Biodiversity Credits

Overview

Biodiversity Credits quantify and make tradable the positive effects generated by "restoration" or "conservation" of biodiversity. You can think of it as the biodiversity version of carbon credits (t-CO2), but its main purpose is to fill the funding gap for Nature Positive. Companies purchase credits to offset unavoidable impacts on nature in their value chains or as a pure social contribution (contribution to Nature Positive).

Key Mechanisms and Precedents

1. UK: Biodiversity Net Gain (BNG)

This is the most advanced system in the world. From 2024, for almost all development projects in England, "increasing biodiversity value by at least 10% compared to before development" has been legally mandated.

• Mechanism

1. Calculate the site's value using a proprietary metric (Biodiversity Metric). 2. Secure the amount lost to development + 10% increase, in principle "on-site." 3. If on-site is impossible, secure off-site nearby, or purchase Biodiversity Credits (Biodiversity Units) from the market.

• Impact

The powerful regulation of "if you develop, you must increase nature" is reliably generating credit demand (= funding flow to conservation).

2. Japan's Movements

Japan does not yet have a mandatory market (compliance market), but unique voluntary movements are progressing.

• J-Blue Credits

Operated by the Japan Blue Economy Technical Research Association (JBE). Credits for CO2 absorption by marine ecosystems such as seagrass bed restoration. The biodiversity conservation aspect is also highly valued.

• Nature Coexistence Sites × Support Certificates

A system to certify that companies have supported conservation activities in areas certified as "Nature Coexistence Sites" by the Ministry of the Environment (support certificates) has begun operation. This is seen as the budding "Japanese version of biodiversity credits."

• J-Credits (Forestry)

Even in conventional CO2 absorption credits, "consideration for biodiversity" may be reflected in prices as added value (premium) going forward.

Detailed Explanation: The Decisive Difference from Carbon Credits

Often confused with carbon credits, biodiversity has decisive characteristics of "Locality" and "Non-substitutability."

| | Carbon Credits | Biodiversity Credits | |---|---|---| | Unit | 1 ton (t-CO2e) | No unified unit (area × quality, etc.) | | Location | Effect is the same wherever reduced | Location is extremely important | | Substitutability | Exchangeable worldwide | Non-exchangeable (Site A wetland ≠ Site B forest) |

"We destroyed a forest in Tokyo, so let's buy credits protecting forests in Brazil to cancel it out" is not permitted in the biodiversity context. Because the ecosystem unique to that location is lost. Therefore, biodiversity credits are fundamentally circulated in "local markets (by watershed or municipality)" rather than "global markets."

Critical Examination

Measurement Difficulty (MRV Problem)

Since it cannot be measured by "weight" like CO2, creating indicators for "what constitutes restoration" is struggling.

• If measured simply by "area," low-quality afforestation (single species) gets rewarded.
• "Quality evaluation" by experts costs enormous amounts, causing credit prices to soar and stopping circulation.

Greenwashing (Indulgence) Risk

There is concern that development companies interpret it as "it's okay to destroy nature if you pay," legitimizing environmental destruction that should be avoided (License to trash). The principle of the "Mitigation Hierarchy"—that credits should be used as a last resort after exhausting "Avoid → Reduce → Restore"—is important.

IKIMON's Contribution

IKIMON contributes to "ensuring data reliability" and "efficiency"—critical challenges in the biodiversity credit market.

• Baseline Survey Support: By utilizing citizen data, we can supplement estimation of "what organisms were there before conservation activities."
• Continuous Monitoring: Daily posting data becomes evidence of ongoing conservation activities.
• Story Visualization: Beyond just numerical data, we provide specific stories (photos) like "this credit was born from activities protecting this rare butterfly," making credit quality easier to communicate.

IKIMON does not conduct credit trading itself, but supports the healthy development of the market as a "data foundation supporting credit reliability."

References

• UK Government. Biodiversity Net Gain.
• World Economic Forum (2022). Biodiversity Credits: Unlocking Financial Markets for Nature-Positive Outcomes.
• Ministry of the Environment, Japan. Nature Coexistence Site Study Group Materials.