Biocredits explained: From market methods to risks behind 120000-fold price gap

Amazon rainforest’s rich biodiversity opens opportunity for expansion of biodiversity credits. (Photo: iStock)

Belém, located on the edge of Brazil’s Amazon rainforest, will host the COP30 this November, thrusting biodiversity into the international spotlight. The World Economic Forum (WEF) launched the Biodiversity Credits Initiative in 2022, aiming to stimulate investment through market-based mechanisms. But how has this emerging market evolved since then and what risks does it entail? 

Biocredit market emerges amid $700 billion annual funding shortfall 

Biodiversity—the variety of life across genes, species, and ecosystems—underpins human wellbeing. It forms the foundation of human survival, providing essential resources such as food, medicine, building materials, and textiles. 

According to WEF, more than half of global economic activities depend on nature. Yet wildlife populations have declined by 69% over the past 50 years, and around 1 million species are now threatened with extinction. This urgent crisis underscores the need to protect biodiversity and presents a timely opportunity for the development of biodiversity credits (or biocredits).   

In essence, biocredits function similarly to carbon credits, but instead of focusing on emissions reduction, they incentivize the protection of biodiversity. By harnessing market forces, biocredits aim to strengthen ecosystems and prevent extinction. According to Nature Conservancy, the global funding gap for biodiversity conservation is estimated at USD 700 billion to USD 900 billion per year. 

However, the biocredit market is still in its early stages, with no unified practices or verification standards in place. A study published by Business Strategy and the Environment found that 34 related projects are currently underway worldwide, each using its own method and criteria. Key stakeholders include investors or buyers, project developers, standard-setting bodies, verification agencies, land managers or local communities, as well as auditors and technical experts. 

Distribution map of global biodiversity projects. 

Prices for biocredits vary dramatically due to the fragmented nature of projects and the absence of standardized methodologies. Data compiled by the Biodiversity Credit Alliance (BCA) reveals an astonishing range, from as low as USD 5 to USD 600,000 per credit— equivalent to a 120,000-fold difference. 

3 frontrunners in the biocredit market: A snapshot of pricing and methods 

While most biodiversity credit projects remain in pilot phase, the BCA highlights three organizations with relatively clear pricing mechanisms:  

1. Botanic Gardens Conservation International 

Botanic Gardens Conservation International (BGCI), the world’s largest plant conservation organization with over 60,000 experts across more than 100 countries, has developed a biodiversity credit initiative based on globally recognized standards. Leveraging data from the Global Tree Assessment (GTA) and IUCN Red List, BGCI has identified roughly 17,500 tree species for inclusion. Credit values are calculated based on changes in population of these species and measured against their global abundance to determine biodiversity impact. 

• Partners: 3,500 organizations across the globe
• Methodology: Based on Biodiversity Impact Credit approach, co-developed by Queen Mary University of London and Bar-Iian University in Israel 
• Location: Global 
• Price: Restoration costs vary by species and location, averaging around USD 100,000 annually. Given a five-to-six-year timeframe for trees to reach stable growth, the price per biodiversity credit is estimated at USD 500,000 to 600,000 

2. Climate Action Company 

Climate Action Company launched New Zealand’s first biodiversity credit project in 2023 and currently operates three active initiatives focused on protecting native species such as Whio (Blue duck), Kea, and Mohua. Project fundings is directed towards monitoring equipment, bait procurement, and staff salaries. Key details of the Whio project are as follows: 

• Partner: Eastern Whio Link 
• Methodology: Customized based on specific conservation area and duration 
• Location: Whioweka Gorge 
• Price: A unit is defined as 100m2 over one year and is priced at USD 200 

3. Savimbo 

Established in 2022, U.S.-based startup Savimbo helps smallholder farmers and Indigenous communities access funding through biocredits to conserve primary forests and endangered species. The company aims to reduce bureaucratic and intermediary barriers in the commercialization process, and has developed its own Indicator Species Biodiversity Methodology (ISBM) to monitor ecosystem changes and issue biocredits. 

• Partners: Indigenous and local communities 
• Methodology: Proprietary measurement and verification system 
• Location: Global  
• Price: USD 5 per unit, based on one hectare over a 30-day period 

In addition to the three organizations mentioned above, several other developers are active in the voluntary biocredit market, including CreditNature, ValueNature, Replanet, and Environment Bank in the U.K.; Terrasos in Colombia; Ekos in New Zealand; South Pole in Switzerland; Wilderlands in Australia, and Orsa Besparingsskog in Sweden.  

Biodiversity's complexity raises questions over the need for biocredits 

For businesses, biocredits may serve as a tool to address growing regulatory pressure, such as the Taskforce on Nature-related Financial Disclosures (TNFD) and the Corporate Sustainability Reporting Directive (CSRD). 

However, such tools also carry risks and challenges. Much like in the voluntary carbon market, companies may face criticism for using biocredits as a shortcut instead of taking real action, and risk being accused of greenwashing. The lack of clear and consistent standards further increases the likelihood of controversy. 

One of the major controversies surrounding biocredits is whether they can be used as “offsets” like carbon credits. For example, If a company destroys the habitat of greater flamingos in Spain, is it justifiable to compensate by restoring the habitat of Bengal bats elsewhere? Frédéric Hache, co-founder of the Green Finance Observatory, strongly disagrees. He argues that, from a standpoint of environmental integrity, such actions are meaningless because the ecological value of different ecosystems cannot be directly substituted or traded. 

Moreover, Mark Opel, finance lead at the U.S.-based Campaign for Nature, has raised concerns about the necessity of biocredits. He argues that if the market remains too small to incentive meaningful corporate action, buying biocredits may end up being no more effective than making a donation—offering little long-term impact. 

According to Mckinsey, achieving nature-positive growth depends critically on the ability to quantify biodiversity effectively. Unlike carbon emissions, biodiversity spans a broader and more complex range of metrics. Establishing universally accepted standards will take time, but only then can markets mature and attract corporate engagement. 

Source: BCA, WEF, IIED, Wiley, Mongabay(1), (2), Think Landscape