Biodiversity offsetting is a false solution: Nature is not a commodity!

To: governments of the EU Member States, UN institutions

“The web of life needs effective protection. Biodiversity offsets and credits are dangerous, false solutions.”

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UN Convention on Biological Diversity (CBD)

The most important international agreement on nature conservation is the Kunming-Montréal Global Biodiversity Framework. It was adopted by 196 countries in Montréal during the UN Biodiversity Conference (COP 15) in December 2022.

Target 19 deals with the financing of nature conservation. It states under point d):

“Stimulating innovative schemes such ... biodiversity offsets and credits ... with environmental and social safeguards”

These financing mechanisms are to be promoted during the UN Biodiversity Conference (COP 16) in Cali, Colombia, in October 2024.

Offset models are nothing new: They have been around since the 1970s. They are often promoted as instruments in the fight against the climate crisis.

Destruction as profit

Some compensation projects even claim that the destruction they permit could increase biodiversity. The buzzwords are “biodiversity net gain” or “no net loss”. Put simply, if the habitat of frogs is destroyed but the living conditions of storks and lizards are improved elsewhere, this is a gain for nature overall. The compensation project does nothing to change the demise of the frogs.

Social and cultural aspects

If people’s livelihoods – such as their drinking water supply or food security – are impacted by the destruction of nature, a compensation project in another location will not help them.

Offsets also often overlook the cultural, spiritual and social value of nature for local communities. Such damage can hardly be compensated for elsewhere.

Statement by nongovernmental organizations and experts

279 nongovernmental organizations and experts - including Rainforest Rescue - have published this statement on biodiversity certificates and compensation payments:

Civil society statement on biodiversity offsets and credits

We, the undersigned, express our grave concerns about biodiversity crediting, offsetting, and related trading schemes. Biodiversity markets are being modelled on the carbon markets, which have serious failings. Additionally, there are insurmountable problems and dangers:

A wrong answer to the wrong question

• The justification for biodiversity offsets and credits is that there is a huge gap between the funding needed and what is available for biodiversity protection. Biodiversity offsets and credits build on a top-down, fortress conservation model, which is highly ineffective, costly, has often involved human rights abuses, and is the wrong response to address biodiversity loss.
• Instead, other proven forms of biodiversity protection, such as the legal designation of Indigenous Peoples’ territories, and environmental regulation and enforcement, should be implemented.
• There is a deficit in the prevention and regulation of biodiversity-destructive activities, which amounted to $7 trillion annually in 2023. Reforming and redirecting harmful subsidies, estimated to be $1.7 trillion in 2022 and providing public financing in the form of grants, are better ways to address the funding gap, avoiding the need for risky financing schemes.1
• Just as carbon offsetting delays climate ambition, biodiversity offsetting will only delay urgent action on addressing the root causes of biodiversity loss.

Offsetting and greenwashing

• Cumulative land-based carbon-removal pledges, before the new land-based biodiversity credits that are now being scaled up, added up to 1,200 million hectares globally, nearly as much as all agricultural land.2 There is no more land to offset carbon emissions or biodiversity loss without displacing peoples and undermining food systems.
• Based on the long experience with carbon credits, claims that biodiversity credits are ‘additional contributions’ to biodiversity protection and would not ultimately be used for offsetting purposes are either naïve or false.3 If biodiversity credits are purchased without the intention of using them for offsetting purposes, they are most likely purchased for greenwashing purposes.

Failing on equity and rights

• International biodiversity markets could allow elites, especially in the Global North, to continue destroying ecosystems, whilst purchasing cheap and abundant credits from the Global South.
• Biodiversity offsetting can create conflicts over tenure rights and the use of lands, fisheries and forests, competing with agroecology and smallholder agriculture, undermining food sovereignty. It will likely drive land grabbing, community displacements, increasing land inequality4 and human rights abuses, just as carbon offsets do.5
• Indigenous Peoples, local communities, peasants and other small-scale food producers, women and youth, the guardians of most of the planet’s biodiversity, typically have received only a fraction of the proceeds of offset projects in their lands, whereas project developers and financial intermediaries receive the biggest share. Resources generated by market supply and demand are further unlikely to be equitably accessible for communities.

Perpetuating market-driven failures

• The commodification of nature through the monetary valuation of ecosystem functions and the creation of biodiversity markets runs fundamentally in opposition to the cosmovisions of many Indigenous Peoples and other communities, who understand Nature as our mother, not as a commodity.6
• Biodiversity offsets and credits allow private markets to price and prioritize biodiversity actions, diminishing governments’ role in biodiversity protection as a public good. Market-based biodiversity protection, driven primarily by short-term financial considerations, cannot be consistent with scientific knowledge on species and ecosystem prioritization needs.7
• Offsetting schemes typically rely on creating a future scenario of what would have happened without the project. These ‘baseline’ scenarios have proven extremely easy to manipulate, resulting in false and worthless credits.
• Proving ‘additionality’ is difficult, as it is impossible to demonstrate that conservation outcomes would not have happened otherwise. Achieving ‘permanence’, i.e. demonstrating that the positive changes will last over time, is inherently impossible. ‘Leakage’, where the negative impacts on biodiversity will only be shifted elsewhere, is a tangible risk.
• The problems with additionality, permanence, leakage, and baseline manipulation will be much more severe and intractable in biodiversity markets than in carbon markets, where these problems already exist.

Weak measurement methodologies

• Finding a common unit for biodiversity accounting purposes would involve serious oversimplification of ecosystem values and functioning. It is not possible to simplify millions of species and their complex web of interdependences into a few tradable assets.8
• Proposals to measure biodiversity gains are based on poor methodologies, many of which allow the cherry-picking of indicators, ignoring important and unique attributes of ecosystems.
• The different ways of living from, in, with, and as, nature illustrate the challenges of taking into account the diverse values held by peoples, which are not comparable or interchangeable.9

Uncertain revenues

• ‘Investment’ through biodiversity markets will be unstable and changeable, leading to unpredictable revenue swings for recipients, and fickle economic incentives for conservation.10
• No major companies have confirmed their interest in purchasing biodiversity credits. Moreover, they are pulling out of the carbon markets after recent exposes of their inherent flaws. There is every reason to expect that the biodiversity market will follow the same path.

Poor governance and conflicts of interest

• There is an absence of effective regulation based on human rights and environmental law. Biodiversity offsets and credit schemes that create human rights violations, or do not live up to minimal environmental standards, are rarely sanctioned.
• The central involvement of organizations such as Verra is highly problematic. They have been responsible for issuing hundreds of millions of phantom carbon credits and have been unable to prevent human rights abuses in projects audited in accordance with their standards.11
• The experience with carbon markets showed us that there is a conflict of interest when it is the same organization which is financially benefiting from the issuance of credits whilst overseeing the process of standard-setting and third-party validation and verification.

Biodiversity credits and offset schemes are false solutions to a false problem – there are much better ways to increase biodiversity financing, without recourse to these risky schemes. Biodiversity offsetting, like carbon offsetting, enables rich countries, corporate actors, financial institutions, and other actors to profit from the biodiversity crisis they have created and maintain the status quo, avoiding implementing politically difficult decisions to regulate destructive activities domestically, while creating a new asset class for their financial sectors. We call on governments, multilateral bodies, conservation organizations and other actors to stop the promotion, development and use of biodiversity offsetting and crediting schemes. Instead, we call on them to prioritize transformational change in tackling the underlying causes of biodiversity loss, including: promoting effective regulation of harmful corporate activity; recognizing, respecting, protecting and promoting the right to land of Indigenous Peoples, local communities, small-scale food producers and women; stopping financial flows and investments that are harmful to biodiversity and peoples; removing harmful government subsidies; changing production and consumption patterns especially of the rich; supporting a just transition, including the transformation of food systems toward agroecology; ensuring funds flow directly and fairly to Indigenous Peoples, local communities, small-scale food producers, women and youth for community-led approaches; pursuing effective and equitable means of conservation; and taking immediate steps to phase down the supply and use of fossil fuels.

To: governments of the EU Member States, UN institutions

Ladies and Gentlemen,

The collapse of biodiversity is one of the greatest crises of our time. A mass extinction has long been underway and is rapidly accelerating. The protection of animal and plant species and ecosystems must be stepped up if the web of life is not to be torn apart.

However, biodiversity offsets, credits and other market-based approaches are dangerous false solutions. They perpetuate the momentum of destruction instead of stopping it.

We therefore call for:

- effective laws, regulations and agreements instead of market and voluntary measures.

- recognition and enforcement of the rights of Indigenous peoples and local communities.

- abolition of climate- and environment-damaging subsidies by states and the EU and their redirection to climate and nature protection.

- financing climate and nature protection through financial transaction taxes and similar mechanisms.

- ensuring that a large proportion of these funds go directly to Indigenous peoples and local communities.

- changing production and consumption patterns that are harmful to the climate and the environment.

- phasing out the use of fossil fuels and switching to environmentally friendly renewable energies.

Yours faithfully,