How much is a Scarlet Macaw worth? Solving the puzzle of biodiversity markets

How much is a Scarlet Macaw worth?

Is it more than a Swallowtail Butterfly? Or less than a Komodo Dragon? Is a herd of zebra more valuable than a troop of kangaroos?

These questions, bizarre and unanswerable as they are, are just one of the conundrums facing biodiversity markets, an emerging system that aims to create tradable credits in exchange for biodiversity gains. As these markets emerge, experts approach them with caution: biodiversity is impossible to quantify, and action is hard to verify and measure. 

Even so, these markets may be one of the best hopes for the creatures and habitats that are disappearing at astonishing speed.

Desperate times call for market measures

Our environment is under severe pressure. The World Wildlife Fund estimates a 69% average loss in wildlife populations between 1970 and 2018. The London School of Economics suggests we are i the planet’s sixth mass extinction event. 


 
In response to this, biodiversity markets are beginning to crop up in countries around the world, including Australia and the UK. These adapt the principle of their successful () predecessor, carbon markets, to create immediate rewards for long-term investment. 


A biodiversity credit borrows the principle of a carbon credit. A government, mission-driven company or any company with an interest in protecting nature generates biodiversity credits to fund restoration or conservation projects and sells them to organizations. In exchange, the company can report the credit towards sustainability activity or against sustainability targets, much as carbon credits count towards emission reduction targets. In essence, a credit is a certificate of ecological commitment. For example, a credit could represent one hectare of land restored or safeguarded – whether that involves preserving habitat for wildlife, regenerating native plant or animal species, or rewilding landscapes. The name does heavy lifting in biodiversity markets: credits count towards environmental net gain, where offsets act as a harm reduction method for environmentally damaging activities. 



 What price is right?

But biodiversity and carbon have an essential chemical difference, one which throws this well-intentioned principle off its axis. Carbon is identical wherever it’s emitted or sequestered: a tonne is a tonne, no matter the source. This uniformity lends itself well to measurement and trade worldwide, across contexts. Biodiversity is – as the name suggests – defined by its immense variety. When it comes to the mechanics of markets, this variety becomes a confounding problem.

Elements of biodiversity are inherently place-based and deeply complex. The ecological value of a square foot of rainforest is not the same as a square foot of desert, nor can a single metric encompass the immense value of any given biome. Each ecosystem supports distinct species, functions, and cultural elements that aren’t easily quantifiable. That makes creating standardized biodiversity credits far more challenging and makes it far more critical to consider them with nuance, local context, and scientific rigor.

New market, old problems

Even with simpler molecules to contend with, carbon markets are plagued by challenges around transparency, integrity, monitoring, and verification. Biodiversity markets .  

For example, without rigorous oversight, there’s a risk of inflated claims: credits tied to outcomes that either never materialize or are impossible to verify (If a company receives credits in exchange for  conserving 100 moles, who digs through molehills to count each mole?) Another potential risk from carbon markets is the danger of  where multiple parties claim credit for the same work.

There’s also a growing worry that companies could wield biodiversity credits like a power hose for greenwashing. Insufficiently regulated, credits may allow companies to boast environmental credentials without meaningfully changing business practices. If credits are seen as easier than meaningful change or minimizing environmental harm, companies might bypass the more difficult but more impactful steps and leapfrog straight to purchasing credits, while continuing activities that degrade ecosystems.

Ironically, biodiversity markets may also ultimately affect people. Without intentional design, a global biodiversity market could act as a perverse incentive for large-scale land purchases in the name of conservation. In some cases, that might mean prioritizing biodiversity gains over the rights or wellbeing of Indigenous or local communities. If biodiversity markets are to be equitable as well as effective, communities must be included in their design and governance.



An offer we can’t refuse

The list of the potential perils of biodiversity markets is worryingly long. The list of potential benefits may be shorter, yet more compelling.

The environment is in grave danger, and it’s in grave danger today. Our rainforests, oceans, deserts, plains and more do not have the luxury of waiting for small amounts of financing to drip through. 

By creating a system where measurable nature gains can be credited, tracked, and traded, biodiversity conservation and restoration becomes an investable activity. This opens the door for financiers to play a meaningful role in protecting ecosystems; not as corporate goodwill, but as part of their core business strategies. Structured thoughtfully, biodiversity credits could channel billions toward habitat restoration and conservation and species protection.

In that light, biodiversity markets are a necessary risk. The key will be to approach them with intention, armed with the hard lessons learned from carbon markets and grounded in ecological, social, and economic realities. 

Done well, they could help tip the scales for habitats teetering on the edge of extinction. Done poorly, they risk accelerating environmental degradation. The opportunity, and the challenge, is getting them right.