On the why, we are often told these days that the main obstacle to addressing the biodiversity crisis is a lack of funding for nature, that this funding gap is too great for governments alone to be able to close, that we consequently need to reorient private capital, and that the best way to do this would be via the creation of a financial market that trades in biodiversity credits. I find this narrative to be debatable and politically biased.

The False Funding Gap Narrative

First, the alleged US$700bn annual funding gap could easily be closed by redirecting a fraction of the existing US$1,700bn annual subsidies to harmful activities. This means that the funding gap could be entirely closed with public funding, without the need to raise taxes or increase deficits, meaning there is no need for private capital at all.

If a political choice is made to rely instead on private capital for conservation, then the most effective and fastest way to reorient private capital would be via environmental regulations that curb destruction. This is because any regulation will have an impact on the future expected profits of the sectors involved, and private capital flows will adjust automatically to the new profit expectations.

Creating a market for biodiversity credits is, therefore, arguably, the last and least effective option if the goal is to address biodiversity loss.

Creating a market for biodiversity credits is, therefore, arguably, the last and least effective option if the goal is to address biodiversity loss.

But even if we were to deem environmental regulations aligned to planetary boundaries too “coercive” and we chose instead to use only the carrot and no stick, it would still be far faster, more efficient and more cost-effective to do this via favourable tax or regulatory treatment rather than by creating a whole new financial market infrastructure based on a pseudo-commodity.

Creating a market for biodiversity credits is, therefore, arguably, the last and least effective option if the goal is to address biodiversity loss. Recent precedents such as the 2008 banking crisis, the Covid recovery plan, or the recent increase in EU defence spending also show that governments can find the money when they want to.

A Lack of Environmental Integrity

In terms of concerns over the creation of a market for nature credits, such a privatization and financialization of conservation policies would fundamentally change these latter by introducing a requirement for profitability. This would, in turn, result in weaker policies than if they were based on regulation. And we have already seen the deleterious consequences of financialization in other areas such as healthcare, education, and housing. Nature credits would also mean a transfer of sovereignty from the State to the financial markets, the priorities of which are unlikely to match ecological priorities, thereby threatening our future and survival.

There is also a fundamental contradiction between the need for a large number of credit types to reflect the large number of species, and the need to transform millions of species into a handful of types of credit in order to have a liquid financial market in which buyers and sellers can easily find trading counterparts. Such a level of simplification is not compatible with environmental integrity.

This makes biodiversity offsetting not “better than nothing”, as is sometimes said, but worse than nothing, as it helps maintain a social licence to destroy, and reduces public pressure for real solutions by giving the illusion that the issue is being addressed.

This is why biodiversity offsetting has had such a poor track record in past decades.

Crucially, I fear that biodiversity credits will also be used largely for offsetting purposes as there is no other business case on this scale. The European Union’s roadmap already places nature credits beyond the mitigation hierarchy —the framework that prioritises avoiding environmental harm first, then minimising, restoring, and only as a last resort offsetting residual impacts. This culminates in offsetting, thereby reinforcing and legitimizing it, particularly as the current balance of political forces is likely to push the EU to align with the International Advisory Panel on Biodiversity Credits framework, which explicitly accommodates offsetting.

And yet there is a scientific consensus on the fact that biodiversity offsetting is not possible in most cases, as our scientific knowledge is incomplete, the science of restoration is in its infancy, and it is simply not possible to transform millions of species into a handful of liquid tradable assets. This is why biodiversity offsetting has had such a poor track record in past decades. This makes biodiversity offsetting not “better than nothing”, as is sometimes said, but worse than nothing, as it helps maintain a social licence to destroy, and reduces public pressure for real solutions by giving the illusion that the issue is being addressed.

The First Scandals Are Already Emerging

I fear that biodiversity credits and offsets will primarily take place in the Global South, under the argument that this is where you find the most intact biodiversity. In reality, however, it will also be because land is far cheaper, as a consequence of colonialism. This will lead to the same land-grabbing, tensions, and human rights abuses that have been documented with carbon offsets.

This is in addition to the fact that getting paid to protect nature somewhere in order to enable its destruction elsewhere could well stand in contradiction to the values and worldview of many Indigenous Peoples and communities. Many Indigenous Peoples understand land, waters, animals and plants as kin, or as part of a living territory, not as external “natural capital” or a bundle of “ecosystem services”. Moreover, market‑based schemes risk subordinating Indigenous territorial governance to distant financial actors and State agencies, effectively recentralizing control over territories that Indigenous Peoples have struggled for generations to defend.

The revenues can be very useful for some Indigenous communities. However, as always, the devil is in the detail: what proportion of the governance body is made up of Indigenous representatives, and do they receive at least 50% of the revenue, for example?

The revenues can be very useful for some Indigenous communities. However, as always, the devil is in the detail.

While there is currently a big push to involve Indigenous Peoples and other forest-dependent communities in the various international biodiversity credit initiatives, I understand this to be more for communication purposes than a desire for real co-design and fair sharing of decision-making power and revenues. Getting a few Indigenous leaders on board is a great and cheap way to avoid accusations of green neocolonialism, and to divert attention from the lack of environmental integrity in these schemes. This is because the conversation now becomes one of “look at these poor farmers that we’re helping with our good hearts, how dare you criticize biodiversity credits and take these revenues from them”.

To be clear, I appreciate that the revenues can be very useful for some Indigenous communities. However, as always, the devil lies in the detail: what proportion of the governance body is made up of Indigenous representatives, and do they receive at least 50% of the revenue, for example? Furthermore, biodiversity credit and offset projects are often promoted in situations where communities are under strong economic and political pressure to accept them, and this can effectively undermine the right to Free, Prior and Informed Consent (FPIC), turning “consent” into coercion.

The Impact on Indigenous Self-Governance

I would like to emphasize two points: firstly, I understand the current emphasis on Indigenous participation as indicating that a vast proportion of biodiversity credit/offset projects will take place on Indigenous Peoples’ territories rather than in the countries of the Global North. Secondly, I want to caution against the promises of revenues from the sale of these credits. These are hypothetical revenues that will likely be extremely volatile, as they are based on financial market prices, and could easily disappear once political leaders in the Global North no longer see a need to pretend to address the biodiversity crisis. In fact, the UK provides a textbook example of such a risk. After starting a mandatory biodiversity offset market in 2024, leading many to start restoration projects, and farmers and landowners to expect revenues, in 2025 the government introduced an alternative: real estate developers will now have an alternative to offsetting 110% of their residual destruction of nature, by paying a one-off fee into a conservation fund.

If markets collapse, communities may be left without a stable income and unable to return to their traditional livelihoods – pressured instead towards dispossession or further commodification of their lands just to survive.

If markets collapse, communities may be left without a stable income and unable to return to their traditional livelihoods.

The consequences could be especially severe for Indigenous Peoples: long-term contracts may restrict land use and governance while promised revenues are often short-lived and uncertain. If markets collapse, communities may be left without a stable income and unable to return to their traditional livelihoods – pressured instead towards dispossession or further commodification of their lands just to survive.

There is already a growing number of scandals linked to biodiversity credits and these point to deeper structural problems. They include TotalEnergies destroying a national park in Uganda to drill oil and claiming to offset, and Eiffage building a dam in the Ivory Coast and destroying the forest and protected species while falsely promising no net loss. Similar patterns are emerging elsewhere: in Mozambique, TotalEnergies’ megaproject has been associated with misleading environmental claims while, in Guinea, mining projects backed by international financial actors have been linked to large-scale ecological damage framed through compensatory mechanisms.

Who Is Promoting These Markets and Why?

Why then are these markets being promoted, knowing that they will likely be an environmental failure, just like carbon offsetting before them? I understand the primary political goal as one of protecting the status quo for a few more years. These markets give the illusion of action while avoiding any confrontation with the private interests that are currently benefiting from destruction, including mining, agribusiness, infrastructure, and real estate, and avoiding any questioning of outdated and unsustainable economic paradigms.

Put another way, I understand that the European Commission does want to address the biodiversity crisis but only to the extent that it does not get in the way of short-term economic growth and competitiveness, which remain its overarching priorities. I also fear that this market could be instrumentalized to dismantle EU environmental regulations even further, by claiming they are no longer needed as they have been replaced by this market. In a way, this is very similar to climate politics, and carbon offsetting in particular, which are both an environmental failure and a political success, as they have successfully delayed meaningful climate action for many years.

Moreover, these new markets are also not without risk for potential private investors, who will be exposed to massive levels of regulatory and reputational risk surrounding this pseudo-commodity. Recent events in the UK have also highlighted the risks of expecting to earn a stable income from the sale of biodiversity credits.

The primary objective of promoting these markets is to maintain the status quo. Image: Frédéric Hache

The Solutions Are Well-Known

What is needed instead is a shift in existing harmful subsidies and a tightening of environmental regulations in order to address the root causes of biodiversity loss and align with planetary boundaries. We know, for example, that the global food system is the primary driver of biodiversity loss through deforestation to raise livestock. The solution, according to the EAT-The Lancet Commission, is to cut food waste and change diets, incentivizing this by a shift in agricultural subsidies, a tax on unhealthy foods and regulated advertising. This would massively reduce deforestation, cut greenhouse gas emissions, and reduce water pollution from overuse of pesticides.

Another central pillar of an effective biodiversity strategy is the recognition and reinforcement of Indigenous stewardship. Securing collective land titles, recognizing Indigenous legal and governance systems, and providing stable, unconditional public support for Indigenous‑led conservation and territorial defence are among the most effective measures a government can take. The other root causes of biodiversity loss, such as overexploitation of natural resources, climate change and pollution, should likewise be addressed by gradually changing the way we consume, eat and travel, and by putting in place regulations, including to cut plastic production. This would, of course, require confronting private lobby groups such as industrial food and farming, and the current political momentum for this is not great.

I take comfort, however, in the fact that the history of social and environmental progress shows several examples of how transformative change has occurred despite unfavourable political contexts — from the trade union movement to the suffragettes, from the US civil rights movement to the environmental movement, as well as the longstanding struggles of Indigenous Peoples to defend their territories. I also take comfort in the fact that several recent surveys show that a majority of citizens worldwide are already on board, willing to change the way they work and live in order to address the climate crisis. Given enough awareness, they would likely show the same support for addressing the biodiversity crisis. The future has not yet been written; once grassroots organizing reaches a critical mass, we will eventually win.

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One biodiversity credit represents a quantified, measurable and tradable “unit” of a positive biodiversity outcome, such as the restoration or protection of particular ecosystems or species. Leading initiatives insist that, unlike traditional offsets, these credits should serve solely as additional investments in biodiversity rather than as mechanisms to compensate for damage caused elsewhere. In this context, they are presented as a voluntary tool for companies and investors seeking to demonstrate “nature-positive” contributions; however, the distinction between credits and offsets remains unclear in practice.

Various structures driven by States and private actors have explored “dual use,” whereby biodiversity units contribute to both mandatory regulatory offset requirements and voluntary “nature credit” markets. However, this possibility remains controversial due to concerns regarding double counting and system integrity. National approaches vary: For example, England’s Environment Act 2021 established a mandatory, regulated market for biodiversity units, whereas New Zealand currently supports a voluntary, privately managed market that could eventually interact with regulatory offset mechanisms.

The Promotion of Private Financing

Major carbon certification bodies and consultancies are also entering into this space. Organisations such as Verra, South Pole, Plan Vivo, rePLANET, Terrasos and ValueNature have developed methodologies to certify biodiversity outcomes and create tradable units. The appeal is clear: a new product for investors and corporations, and a new revenue stream for intermediaries who already control a large share of the carbon market.

A growing network of initiatives – including the Biodiversity Credit Alliance, the World Economic Forum’s Financing for Nature platform, the Taskforce on Nature-related Financial Disclosures (TNFD), and new multilateral funding mechanisms such as the Global Biodiversity Framework Fund under the Global Environment Facility – is shaping the architecture of nature finance and promoting “high-integrity” biodiversity markets. In parallel, initiatives such as the International Advisory Panel on Biodiversity Credits are advancing a Global Biodiversity Credits Roadmap through voluntary, multi-stakeholder processes.

At COP16 of the Convention on Biological Diversity, governments prioritised mobilising private finance for the Kunming-Montreal Global Biodiversity Framework (KMGBF) and operationalising the Global Biodiversity Framework Fund, yet they stopped short of formally endorsing biodiversity credit markets. Although the fund recognises Indigenous Peoples’ rights and social safeguards, serious doubts remain regarding how compliance with these commitments will be upheld in practice as biodiversity financing increases.

The Roadmap towards Nature Credits does not adequately address the rights of Indigenous Peoples, including their rights to lands, territories, and resources.

The Roadmap towards Nature Credits does not adequately address the rights of Indigenous Peoples.

In July 2025, the European Commission published its Roadmap towards Nature Credits, a market-based framework aimed at mobilising private sector investment for biodiversity conservation, based on the premise that public funding alone is insufficient. The Roadmap does not adequately address the rights of Indigenous Peoples including their rights to lands, territories, and resources. Nor does it sufficiently address the structural drivers of biodiversity loss, such as biodiversity-harmful subsidies, financial flows and production systems.

Can biodiversity be standardised and sold?

Proponents of this argument note that biodiversity credits can unlock conservation funding, reward sound environmental management, and incentivize better business practices. However, the “financing gap” approach adopted in the KMGBF obscures the fact that current proposals rely heavily on private capital from the very entities most responsible for biodiversity loss. This reinforces patterns in which wealthy states and corporations retain control over “nature finance” flows.

Biodiversity credits thus risk replicating colonial dynamics by concentrating decision-making power and value extraction in the Global North, while positioning Global South territories and peoples as sites of environmental “reparation.” The technical language of “market integrity” ultimately upholds a political project that preserves extractive economic patterns while shifting responsibility for ecological damage onto the lands of Indigenous Peoples and racialised communities.

Current strategies disproportionately benefit market-based tools, avoiding the strengthening of territorial rights, the halting of destructive projects, or subsidy reform.

Current strategies disproportionately benefit market-based tools, avoiding the strengthening of territorial rights, the halting of destructive projects, or subsidy reform.

However, core challenges are often presented as technical problems: defining a biodiversity unit that is scientifically robust, measurable and scalable. In practice, these efforts face deeper ecological and ethical problems. Biodiversity is radically place-based — ecosystems are not interchangeable, and their relationships are complex and often only partially understood. Attempts to define “ecological equivalence” have already failed in biodiversity offset systems. A global review found that most of these structures failed to deliver on their promise of “no net loss” due to poor monitoring, weak enforcement, and unrealistic restoration timelines.

Although biodiversity credits claim to focus on positive outcomes rather than compensating losses, they inherit the same logic of converting complex ecological relationships into standardised, tradable units. The push for global fungibility reflects investors’ need for liquidity rather than ecological realities. As a result, this carries the risk of fragmenting ecosystems into “assets” and “service units” — undermining the holistic approaches to territory that underpin many Indigenous legal orders.

There is also a broader issue regarding reliance on markets to resolve a crisis largely driven by accumulation of wealth. Economic tools, such as credits, should complement — not replace — regulation, public funding and collective forms of governance. Yet, current strategies disproportionately prioritize market-based instruments, while failing to strengthen land rights, halt destructive projects, or reform subsidies.

Indigenous territories at the frontline of biodiversity finance

Many biodiversity credit pilot projects are being developed in the Global South, particularly in forest territories governed by Indigenous Peoples —the same lands that have hosted carbon offset projects over the past two decades, frequently accompanied by rights violations and social conflicts. Protected areas have repeatedly been established without recognising customary tenure, without ensuring Free, Prior, and Informed Consent (FPIC), and with severe restrictions on traditional livelihoods. Biodiversity credits are likely to intensify these dynamics in various ways:

Land pressure. Assigning a financial value to biodiversity conservation outcomes makes Indigenous territories more attractive to conservation investors, particularly where land rights remain unresolved, creating a risk of long-term management arrangements that marginalize customary institutions.

Control and surveillance. Verification systems such as remote sensing, standardised indicators and digital tokens displace Indigenous knowledge and governance, benefitting external experts whilst potentially monitoring how communities use their own territories.

Unfair contracts. As with carbon projects, communities often lack independent legal advice; contracts may be signed by narrow leadership without collective consent, with small and poorly documented revenue shares vulnerable to elite capture.

Division and criminalisation. Where significant sums of money are at stake, intermediaries can exploit internal differences to secure consent. Those who question projects risk being labelled anti-development or threats to conservation — a serious concern given the growing criminalisation and killing of environmental defenders.

Beneath these concrete risks lies a deeper clash of values. Biodiversity credit methodologies reduce nature to what can be counted, economically valued and traded, whereas many Indigenous knowledge systems are grounded in responsibility, reciprocity and the sacred nature of the natural world — where territory cannot be partitioned into commodities. When that relational worldview is treated as an obstacle rather than a foundation for public policy, biodiversity credits become yet another tool of colonisation.

Whose integrity?

In response to mounting criticism, biodiversity credit initiatives emphasize “high-integrity” principles such as robust governance, FPIC, equitable benefit-sharing, and grievance mechanisms. Some multilateral funds publicly recognise Indigenous Peoples as custodians of biodiversity. However, there is a marked gap between rhetoric and practice. Core principles and methodologies are being designed by coalitions of financial institutions, conservation NGOs and standard-setting bodies, with limited or late-stage Indigenous involvement.

Since the adoption of the KMGBF, numerous Indigenous organisations — including the UN Permanent Forum on Indigenous Issues — have repeatedly warned, including at CBD COP16, that biodiversity markets risk replicating the dispossession, inequality, and territorial control observed in carbon offset projects. These organizations emphasise that biodiversity financing must address historical injustices, strengthen direct funding for Indigenous Peoples, and avoid commodifying nature while undermining collective territorial governance. Any emerging biodiversity credit framework must critically incorporate these positions.

Governance must reflect genuine Indigenous leadership. Indigenous organizations must occupy real decision-making spaces in the design and oversight of biodiversity financing mechanisms.

Governance must reflect genuine Indigenous leadership. Indigenous organizations must occupy real decision-making spaces in the design and oversight of biodiversity financing mechanisms.

Three fundamental shifts are required to prevent biodiversity credits from replicating the harms associated with carbon markets. First, rights must precede markets: recognition of Indigenous Peoples’ land, territory and collective tenure rights should be a prerequisite for any credit scheme, rather than an aspiration. This entails the full implementation of the UN Declaration on the Rights of Indigenous Peoples — particularly regarding FPIC and self-determination — in both law and practice.

Second, governance must reflect genuine Indigenous leadership. Indigenous organisations should hold real decision-making roles — not merely advisory ones — in the design and oversight of biodiversity finance mechanisms, supported by dedicated funding and respect for diverse knowledge systems. Third, the role of credits must remain limited. They should neither license destructive activities through offsetting nor replace regulation and public financing. Binding rules are needed to prevent double-counting, greenwashing and the use of credits to justify mining, fossil fuel extraction or large infrastructure projects elsewhere.

Choosing a different path

The drive for biodiversity credits addresses a real problem: chronic underfunding of biodiversity, particularly where Indigenous Peoples are its primary custodians despite historic marginalisation. Yet, direct funding for Indigenous-led conservation, coupled with legal reforms to secure land and governance rights, would likely deliver far more enduring outcomes than speculative credit schemes.

Whether or not Indigenous Peoples engage with these markets is a matter of self-determination, but any decision must be based on FPIC with transparent information regarding the risks and alternatives. Governments and private actors must not treat credit schemes as a shortcut around the harder decisions of ending destructive industries and confronting unequal power relations.

The fundamental question is which visions of nature, development and justice will shape the future. If biodiversity credits simply reinforce the extractive logic that created the biodiversity crisis, they will represent another round of sacrifices imposed on Indigenous Peoples.

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