What bio-credits can learn from carbon markets

The role of Africa’s biodiversity in climate action has been under the spotlight in Brazzaville where top political leaders met for the Three Basins Summit. 

• Few concrete steps were agreed – but the meeting catalysed plans for a new generation of biodiversity credits. 

Why it matters: Sustaining diversity is key to the health of Africa’s carbon sinks, such as tropical forests. 

• ​​Bio-credits are financial instruments designed to support biodiversity. 

• They put a monetary value on, say, the wildlife in an area over a period.

• The landowner can sell the resulting bio-credits, verified by third parties.

The idea: Biodiversity was once seen as an add-on to carbon markets. But in the future, bio-credits may well be traded separately. 

• The reason is a growing understanding of their specific dynamics as well as a need for more funding.

• Biodiversity doesn’t lend itself to a single unit of measurement such as CO2, which makes it harder to evaluate impact.

• Carbon is ubiquitous on the planet but biodiversity is specific to a place. That makes it trickier to trade globally.

Despite the differences: Lessons from the carbon markets are nonetheless central to current biodiversity debates. Four stand out: 

1. The role and compensation of local stakeholders as stewards of the land has long been neglected and still needs addressing in many cases.

2. The importance of third parties is widely accepted. Certification organisations are already designing standards for biodiversity.

3. Wide public engagement is necessary to build trust. Carbon markets showed how dependent they are on the presumption of integrity, especially if they require corporate funding.

4. Regulatory frameworks and governance matter. Industry bodies focused on integrity only appeared in the carbon markets in the past few years and struggled to align with existing practice. It’s critical to set them up prior to market formation, says the Compensate Foundation.

The value: Global forests are estimated to be worth $150 trillion or double of all stock markets. 

• That includes Africa’s top carbon sinks – the rainforests in the Congo river basin outrank even the Amazon.

Reality check: Who will pay to maintain them? Bio-credits are one option but it requires scale. 

• Managing Africa’s 1,802 African national parks alone takes $10 billion.

• Only 19% of Africa's land and 17% of the seas around the continent are protected. At least $20 billion is needed to align with objectives of the landmark Kunming-Montreal Global Diversity Framework.

Urgent, urgent: Last year, the planet lost 6.6 million hectares of forest, an area larger than Sri Lanka, and deforestation rates increased by 4%.