Q&A: Can biodiversity credits help close Africa’s nature financing gap?

From the newsletter

Innocent Omil, founder of Eco Sanctify in Kenya, explains how biodiversity credits work, their potential in Africa, and the risks of leaving nature without a price. “Biodiversity credits are about valuing nature in a way that encourages protection over exploitation,” the Eco Sanctify founder says in an exclusive interview with Conservation Rising.

• Africa is losing its biodiversity at alarming rates. The International Union for the Conservation of Nature (IUCN) warns that 6,400 animals and 3,100 plant speciess on the continent are at risk of extinction. Home to roughly a quarter of the world's mammal and bird species, scientists say its biodiversity loss poses a threat to millions of livelihoods on the continent.

• Biodiversity credits are a potential economic tool used to finance conservation and restoration activities. However, according to The Nature Conservancy, an additional $598 to $824 billion annually is needed to reverse the biodiversity crisis by 2030. 

More details

• What are biodiversity credits?

  Biodiversity credits are a mechanism for generating funds for conservation by quantifying and monetising positive outcomes for biodiversity. These credits are created through projects that either conserve or restore ecosystems. Each credit represents a specific gain in biodiversity, such as the protection of a particular habitat or improvements in conditions for endangered species, measured over a set timeframe. Organisations or companies purchase these credits to support their sustainability goals or regulatory obligations, thereby contributing financially to biodiversity protection efforts.

  Who is currently investing in biodiversity credits?

  A diverse range of stakeholders are expressing interest in biodiversity credits, including environmental NGOs, philanthropic foundations, government agencies, multilateral development banks, and private companies. As the pressure increases for businesses to disclose and mitigate their impacts on nature, biodiversity credits are seen as a viable solution. Corporations, especially those reliant on natural resources, are turning to these credits to align with international frameworks and demonstrate measurable contributions to biodiversity.

  How is the value of a biodiversity credit determined?

  The value of a biodiversity credit depends on the project’s design, location, and the outcomes achieved. Some credits are based on a single measurable metric, such as the number of a certain tree species protected or a defined area of land maintained in its natural state. Others represent a broader range of outcomes, including a combination of species recovery, habitat quality, and ecological function. Prices can vary widely, ranging from under $10 per credit for smaller or less complex projects to over $100,000 annually for large-scale initiatives focused on critically endangered species or unique ecosystems.

  How do biodiversity credits differ from carbon credits?

  While both biodiversity and carbon credits serve as tools for environmental financing, they have distinct purposes. Carbon credits are designed to mitigate climate change by offsetting greenhouse gas emissions, measured in standard units, typically tons of CO₂ equivalent. In contrast, biodiversity credits support conservation and restoration efforts and lack a universally accepted unit. Although the two types of credits differ in focus, many projects can deliver co-benefits. For example, restoring a wetland may both sequester carbon and create habitat for diverse plant and animal species.

  What is the distinction between biodiversity credits and biodiversity offsets?

  Biodiversity offsets are typically used to compensate for damage caused by development elsewhere. They are often regulatory in nature and may not always result in a net positive outcome for nature. In contrast, biodiversity credits are designed to enhance biodiversity through proactive conservation or restoration, regardless of any prior environmental damage.

  Why should companies be interested in buying biodiversity credits?

  Companies are facing increasing scrutiny from regulators, investors, and consumers regarding their environmental impact. Biodiversity credits provide a means to demonstrate a genuine commitment to nature-positive goals. For businesses that depend on ecosystems, such as agriculture, tourism, and extractives, protecting biodiversity is crucial for securing access to essential natural resources. Moreover, engaging in biodiversity credit schemes may assist companies in complying with forthcoming regulations or achieving targets set under frameworks like the Kunming-Montreal Global Biodiversity Framework.

  What are the current risks or challenges in the biodiversity credit market?

  The biodiversity credit market is still developing. A significant challenge is the absence of standardised methodologies for measuring and verifying biodiversity outcomes. This raises concerns about credibility and effectiveness. There is also a risk of greenwashing if credits are not supported by tangible, measurable conservation achievements. Importantly, equity must be prioritised in Africa, where many biodiversity-rich areas are managed or inhabited by Indigenous Peoples and local communities. Their consent, participation, and fair compensation are vital for the legitimacy of any project.