Biodiversity credits: An overview of the current state, future opportunities, and potential pitfalls

Sven Wunder*, Cecilia Fraccaroli, Joseph W. Bull, Trishna Dutta, Alison Eyres, Megan C Evans, Bo Jellesmark Thorsen, Julia P. G. Jones, Martine Maron, Bart Muys, Andrea Pacheco, Asger Strange Olesen, Thomas Swinfield, Yitagesu Tekle Tegegne, Thomas B. White, Han Zhang, Sophus O. S. E. zu Ermgassen*

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Biodiversity credits are an emerging vehicle for pro-environmental financing, yet much uncertainty remains around how and when they could boost biodiversity conservation. Here we define what biodiversity credits are and explore impact pathways through a proposed theory of change. Based on evidence from 34 pilot projects and a review of lessons from related market-based incentives for conservation, we further explore potential opportunities and pitfalls, including future supply and demand, bundling/stacking options, and needed social safeguards. We explore how biodiversity credits can better tackle challenges linked to additionality, permanence, leakage, and commensurability. While new monitoring technologies can help quantify biodiversity, trade-offs exist between simple metrics enabling liquid markets and costlier ones more adequately representing biodiversity. To avoid past mistakes, sound credit design and implementation require more robust crediting baselines, standards, governance, and impact evaluation. Quality credits will be more expensive than those cutting integrity corners, which may dampen the expected biodiversity credit boom.

Original languageEnglish
JournalBusiness Strategy and the Environment
Number of pages30
ISSN0964-4733
DOIs
Publication statusE-pub ahead of print - 17 Jun 2025

Bibliographical note

Publisher Copyright:
© 2025 The Author(s). Business Strategy and the Environment published by ERP Environment and John Wiley & Sons Ltd.

Keywords

  • biodiversity monitoring
  • ecological economics
  • economic incentives
  • environmental finance
  • equity
  • forest carbon
  • impact evaluation
  • institutions

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