Can a storm of financial innovation save Africa’s wild places?

They may not yet have the sex appeal of electric vehicles. But “biodiversity credits” – currently emerging across the continent – appear similarly vibrant and futureful. What they are: Financial instruments aimed at conserving or restoring specific bits of nature. Carbon credits, now two decades old, at times already include similar aspects. But mostly they’re an add-on rather than being core to the instrument. Bio-credits are now rapidly splitting from the carbon markets, differing in aim. Carbon credits focus on direct climate impact, for example on reducing CO2, while bio-credits aim to sustain diversity in nature, benefitting climate indirectly. This could be rocket fuel for conservation efforts, especially in Africa. Read more

The market: Experts see bio-credits becoming standalone, tradable assets within 2-3 years.

• They’re projected to be worth $2 billion by 2030 (similar to carbon markets today). 

• By 2050, demand for bio-credits is estimated to reach up to $180 billion a year.

Tip of the iceberg: A frenzied race is underway to set standards, develop crediting frameworks and influence outcomes.

• Cooperation as well as competition is bringing together NGOs and consultancies in various settings.

• Big names include McKinsey, Dalberg and Crossboundary, as well as the World Economic Forum and The Nature Conservancy. 

• Standard setters from carbon markets are also involved, including Verra, Plan Vivo, Gold Standard and Social Carbon. 

• And last but far from least, successful carbon credit developers: SouthPole, Green Collar, Terrasos, Nature Credit, Wilderlands and more.

On the ground: Perhaps the most interesting work is done at individual project level. Dozens of initiatives are pioneering or trialling solutions (see our map and cheat sheet).  

Shovels to miners: On the periphery of the emerging bio-credit sector, specialist service providers are setting up shop. 

• Baotree offers tracking using mobile technology, bridging on-the-ground data collection with monitoring across portfolios of projects.

• AirImpact builds comprehensive monitoring platforms to scale conservation efforts, with a focus on transparency and community engagement. 

• BIRA, the “Biodiversity Investments—Researcher & Accelerator” is Africa’s first accelerator for biodiversity credit projects. 

Main drivers: Why the rush? Biodiversity markets aim to solve three problems: Generate capital for conservation, change harmful behaviour and boost local stewards of nature.

First, conservation capital: A big funding gap is limiting efforts to protect wild places.

• Nature globally needs up to $1 billion by 2030. 

• Actual funding today is perhaps $150 billion.

• The public sector historically contributed 80% of funding but can no longer cope.

To fill the gap: The private sector is called on to scale financing for nature beyond philanthropy. Likely investors include: 

• Financial institutions: Banks, insurers, pension funds

• Polluters: Car makers, airlines, property developers

Second, behavior change: Another goal is to make biodiversity destruction expensive. 

• If the survival of a species has financial benefits, business is expected to shift towards more nature-positive products, services and processes. 

Third, equity: Indigenous peoples & local communities need a bigger stake in conservation.

• Bio-credits will give them additional ownership in their native landscapes. 

• Sharing rewards with nature’s stewards will benefit general ecosystem health.

Litmus test: Like EVs, bio-credits are a fast developing pillar of the green economy. 

• Within three years, we should know if they really will be a major new asset class.

• This would undoubtedly be a win for conservation.  

Yes but: Nascent markets are exciting yet do not always thrive (remember crypto?)

• Countless proprietary biodiversity methodologies are in development.

• No single global standard has emerged – yet.

• Is one even desirable, or should credits remain individual and proprietary?

• The answer may dictate who will be the commercial winners.