Carbon credits can support biodiversity by reducing greenhouse gas emissions, but they can also boost nature-based solutions like ecotourism and sustainable forest management. These projects provide a platform for local communities to develop their economies while protecting wildlife, habitat and biodiversity, and helping to avoid deforestation in these regions. In the future, these solutions could help to meet global biodiversity targets.

However, biodiversity credit markets face some challenges that are unique to their sector. First, unlike carbon markets, biodiversity is not fungible. While offsetting environmental harms with environmental goods is a common practice in carbon markets, nature is fundamentally unique and restoring one habitat cannot offset the loss of another (though there are exceptions). Therefore, biodiversity credits must be highly context specific in order to generate meaningful conservation outcomes.

Second, while climate finance is increasingly geared toward the “triple bottom line,” biodiversity has not yet been adopted in this way. This is largely due to the lack of a clear and consistent definition of nature-based value that can be captured by markets. While initiatives like the Taskforce on Nature-related Financial Disclosures and Net Nature Positive offer hope, a new mechanism is needed to incentivize biodiversity preservation and expansion. Biodiversity credits may be able to fill this gap, by linking the intrinsic value of nature to carbon prices and providing buyers with biodiversity co-benefits.

Interest in these new markets has grown rapidly since the Kunming-Montreal Global Biodiversity Framework was agreed at COP 2022. This framework sets a target to mobilize USD 200 billion per year to stop biodiversity loss and protect biodiversity. Since public finance will fall well short of this, new market-based approaches are required. New biodiversity credits — particularly those backed by CCB standards — are poised to be one of these solutions, as they focus on community and biodiversity co-benefits.

Despite this, many experts believe that carbon.credit

Instead, many observers believe that biodiversity markets will likely remain tied to carbon markets for the foreseeable future. This is because carbon and biodiversity are both inherently linked through land-use changes, and both have a similar scale. Furthermore, the cost of implementing a standalone biodiversity market is likely to be higher than that of a carbon market because of the need for more comprehensive monitoring and verification systems. However, as the biodiversity market evolves, there is growing interest in separating these two markets and exploring the possibility of biocredits that are stacked on top of carbon ones or bundled into a single combined credit. This approach is simpler for buyers and could allow both carbon and biodiversity to leverage the existing scale of the market while addressing their differences.