Using Carbon Investment to Grow the Biodiversity Bank

The fervor with which carbon initiatives are being adopted (Capoor & Ambrosi 2007) presents a unique opportunity to restore biodiversity while creating new financial and marketing incentives for investors. We argue that current approaches to carbon offsetting that rely largely on investment in monoculture plantations will rapidly lose appeal as the public becomes aware of their dubious carbon benefits (Guo & Gifford 2002; Glenday 2006) and the related environmental and social harm that they may bring (Jackson et al. 2005; Lamb et al. 2005). Here we describe a scheme that is more robust to uncertainty about carbon sequestration and is guaranteed to have broad environmental benefits, including restoration of degraded natural systems and endangered species habitats. The proposed scheme provides a mechanism for investing in the world's most threatened ecosystems that makes carbon, biodiversity, and financial sense. The idea is simple: investors should be allowed to reap the dual benefits of carbon and biodiversity credits from one parcel of land and those credits could later be traded on the relevant markets. Current approaches place investors' hopes in future carbon and timber values that may be risky given available evidence about the real sequestration value of short-rotation plantations (Guo & Gifford 2002) and the rapid rise in monoculture plantations (FAO 2005), which could lead to a reduction in demand and a slowing of the plantation timber market. Investors risk massive losses if the carbon benefits are proven to be dubious or if the market for plantation timber falters. A diverse portfolio of carbon and biodiversity investment makes more sense for investors and the environment.