploitation. A paired development site is used as a reference to measure how much biodiversity has been saved or preserved.

This economic scheme will only be successful if there is a demand for biodiversity credits. Demand can be viewed from 2 perspectives: sellers and buyers. Sellers are the developers of biodiversity projects, which can include farmers (who may receive subsidies for wilding projects[9]), and conservation centers. These sellers can use biodiversity credits to secure funding and validate their efforts.

Buyers, on the other hand, cannot use biodiversity credits to claim carbon emissions reductions. Instead, they may purchase these credits to improve their company’s ESG (Environmental, Social, and Governance) goals or bundle them with products. For instance, biodiversity credits can serve as a premium green label. However, by purchasing conference tickets, attendees could pay a premium that includes a bundle of biodiversity credits.

Investing in biodiversity credits also involves several risks:

1.        Strategic risk

Purchasing credits without understanding their specific characteristics could result in misalignment with the company’s objectives[10]. Not all credits are equal; for example, a water company should buy credits related to water ecosystem conservation, not those for bird and flower conservation.

2.        Operational Risk

Biodiversity involves many variables, making biodiversity uplift uncertain and not guaranteed. There is also a risk that projects could disrupt local communities and Indigenous people

3.        Reputational Risk

Credits and claims must be thoroughly examined and verified by third parties. Bad credit could damage a company’s reputation.  

Every scheme has its pros and cons, and both sides must be considered seriously. The need for biodiversity to sustain life cannot be ignored. Restoring and maintaining biodiversity is expensive, so biodiversity credits are necessary to provide economic incentives for conserving nature. While many projects are still in pilot phases, the demand for biodiversity credits is growing and shows promise for the future.

Mt. Stonegate has extensive expertise in markets involving carbon projects. With years of experience and a deep understanding of these economic instruments, Mt. Stonegate can guide you through the complexities of biodiversity credits. For more information about biodiversity credits and how they can benefit you, don't hesitate to get in touch with Mt. Stonegate. We help you make informed decisions and contribute to a sustainable future.


Akanksha, Khatri, and Jason Eis. “Biodiversity Credits: Demand Analysis and Market Outlook.” Insight Report. Biodiversity Credits. World Economic Forum, December 2023.

Almond, Rosamunde, Monique Grooten, Diego Juffe Bignoli, and Tanya Peterson. “Living Planet Report 2022 - Building a Nature Positive Society.” Gland, Switzerland: WWF, 2022.

Brahambhatt, Rupendra. “Cavendish Bananas Face Extinction and Not All Experts Agree on How to Save Them.” Business Insider. Accessed May 20, 2024.

Harvey, Fiona, and Fiona Harvey Environment correspondent. “England’s Farmers to Be Paid to Rewild Land.” The Guardian, January 6, 2022, sec. Environment.

Khatri, Akanksha, and Alessandro Valentini. “High-Level Governance and Integrity Principles for Emerging Voluntary Biodiversity Credit Markets.” World Economic Forum, December 2022.

Ollendyke, Dana. “Understanding Carbon Credits and Offsets,” February 13, 2023.

Pimm, Stuart L. “Biodiversity | Definition & Facts | Britannica,” May 16, 2024.

Wallacea Trust. “Methodology for Quantifying Units of Biodiversity Gain.” Wallacea Trust, October 2023.

White, Thomas B, Silviu O Petrovan, Alec P Christie, Philip A Martin, and William J Sutherland. “What Is the Price of Conservation? A Review of the Status Quo and Recommendations for Improving Cost Reporting.” BioScience 72, no. 5 (May 1, 2022): 461–71.

[1] Pimm, “Biodiversity | Definition & Facts | Britannica.”

[2] Brahambhatt, “Cavendish Bananas Face Extinction and Not All Experts Agree on How to Save Them.”

[3] Almond et al., “Living Planet Report 2022.”

[4] White et al., “What Is the Price of Conservation?”

[5] Khatri and Valentini, “High-Level Governance and Integrity Principles for Emerging Voluntary Biodiversity Credit Markets.”

[6] Ollendyke, “Understanding Carbon Credits and Offsets.”

[7] Akanksha and Eis, “Biodiversity Credits: Demand Analysis and Market Outlook.”

[8] Wallacea Trust, “Methodology for Quantifying Units of Biodiversity Gain.”

[9] Harvey and correspondent, “England’s Farmers to Be Paid to Rewild Land.”

[10] Akanksha and Eis, “Biodiversity Credits: Demand Analysis and Market Outlook.”


bottom of page