Nature-based credit markets at a crossroads

A swathe of recent impact evaluations demonstrating disappointing results suggest nature-based credits (derived from carbon or biodiversity offsets) are at a crossroads. Either nature-based credit markets are fundamentally reformed to adopt the latest scientific understanding on additionality, leakage and permanence, rebuilding investor confidence and allowing them to upscale, or they will continue to demonstrate non-additionality, lose investor confidence and constrain one of our most promising tools for drawing private investment into conservation. Scientific credibility can be established by releasing nature-based credits ex-post after proven demonstrably additional relative to a statistically-derived counterfactual. Credit markets must also be reformed to make them robust to, rather than resistant to, scientific improvements in credit estimation methods by conservatively estimating benefits whenever there is uncertainty. These principles imply a greater degree of regulation to ensure fundamental demand for these high-integrity, higher-priced mitigation outcomes. We argue these principles are necessary to support credit markets associated with sufficient market confidence to attract investment and deliver the environmental benefit embedded in the ambitions of the Kunming-Montreal and Paris agreements.