Indigenous groups, ecologists, scholars, and NGOs have spoken out against the idea of biodiversity markets, emphasizing their lack of effectiveness and stressing that the protection of ecosystems should be rooted in local knowledge and community-led governance rather than top-down market solutions. Ahead of the COP16 United Nations Biodiversity Conference, we get to the bottom of it.
Read the previous article ‘COP16 and biodiversity markets: Indigenous peoples meaningfully included?’ here.
This month, a Civil society statement signed by over 200 organizations including Survival International, Alianza Biodiversidad en América Latina, and the international rural movement Vía Campesina, expressed ‘grave concerns about biodiversity crediting, offsetting, and related trading schemes’. The statement deems the focus of COP16 in Cali ‘a wrong answer to the wrong question’ and calls for an end to ‘the promotion, development and use of biodiversity offsetting and crediting schemes’. These groups argue that ‘transformational change’ is what must instead be prioritized in order to tackle the underlying causes of biodiversity loss.
So what is biodiversity offsetting? Does it make any sense?
Biodiversity offsetting, just like carbon offsetting, ‘is the idea that instead of curbing all destruction, it will be possible to compensate for it – by some actions, somewhere, at some time’, as Frederic Hache of the Belgian think tank Green Finance Observatory explained in a Survival International press conference. If you’re confused, you should be.
Take this basic, fabricated example: a company wants to build an airport terminal in the Darién jungle over an important habitat for anteaters and ocelots. There are three possible cases. In the first, (following traditional environmental regulations) the company is told to build their terminal elsewhere. In the second, (following classic biodiversity offsetting) the company is told that in order to build the airport, they must compensate by introducing ocelots in another habitat within 10km of the airport. In the third (an extreme version of biodiversity offsetting – somewhere along the lines of what is to come), the company must compensate by recreating some kind of habitat elsewhere in the world. E.g. They may compensate for destroying an ocelot habitat in Panama by ‘creating’ a habitat for bats in Ghana.
‘This extreme version of course does not make any sense from an environmental perspective, but it enables the creation of a financial market,’ Hache explains. ‘By making restoration generic (no longer tied to a specific place), you can “restore” before destroying, and then you can collect the credits which you can then freely trade and speculate on their future value until they are actually used.’
Hache sees biodiversity offsetting as ‘infinitely worse’ than carbon offsetting. One reason for this is that we are simply unable to recreate an ocelot habitat elsewhere. Habitats are complex webs of life in which millions of species are interlinked and interdependent. Over 90 per cent of fungal species are still unknown to science, and there are gaping mysteries in our understanding of the functions different biological kingdoms play within ecosystems. Although carbon offsetting itself is extremely flawed, at least it only needs to take into account six main greenhouse gasses which are relatively easy to measure in the atmosphere.
Biodiversity offsetting is not new to places like Australia, but its track record is dire. A report by the Nature Conservation Council found that in 75 per cent of cases, ‘offsets resulted in “Poor” or “Disastrous” outcomes for wildlife and bushland in Australia, while only 25 per cent resulted in “Adequate” outcomes. None resulted in “Good” outcomes for nature.’ A recent study analyzing the impact of biodiversity offsetting in the Victoria region of Australia between 2000 and 2013 found ‘limited-to-no impact’.
Essentially, international stakeholders will be travelling long distances to come together at COP16 to debate a market solution which does not curb environmental destruction, but at best, merely displaces it. Ecosystems are not replicable, nor can we compare the value of destroying potentially ancient ecosystems and replacing them by planting and introducing species.
Essentially, international stakeholders will be travelling long distances to come together at COP16 to debate a market solution which does not curb environmental destruction, but at best, merely displaces it.
As experts have pointed out, there is also plenty of academic research on biodiversity offsetting and the results demonstrate that it is a failure. ‘This is a system which oversimplifies and standardizes millions of species into a few liquid tradable assets’, Hache states. It will always favour the cheapest option, making starkly clear that financial priorities are unlikely to match environmental priorities. ‘Biodiversity offsetting will only delay urgent action on addressing the root causes of biodiversity loss,’ claims the civil society statement with hundreds of signatories.
Another key issue here is that offsetting ‘somewhere else’ requires land ‘somewhere else’. This somewhere is likely to be the Global South, where land issues are rife (land-grabbing, conflicts over land use, human rights violations, involvement of armed groups, displacement of Indigenous peoples). These issues will be compounded by the scheme and may promote land-grabbing on a corporate scale.
Will biodiversity credits be used?
Given the world has recognized the flaws in carbon credits, the European Commission and other bodies are trying to argue that biodiversity credits will not be used for offsetting purposes. The reality is that the central European biodiversity strategy is based on a net gain principle, measuring in one single metric the destruction and restoration of biodiversity. In order to achieve net gain, biodiversity gains must be larger than the biodiversity losses. And these must be measured – whether in credits, offsets, certificates, or restoration targets. They are essentially the same thing: biodiversity units, and they are essential for calculating net gain.
There is currently a small voluntary biodiversity market, in which companies can choose to invest in people protecting or restoring nature, without this representing an ‘offset’ to the environmental damage they cause. For example, having damaged high-altitude wetlands and páramo ecosystems in Cajamarca Peru with Yanacocha, the largest gold mine in South America, American company Newmont is attempting to compensate for biodiversity impacts through replanting Polylenis trees in a nearby zone. Newmont measures its progress towards ‘achieving a net gain’ by counting the numbers of planted Polylepis (quinual) trees in the forest habitat offset. It leaves out true measures of biodiversity and fails to ‘write off’ other destruction it has caused in Cajamarca, including water contamination, landscape erosion, and social conflict and health issues it has caused.
A more grassroots example is that of Savimbo, a company ‘created by, and for, Indigenous Peoples and local communities’, according to their website. Savimbo charges buyers for biodiversity conservation work Savimbo carries out, awarding buyers voluntary biodiversity credits for every ‘unit’ of habitat preserved (they measure this with wildlife sightings). They clearly state that credits can never be used to provide offsets. However, as the aforementioned civil society statement points out, we have learned from the failures of carbon credits that it is ‘naïve or false’ to claim biodiversity credits will not ultimately be used for offsetting purposes. ‘If biodiversity credits are purchased without the intention of using them for offsetting purposes, they are most likely purchased for greenwashing purposes,’ they state.
Basing our conservation policies on offsetting and a biodiversity credit market would enable destruction to increase. It would not curb it.
Worryingly, in order to scale up, neoliberal governments are pushing for a regulatory market in which it would be mandatory for companies to offset destruction they cause. But increasing the scale of the market would increase the scale of the biodiversity projects, likely magnifying all of the related issues which disproportionately affect Indigenous people and local groups.
As Hache points out, unlike the EU carbon trade having a cap on carbon emissions, the biodiversity offset market has no planned cap on annual biodiversity destruction. So, just as carbon offsetting can actually lead to an increase in destruction and in emissions, ‘basing our conservation policies on offsetting and a biodiversity credit market would enable destruction to increase. It would not curb it’.
Is a market for biodiversity even necessary?
A World Economic Forum report in 2020 stated that ‘prioritizing’ nature would be a $10 trillion USD business opportunity. UN.Live claims that ‘NATURE’ has launched as a musical artist on major streaming platforms, allowing ‘nature to generate royalties and funding from her own sounds.’ Nature is clearly being commodified.
There is really no need to increase funding, but rather a need to redirect the current funding.
The main argument to justify offsetting is that there is a ‘funding gap’ and that funding needs to be increased by about $200 million USD annually for biodiversity protection to be viable. However, the statistics show there is no need. According to the World Bank, subsidies from international governments which promote environmentally damaging practices like fossil fuel consumption, unsustainable agriculture, and deforestation (leading to biodiversity loss, climate change, and pollution) represent $6 trillion USD per year. So there is really no need to increase funding, but rather a need to redirect the current funding.
‘Despite limited financial support, we – Indigenous Peoples – remain the key protectors of the ecosystems and biodiversity that sustains the planet,’ The Global Alliance of Territorial Communities states. So why, they ask, are investors ‘so eager to support cutting-edge technologies but hesitant to trust those who have safeguarded our planet’s ecosystems for generations?’
It is clear that creating a biodiversity market simply serves to protect the status quo, cradling the financial sector through greenwashing. Hache and other experts predict that we will waste a decade investigating a false solution, time that could be spent working with local communities and international organizations to halt real harm. The main political goal here, he explains, is to ‘buy some time’, to ‘delay real action from Global North countries in order to protect corporate profits for a few more years, directing the conversation away from the need to curb destruction at home.’
Why are investors so eager to support cutting-edge technologies but hesitant to trust those who have safeguarded our planet’s ecosystems for generations?
Will Colombia benefit from COP16?
Colombian environmentalists note that the meeting will help raise environmental awareness within Colombia and will boost Colombia’s international image as a biodiversity hotspot. This country is of the most biodiverse on the planet but has historically been left out of global negotiations. Indigenous and Afrodescendent groups and environmental NGOs are hopeful that the event and associated media will bring their demands to a world stage.
It’s worth nothing that the COP16 event itself is likely to boost the local and national economy. Cali’s mayor expects a hotel uptake of near 99 per cent, bringing in $22 million USD over the course of the 12 days in accommodation, food, and other services. The meeting itself is a market. This doesn’t necessarily offset the negatives, however – including carbon footprint of travel and event production.
The Colombian government has chosen the theme ‘Peace with Nature’, to promote the country as a site of peace in line with Petro’s (failed) ‘Total Peace’ initiative, despite ongoing conflict between armed groups and the military in which civilians and the environment are both bargaining chips. Cali Mayor Alejandro Éder, who specializes in conflict resolution and played a key role in the Havana peace talks 2012-16 says, ‘For the first time in many years, Cali, in Colombia’s Pacific region, will be in the global public eye for a good reason’. But for this theme to have an impact, violence against environmental defenders must be addressed. In 2023-4 Colombia was the world’s deadliest country for land and environmental defenders.
The Mayor of Cali states ‘this event is a historic moment marking the entry of Colombia into a global debate around one of the most important topics for all of humanity.’ But if the country is to be a pioneer in biodiversity offsetting, measures must be taken to ensure Colombia’s habitats and its Indigenous and rural communities are not compromised.