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    • Biodiversity

    Can quantifying nature via biodiversity credits be a way to save it?

    A handful of companies are trying to conserve nature by quantifying it. As COP 16 approaches, the world is watching how biodiversity credits could reshape the way we value nature.

    By Jesse Chase-Lubitz // 16 October 2024
    Over the last 17 years, a small group of ecotourism companies in Kenya have been paying local Maasai residents in the Maasai Mara region to keep their land unfenced and wild to maintain the unique biodiversity of the region. These funds have already saved — among other things — pastoral livelihoods and the local elephant population. The effort as a whole also increased the amount of protected land in the country from 8% to 12%. “This has really led to a big shift in terms of people really starting to see the value of putting their land aside for wildlife,” said Mohanjeet Brar, managing director of an ecotourism company called Gamewatchers. But when the pandemic hit, Brar and other local tourism companies realized that ecotourism funds weren’t enough to support these indigenous livelihoods. In search of another way to bring finances to the region, Brar and his colleagues looked to the biodiversity beneath their feet. Brar, along with a handful of scientists, conservations, and sustainability business experts, launched a new company, EarthAcre, in 2021. The purpose of the company is to quantify the region’s biodiversity and sell it to companies, bringing in a new pipeline of cash for the indigenous groups who allow this land to thrive. “The supermajority of the last remaining biodiversity on Earth is on community lands and Indigenous communities in particular,” said Viraj Sikand, EarthAcre’s CEO. “That’s not a coincidence. It’s a function of intentional cultural decisions.” EarthAcre is one of a few dozen companies working on selling biodiversity preservation to channel funds back down to the individuals who can maintain and restore it. In doing so, these firms are laying the foundation of a biodiversity market — one that experts hope will avoid the mistakes of the carbon market. “We think that having a biodiversity credit market is part of what needs to happen to mobilize the necessary finances for the global biodiversity framework,” said Marcos Neto, the United Nations Development Program’s assistant secretary-general and director of policy. “It’s not a silver bullet, but it has to be set up, and with a lot of integrity.” A burgeoning market Biodiversity credits are even newer and less defined than carbon credits. But the idea is catching on within institutions and the private sector. One expert, Simas Gradeckas, who keeps track of biodiversity credit activity, found 52 biodiversity quantification schemes as of June 2024. The World Economic Forum announced plans to launch a “biodiversity buyers club” in 2023 in collaboration with McKinsey. The partnership will pilot transactions to show a corporate commitment to biodiversity and encourage more private sector involvement. The UNDP’s Biodiversity Credit Alliance, or BCA, says that a market is in the “early stages of being established.” BCA is a knowledge-sharing platform with 470 public sector groups, private companies, Indigenous groups, and local communities. It is meant to provide guidance to help establish the market. It is working on developing a definition for biodiversity credits in a way that avoids “false starts,” which instilled doubt in the carbon credit market. They are establishing a peer review mechanism to assess the legitimacy of the credits, and they are working on estimating the demand there might be. Similarly to carbon credits, the biggest challenge for biodiversity credits is measuring the impact and instilling trust in the integrity of the credit. But there are fundamental ways in which this market is different and must be treated as such. “This can’t become an offset market,” said Neto. “CO2 is CO2 anywhere in the world, but a species in my hometown in the Amazon is not going to be offset by a species somewhere else. Each species has its own value, its own ecosystem, and its own relationship with Indigenous peoples.” Experts are also hoping the biodiversity credit market will learn from the mistakes of the carbon market and sidestep some of the early falters that undermined trust in the system. “We learned from the carbon market that if you don’t try and put integrity and clarity from the beginning, then you end up with a carbon market that is a little bit of a wild west,” said Neto. At the heart of this trust lies quantification. But biodiversity is even more challenging to quantify than carbon and there’s a lot of room for failure. “I think we have to create more markets to value nature,” said Crystal Davis, the global director of food, land, and water at the World Resources Institute. “I think the challenge is trying to figure out what we hinge those markets on in terms of measurements. What does it mean to measure biodiversity? It’s a big term.” Quantifying biodiversity The companies involved are working on ways to accurately measure the biodiversity found in different parts of the world. But they all have a different way of doing so. “I think that the biodiversity credit market to date has been very bespoke,” said Drea Burbank, CEO of Savimbo, a similar organization to EarthAcre that creates biodiversity credits largely in Colombia. “Every project has their own special thing, their own special methodology, their own special unit, and I don’t think that that’s working to scale a market.” Each company has a different way of quantifying biodiversity. EarthAcre tapped into a method that uses laser technology, or LiDAR, acoustics, thermal imaging, and cameras to create 3D renderings of swaths of Maasai grasslands. Andrew Davies, an assistant professor of Organismic and Evolutionary Biology, is the brains behind this system. The technology uses drones to collect imagery of the landscapes and LiDAR technology, which stands for Light Detection and Ranging, to remotely sense the density of plants and animals on the ground and create a 3D map. They also take photographs, talk to locals about their observations, and use thermal data to fill in any gaps. Not only does this allow them to see how much biodiversity exists there, but also how much biodiversity can live there. “We’re looking at biodiversity capacity,” said Davies. “In other words, how much biodiversity is an ecosystem able to hold?” “This has really led to a big shift in terms of people really starting to see the value of putting their land aside for wildlife.” --— Mohanjeet Brar, managing director, Gamewatchers This helps them see the potential for conservation, as well as for carbon sequestration in the grasslands — an environment that they feel is underappreciated for its potential in carbon capture. The company then translates that existing biodiversity into discrete monetary credits, similar to carbon credits, and offers them to companies that are interested in purchasing the credits to provide funds to the Indigenous communities protecting the land. The funds get funneled into the existing micropayment system that was set up through the Gamewatchers ecotourism business. EarthAcre sells credits at $100 per acre. From that, 60% goes directly to landowners at the household level, 10% goes to community-level interventions, and 30% is for development, data, and monitoring. The company just secured funding from Klarna, an AI-based global payment network, which it says could lead to a 20% increase in EarthAcre’s output and finance 300 local individuals. Savimbo, on the other hand, worked with Indigenous groups to develop a methodology that relies on image and video records of indicator species using camera traps. Indicator species are those flora and fauna that can only survive in healthy and functional ecosystems. While corporate interest in EarthAcre, Savimbo, and other similar companies is growing for this to be a global marketplace, Davis said that the measurements need to be simplified. “I think we can simplify metrics per hectare — we know this is a piece of land, we know this is important for diversity, so let’s conserve it,” she said. “But if you hinge the payment around the measurement, the quantification of biodiversity, we’re going to get stuck.” UNDP said that this process is likely to take a while, but will eventually happen. “It’s almost mission impossible, but it’s not quite impossible to create a market of different varieties," said Maxim Vergeichik, senior nature economist at UNDP. “This is what exists today. People are already starting to observe the similarities in the methodologies, but I think it will need some time before they actually recognize where the consolidation is worth it.” In the meantime, UNDP thinks it’s crucial for regulatory bodies to keep a close eye on how it evolves. “This is not a market that is supposed to be left, in our opinion, to the invisible hand of the market. It needs to be born regulated,” said Neto. Discussions at COP 16 The International Advisory Panel on Biodiversity Credits, or IAPB, BCA, and the World Economic Forum are all expected to launch initiatives aimed at boosting confidence in the biodiversity credit market during the biodiversity COP 16 in Colombia, which begins on Monday, Oct. 21. They will also be discussing the risks and opportunities of biodiversity credits for Indigenous groups and how to form an “integrity mechanism” to scale the market. Biodiversity credits were first included in the annual financing discussion at COP 15 in 2022. Experts are hoping that this COP, which is expected to be significantly larger than the last one, will help solidify the inclusion of biodiversity credits in discussions between institutions and the private sector. However, experts don’t have particularly high expectations for this COP to significantly move the needle on biodiversity credits. “I think what we will have in Cali will be the presentation of progress on high-level principles,” said Vergeichik. “But the principles are not ready to be announced in their final form. We are neither excited nor pessimistic about it. We’re quite pragmatic.”

    Over the last 17 years, a small group of ecotourism companies in Kenya have been paying local Maasai residents in the Maasai Mara region to keep their land unfenced and wild to maintain the unique biodiversity of the region.

    These funds have already saved — among other things — pastoral livelihoods and the local elephant population. The effort as a whole also increased the amount of protected land in the country from 8% to 12%.

    “This has really led to a big shift in terms of people really starting to see the value of putting their land aside for wildlife,” said Mohanjeet Brar, managing director of an ecotourism company called Gamewatchers.

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    About the author

    • Jesse Chase-Lubitz

      Jesse Chase-Lubitz

      Jesse Chase-Lubitz covers climate change and multilateral development banks for Devex. She previously worked at Nature Magazine, where she received a Pulitzer grant for an investigation into land reclamation. She has written for outlets such as Al Jazeera, Bloomberg, the Organized Crime and Corruption Reporting Project, and The Japan Times, among others. Jesse holds a master’s degree in Environmental Policy and Regulation from the London School of Economics.

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