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Pricing the priceless: Lessons for biodiversity credits from carbon markets

Voluntary carbon markets are a cautionary tale for the emerging biodiversity markets. Inigo Wyburd explains why we can’t put a price on nature in this way. 

Today nature is under threat, declining at an unprecedented rate, with around a million species at risk of extinction, according to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPEBS). Humans cause the greatest damage, owing mainly to natural resource overexploitation, the introduction of invasive species, anthropogenic climate change, the destruction of habitats and ecosystems, not to mention pollution and poaching. 

How humans try to repair this damage is often equally problematic, as evidenced in the Change Now report stating, “Despite its critical importance, biodiversity conservation frequently finds itself in the shadow of climate change debates, resulting in less visibility, funding, and action dedicated to combating biodiversity loss.”

What is the biodiversity credit market? 

A $700 billion per year biodiversity funding gap exists based on the Kunming-Montreal Global Biodiversity Framework (KM-GBF). Parties to this convention aim “to implement national biodiversity strategies and action plans, mobilising at least $200 billion per year by 2030” by “stimulating innovative schemes, such as payment for ecosystem services, green bonds, biodiversity offsets and credits, and benefit-sharing mechanisms, with environmental and social safeguards”. 

Biodiversity markets are meant to channel private sector funding towards schemes that aim to conserve and restore biodiversity. In its current form, the unregulated funding schemes are reminiscent of the voluntary carbon market, which has a track record of supplying poor quality, cheap credits that inadequately transfer funds to the Global South. 

Similarities with the voluntary carbon market

Carbon credits often claim to provide biodiversity “co-benefits”. This is based on an understanding that carbon projects, particularly those involving forest conservation or restoration, can yield additional environmental benefits beyond carbon sequestration. In fact, even though biodiversity is usually an afterthought in carbon markets, the benefits to nature of carbon crediting projects often outweigh their questionable climate impact.

In recent years, carbon markets have faced considerable scrutiny from environmentalists and the media, largely triggered by concerns about the overcounting of climate benefits and the quality of the underlying projects. Biodiversity markets face similar risks and will require similar scrutiny. Moreover, given the heightened complexity of the biodiversity market, unprecedented challenges will emerge.

Challenges ahead for biodiversity markets

Carbon markets have struggled to smooth out long-term issues relating to what additional benefits they bring to the climate, the difficulty of commodifying credits from different types of projects, their use for emissions offsetting and the transparency of transactions. These issues are likely to plague the biodiversity market and perhaps more so.

For example, many projects under the Kyoto Protocol’s Clean Development Mechanism (CDM) failed to ensure additionality. This measures whether a climate benefit delivered by a project would have occurred even without the incentive provided by the sale of the credit. In other words, would the result have been achieved anyway? 

Further complicating matters, unlike carbon credits that use a standardised metric to measure the impact of projects – a tonne of CO2 equivalent – applying a similar metric for biodiversity conservation and restoration efforts across various habitats and locations is unrealistic and potentially disastrous. 

As is the case for carbon credits, biodiversity credits must not be used for compensation purposes. It is conceptually absurd that offsetting the loss of nature in one place can be compensated for by creating an equally valuable unit of nature somewhere else. This ignores the very nature of the natural world. No two organisms are ever the same, so such losses can never be truly offset. 

Moreover, voluntary disclosure of trading information in carbon markets remains sparse and untransparent, making it difficult not only to assess who is buying and selling the credits, but also how much money is flowing towards projects and local communities – a trend likely to be echoed in the nascent biodiversity market.


Environmental and social integrity issues prevalent across nature based carbon market projects as highlighted by our recent research, could be reflected in biodiversity conservation and restoration projects. 

Many forest-based carbon projects overestimate their impact by exaggerating their baselines, underestimating the amount of displaced deforestation, and by misrepresenting the deforestation threats that forests will face in the future, thereby undermining the project’s intended climate benefit. Furthermore, it is not only nature and the environment where a project can miss the mark, as often safeguards to guarantee the protection of indigenous peoples or local communities are weak.

It’s clear that closing the biodiversity funding gap will require increased funding. However, creating a biodiversity credit market is not the answer. The voluntary carbon market provides a clear illustration of the limitations and challenges associated with this kind of initiative, and these challenges are likely to be even more pronounced when it comes to biodiversity. Instead, meaningful progress in nature conservation hinges on policy reforms as explained by Campaign for Nature. These could include enforcing regulatory measures to ensure that corporations adopt environmentally responsible and sustainable practices, imposing higher taxes on companies contributing to environmental degradation and reallocating subsidies from environmentally harmful activities to support initiatives focused on nature conservation and restoration.


  • Inigo Wyburd

    Inigo is Carbon Market Watch's policy expert on global carbon markets, with a special focus on the voluntary carbon market (VCM).

    View all posts

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