Mobilising Private Capital for Biodiversity : Establishing Requirements for Effective Biodiversity Credits and Voluntary Biodiversity Markets Informed by Carbon Market Experiences

Sammanfattning

Biodiversity credits (BCs) are one of the more novel financing instruments that the Global Biodiversity Framework proposes to mobilise more private capital for biodiversity and narrow the current biodiversity funding gap. BCs and the voluntary biodiversity markets (VBMs) around them are at a nascent stage resulting in high uncertainty among market participants, but also possibilities for market design to learn from and avoid shortcomings experienced in the adjacent voluntary carbon markets. This thesis sheds light on BCs and VBMs to explore what is needed for them to effectively function at unit and market level. The author proposes a requirements framework based on research on BCs, lessons learned from the carbon markets, and insights from other biodiversity finance schemes. At unit level, five key criteria need to be considered for BCs to function effectively: measurement and monitoring, durability, additionality, minimisation of leakage, and additional environmental and social safeguards. At market level, two conditions need to be fulfilled to result in functioning VBMs: (1) VBM engagement leads to positive biodiversity outcomes, and (2) VBMs scale. The results present various mechanisms to ensure those fulfilments:correct incentivisation to avoid credit inflation, strengthened transparency to preventdouble-counting, reinforced penalties in cases of fraud, and prohibition ofnon-like-for-like offsets through BCs. Further, regulation on BC-related claims mustbe clarified, BCs might need to be embedded within biodiversity compliance markets,and financing for the initial phase of BC projects must be ensured. Based on theidentified market mechanisms, this thesis also proposes an improved VBM architecture.