How to make biodiversity credits work: Science-based solutions for real conservation gains

Biodiversity is in crisis. Human activities are driving species extinctions at unprecedented rates, but funding for conservation remains woefully inadequate. To address this gap, the concept of a Biodiversity Credit Market (BCM) has emerged, inspired by carbon credit systems that incentivize conservation and restoration efforts.

However, while the BCM holds promise, it risks falling into the same pitfalls as its carbon counterpart—especially if it fails to implement rigorous science-backed baselines, monitoring and validation processes. In a publication in npj Biodiversity, T. Mitchell Aide, a research associate at the Smithsonian’s National Zoo and Conservation Biology Institute (NZCBI), identifies these challenges and provides science-based solutions to ensure the BCM genuinely contributes to global biodiversity conservation.

Getting the baseline right

The first step for any conservation or restoration project is establishing a baseline. In theory, this baseline is essential for measuring “additionality”—how much biodiversity a project has preserved or restored beyond what would have occurred naturally.

Unfortunately, Aide argues, many carbon credit projects have manipulated baselines to exaggerate their impact. For example, projects often predict excessive future deforestation rates to amplify their achievements, leading to an over-allocation of carbon credits.

This same risk exists in the biodiversity space, where defining baselines is even more complex due to the sheer variety of lifeforms and ecosystems.

Aide suggests the following solution: BCM projects should monitor control sites, both degraded and pristine, throughout the lifetime of the project to establish a dynamic and realistic baseline. Doing so allows projects to account for natural biodiversity fluctuations caused by factors like climate variability, ensuring credits are only awarded for true gains in biodiversity.

What biodiversity should be monitored?

Unlike carbon, which is a relatively simple metric, biodiversity is multifaceted. It encompasses ecosystems, species and genetic diversity—each with its own value. Measuring biodiversity isn’t as straightforward as counting trees or carbon stocks. Some BCM projects have opted to use habitat diversity, like the presence of forests or wetlands, as a proxy for biodiversity. But this can be misleading.

A forest may look intact from satellite imagery, but it could be an “empty forest” devoid of critical species due to hunting, logging or habitat fragmentation. As such, monitoring the population dynamics of species, alongside habitat measures, is essential. Tools like camera traps, acoustic sensors and environmental DNA (eDNA) are now available to track wildlife populations in non-invasive and cost-effective ways.

Monitoring should not only focus on the project site but also on nearby areas to prevent “leakage”—where conservation in one area inadvertently pushes destructive activities to another. By integrating species monitoring with habitat assessments, researchers can capture a fuller picture of biodiversity changes and ensure credits represent real conservation outcomes.

The need for transparent validation

According to Aide, a critical challenge in both carbon and biodiversity markets is validation. In theory, an independent third party should verify project claims to prevent inflated outcomes. However, in practice, verification has often been compromised, with project developers selecting their own verifiers, leading to conflicts of interest.

To avoid this, Aide advocates for the BCM to establish independent regional or national verification panels. These panels would not only review the monitoring data but also oversee project approval and certification. Ideally, data from BCM projects would be publicly available through transparent platforms like blockchain, ensuring all stakeholders can verify the authenticity of biodiversity claims.

Incorporating permanence

One major concern for the long-term success of the BCM is permanence. Biodiversity gains must be sustainable. Projects should commit to conserving habitats and species for at least 30 to 50 years. This level of commitment is critical for ensuring the biodiversity benefits last and are not simply short-term victories.

A well-designed BCM should include mechanisms to protect biodiversity beyond the lifespan of individual projects. This could involve requiring projects to create endowments to support ongoing monitoring and management long after the initial funding runs out.

Moving forward: Getting it right

In the last two decades, advancements in technology and artificial intelligence have revolutionized scientists’ ability to monitor biodiversity. Real-time acoustic monitoring and camera traps, combined with satellite imagery and eDNA analysis, provides unprecedented insight into species dynamics and habitat health. These tools should be at the forefront of BCM project design, ensuring conservation outcomes are measurable, verifiable and transparent.

Moreover, projects need to be compared to baselines that are monitored at the same intensity as the project sites to allow for a more realistic evaluation of additionality, helping avoid the pitfalls of inflated claims that have plagued other environmental credit markets.

The time for action is now. By establishing rigorous standards, embracing cutting-edge monitoring technologies and ensuring transparency in validation, the BCM can help close the biodiversity funding gap while delivering real conservation benefits. The future of the planet’s ecosystems depends on getting it right.