Biodiversity Credit: New Episode of ‘Green Business’?

Biodiversity describes the diversity of various forms of living things on Earth. Biodiversity has long been under threat of significant damage. Today, degradation in nature has occurred at an alarming rate. Not only ecological impacts but also social impacts are created by this phenomenon. Humans will gradually experience the impact of environmental degradation, especially if they live in areas directly adjacent to nature.

Communities in historically biodiversity-rich areas often bear the greatest impact due to biodiversity loss from unwise conservation efforts. Local communities around forest areas have long relied on harvested forest products as a source of life and livelihood. Many projects coming into forest areas have caused massive forest damage. These activities cause the depletion of forest products that can be obtained and produced by communities around forest areas. Moreover, there is a gap in access between companies that control forest resources of up to 97%, while local communities only get 3% of their share [1]. Therefore, biodiversity credit is designed as a biodiversity unit that can incentivize conservation actors and benefit community groups living around forest areas. So far, several initiatives are developing biocredit and testing a voluntary market for this credit, examples of which are Terrasos and Wallacea Trust.

Biodiversity credit can be understood as a standard unit of positive biodiversity outcomes. One or more actors produce these biodiversity units through biodiversity conservation or restoration. These activities are monitored occasionally and verified at the end of the period. Biodiversity credit systems must provide investors and biodiversity conservationists with measurable ecological results and long-term certainty. Ecological results can include structure, composition, ecosystem function, and other interrelated matters. These results are represented as biocredit. Biocredits can be transferred and sold to individuals/companies requesting to claim these results. If thoughtfully designed and developed, biocredit can support practical conservation activities and directly support local community-led action. Indigenous people and local communities can fully participate in the mechanism and get the benefits [2]

As well as carbon credits that can be obtained by actors who want to contribute to reducing greenhouse gas emissions, biodiversity credit can also be obtained by those who want to encourage positive biodiversity outcomes. However, biocredit is outside the carbon credit framework. Carbon credits were created so that emitters can compensate each year, while biocredits are proposed to stop and overcome various threats of species loss, including permanent habitat loss.

Biocredit schemes are becoming more common in implementing conservation through three approaches: maintaining or avoiding losses, restoration, and supporting existing efforts. The calculations required to run a biocredit scheme are precise, acceptable, and without bias. The duration for which biocredit will be maintained must also be determined, for example, 10 years to more than 20 years. Existing calculations require high flexibility to suppress biases caused by different natural conditions (according to regional, climatic, and geographical conditions). Biodiversity between ecosystems globally means that places are all different. Therefore, there will be varying recovery dynamics between ecosystems. For example, some forests, such as humid tropical forests, can regenerate quite quickly, while others, such as boreal forests, take decades. So, recovery patterns will depend on disturbances and factors such as climate change. This mandates us to think about biocredit more coherently with nature’s dynamic realities to not create a bias toward faster recovery systems. It is important to normalize different management interventions and locations based on criteria representing global ecological significance. For example, the use of the IUCN Red List as a global standard for assessing risk.

One of the companies developing biocredit is Terrasos. Terrasos, based in Colombia, South America, specializes in structuring and operating environmental investments. Terrasos expands its scope into biocredit issuance. This company is one of the companies that has initiated habitat banking in Colombia. Terrasos operates throughout Colombia but mainly in the most threatened ecosystems, according to the IUCN Red List. In 2022, Terrasos constructed a habitat bank of 2000 hectares. In Colombia, habitat banks must be registered and supervised by the Ministry of the Environment. In July 2022, Terrasos sold around 60 Voluntary Biodiversity Credits (VCB). This shows that there is promising interest in the biocredit market [3].

If we look at several biodiversity credit case studies that have been developed, this biocredit scheme can be implemented in Indonesia. Wallacea Trust, another initiative designing biodiversity credit, has succeeded in creating a biodiversity credit methodology that is claimed to apply to all ecoregions worldwide. Wallacea Trust is also working to reforest mangrove forests in several tropical regions, such as Sri Lanka and the Republic of Ecuador. If we look at the locations where biocredit development has been carried out, Indonesia has similar characteristics to these countries. Indonesia is a tropical country with a high diversity of flora and fauna. In 2017, Indonesia had 31,750 identified plant species. This number represents 1.75% of all plant species that have been identified in the world. Every year, new species are always discovered in Indonesia. Apart from that, Indonesia is second in fauna richness after Brazil, namely around 12% of the world’s mammals, 16% of reptiles, and 17% of the world’s birds, which are found in Indonesia[1]. Most endemic species that only live in Indonesia are included in the IUCN Red List. Examples are ebony (Diospyros celebica) in flora taxa and Sumatran tiger (Panthera tigris sumatrae) in fauna taxa. Apart from that, Indonesia, an archipelagic country, has a long coastline of 99,083 kilometers. This makes Indonesia have 23% of the world’s mangrove ecosystem, around 3,489,140.68 ha (2015) [5].


[1] Adnan H, Berliani H, Hardiyanto G, Suwito, Sakti DK. 2015. Pemberdayaan Masyarakat melalui Kemitraan Kehutanan. Jakarta: The Partnership for Governance Reform.

[2] [3] Ducros A, Steele P. 2022. Biocredits to Finance Nature and People: Emerging Lessons. London (UK): International Institute for Environment and Development.

[4] Setiawan A. 2022. Keanekaragaman hayati Indoensia: masalah dan upaya konservasinya. Indonesian Journal of Conservation. 11(1):13-21.

[5] [KLHK] Kementrian Lingkungan Hidup dan Kehutanan.,68%20Ha%20(tahun%202015).