The Credits Race
“Biodiversity credits” are considered the most promising programs for raising private capital for nature conservation. However, the results show that prices are highly variable, and standards and measurement methodologies are very heterogeneous across different schemes: the first comparative study of 15 active credit schemes around the world reveals the picture of a rapidly expanding sector, though still lacking the basic rules to ensure integrity and large-scale investment. This is what emerges from the paper “Biodiversity credits schemes: a comparative analysis,” by Edoardo Croci, Benedetta Lucchitta, and Marta Cusa of Bocconi University.
A rapidly growing market in need of rules and controls
Over the last three years, biodiversity credits have multiplied, with several projects already underway in countries such as Australia, Brazil, Colombia, India, and the United Kingdom, covering almost one million hectares. The idea is simple: to provide measurable remuneration for the conservation or restoration of nature through certificates attesting actual improvement in an ecosystem—from habitat restoration to species protection to the regeneration of degraded areas. Biodiversity credits are negotiable units that can be purchased by companies, not only to offset their impact, but also to contribute to nature-positive goals, i.e., to generate a net increase in natural capital.
But reality, the authors explain, is more complicated. “Our analysis shows a very high degree of heterogeneity among the schemes,” notes Edoardo Croci, director of Bocconi's SUR Lab. “Different names, metrics, and methodologies make the landscape extremely fragmented: without common standards, it is hard to assess the quality of credits and verify that they really generate an additional and measurable benefit for ecosystems.”
The absence of shared rules also generates distorted market effects. The research documents an extremely wide range of prices, influenced not only by the variety of habitats and projects, but also by differences between schemes and calculation methods that allow for credible comparisons.
The issue of credibility: additionality, permanence, leakage
Today, most of the 15 schemes compared are managed by private entities. Only three are public—in the United Kingdom, India, and Australia—and it is precisely these ones that have the most solid and stringent structures. But structural problems remain almost everywhere.
The authors note that:
- only 10 schemes have clear additionality criteria, i.e., proof that the environmental benefit would not have occurred anyway;
- permanence is guaranteed by various means, from mandatory buffers (up to 30% of units issued) to legal contracts;
- the risk of leakage — improving an area by shifting damage elsewhere — is addressed inconsistently.
“We found that the minimum requirements for scientific robustness are still insufficient, especially with regard to biodiversity measurement metrics,” explains Benedetta Lucchitta, a researcher at GREEN Bocconi. “There are several metrics and approaches available: we need to develop place-based methods capable of capturing the ecological specificities of territories; on the other hand, it is necessary for these same methods to produce evidence that is comparable with other systems, in order to ensure credibility, transparency, and consistency at global level.”
A global map made up of experiments
The analysis also highlights marked geographical differences. Australia and Brazil, which alone account for almost 80% of projects, have become natural laboratories for developing nature-based financial instruments thanks to:
- strong pressure on ecosystems,
- regulatory frameworks already geared towards compensation and restoration,
- advanced technical supply chains for monitoring and verification.
The United Kingdom, the only country to introduce a mandatory market through the Biodiversity Net Gain mechanism, is the most structured case: high prices, a central registry, and a direct role for the state as a seller of “statutory credits”. But even here, transparency of actual prices remains limited.
Transparency and governments: the two conditions for growth
While potential demand from businesses is increasing—partly due to regulatory pressure from instruments such as TNFD and CSRD—the supply of quality credits remains insufficient. According to the authors, there are two decisive factors for making this a credible market:
- Common standards on measurement metrics and integrity criteria;
- A stronger role for governments, both as regulators and as guarantors of credit quality.
“The risk is replicating the critical issues that have already emerged in the carbon market,” summarizes Croci, “with rapid expansion but without sufficient controls on credit quality.” Lucchitta adds, “Companies are interested, but they want certainties. Transparency on projects, involvement of local communities, and rigorous governance are prerequisites for attracting capital on a large scale.”
Nature as an asset to be protected
The Bocconi paper shows that the potential of biodiversity credits is enormous: they can channel private capital towards ecosystem restoration at a time when the financing gap for nature exceeds $700 billion per year. But without a robust framework, there is a risk of turning a historic opportunity into a new arena for greenwashing.
The final message is clear: before launching the market, we need to build its foundations. Only then can biodiversity credits become a credible tool for contributing to global nature conservation goals.
