Designing a biodiversity credit accounting framework for environmental investment and financing

Abstract

<p>Achieving biodiversity goals and targets poses a significant financial challenge due to biodiversity externalities. Efforts to address this challenge have focused on market-based solutions for biodiversity offsets to bridge the financial gap. However, accurately calculating biodiversity credits remains a barrier to promoting and implementing these solutions. Here, we propose an innovative accounting framework for biodiversity credits based on the emergy accounting approach. Emergy (spelled with an m) represents the biosphere work performed over time and space (ecosystem services) that supports species, human societies and economies, and is measured in units of solar equivalent energy (emergy, sej). This unified accounting method considers the perspectives of ecosystem productivity, ecosystem networks, and human well-being. We evaluated the biodiversity credits in 157 restoration projects and found several advantages in terms of differentiating project types and setting thresholds for biodiversity credit increases in restoration projects. Only 66% of the projects achieved biodiversity credit increases, and only 29% of the generated credit can be traded on the market. This study provides a scientific foundation for decision-making in ecosystem restoration management and contributes to broader biodiversity conservation solutions as well as to bridging the financial gap in achieving biodiversity goals.</p>