In 2009, as global financial markets shuddered, David Dorr became interested in the possibility of putting a price on nature. Dorr is a Cayman Islands-based global macro trader, attuned to what he calls the "butterfly effect" of geopolitics and other international forces on financial markets. The economic crisis, Dorr had realized, paled beside the looming environmental one. "Nature, holy [cow], is in severe crisis," Dorr recalls thinking. The existential threat to humanity posed by environmental degradation was "something that’s gonna touch every asset class."

Dorr knew about carbon credit schemes, in which people, governments or companies pay for the storage or removal of carbon from the atmosphere to offset their greenhouse gas emissions. But he wanted something broader, a way to judge the value of nature not in an extractive sense, nor by the so-called ecosystem services that nature could provide, but by its own inherent value.

It has taken longer than Dorr expected, but his vision, if not yet a reality, is at least widely shared. Scientists, conservationists and policymakers around the world are working to develop what they call biodiversity credits. While varied in detail, these credits are alike in their purpose: attaching economic value to the preservation or restoration of ecosystems.

Only a few companies have biodiversity credits for sale, but many more are working to develop them.

In broad outline, it works like this. Companies developing biodiversity credits identify a threatened habitat and form a partnership with the owners of that land. The company or a third party then conducts a biological survey to establish the habitat’s baseline condition, using factors such as species richness, ecological integrity and water quality. The company then devises a plan for improving habitat and protecting it over a given stretch of time, usually a decade or longer.

At given intervals, perhaps every year or two, the company, or the third party, monitors its progress. If the habitat has met the agreed-upon goals of improvement, it generates a biodiversity credit, which someone else can buy. Revenues from the credit are split between the landowner and the biodiversity credit developer.

"We only get paid when we deliver the performance outcomes," says Mariana Sarmiento, CEO of Terrasos, a Colombian company that last year became one of the first to offer biodiversity credits for sale, with 62,000 12-square-yard plots of conserved or restored ecosystems that will be managed for 30 years. The price is currently around $32 per unit, and slightly more than 100 have been sold so far.

Many people hope, like Dorr, that these biodiversity credits will eventually be standardized, as carbon credits are, with consistent contents and price, and can then be traded internationally in the manner of commodities. Packaged like this, they argue, biodiversity credits could provide a way to fund conservation on an unprecedented scale. The need is acute: According to a recent World Economic Forum paper, estimates of the cost to halt the current global loss of biodiversity are as high as $1 trillion annually. Less than $150 billion is spent on such efforts each year.

One company is developing credits that will each protect one hectare of habitat and its wildlife for at least 10 years.

Although only a few companies have biodiversity credits for sale, comprising probably less than a few hundred acres, many more are working to develop them. Already, large players in the carbon credit industry are getting involved.

There are good reasons to be skeptical that the nascent biodiversity credit industry will deliver all its proponents say it will. One challenge lies in showing that the money spent on these credits actually has its desired effect. This problem has plagued the carbon credit market since its inception in the early 2000s. A recent example came to light in January when a joint investigation found that the majority of rainforest carbon credits certified by Verra, the world’s largest certifier of voluntary carbon credits, were in fact worthless.

But developers of biodiversity credits face another hurdle, unique to their endeavor, which is that unlike carbon, which can be quantified using weight-based metrics, biodiversity is diffuse. Even E.O. Wilson, who helped popularize the term "biodiversity," struggled to concisely define it, writing that it encompasses "the totality of hereditary variation in life forms, across all levels of biological organization" from genes to individual species to entire ecosystems. Setting a value for the protection or preservation of such diversity is difficult. Applying a consistent value to a biodiversity credit generated in the Amazon rainforest and one from the Sahara Desert is even harder.

Members of the alliance agree that they must be diligent in proving that biocredit buyers are getting what they pay for.

Alain Karsenty, an environmental economist at the French Agricultural Research Centre for International Development, is in favor of biodiversity credits — or "certificates," his preferred term. But he says he is "not sure biodiversity certificates will attract a large amount of money and buyers."

The phrase "biodiversity credit" has appeared in the scientific and conservation policy literature for at least 20 years, usually in reference to what are also called "biodiversity offsets," legally mandated in some countries. "You basically damage habitats of an endangered species in one area, and then you try to rebuild the habitat in another," says Paul Steele, an economist at the International Institute for Environment and Development (IIED). "But that’s pretty challenging to do and almost never works."

In 2020, Steele published a paper with his IIED colleague Ina Porras proposing a new use of the phrase. These biodiversity credits, or "biocredits," would operate on a voluntary basis, underpinned by supply and demand: On the one hand were those who wanted to contribute funding to conservation; on the other hand were conservationists and landowners who needed funding to do that work. The scheme would be able to fund protection and restoration of places rich in carbon, such as peat swamps, and those poor in carbon, like deserts.

At first, the paper seemed to flop, Steele says. But over the next two years, the idea took off.

It remains unclear whether biodiversity credits will take off and reach a global audience.

Simon Morgan, a South African ecologist, says he and his colleagues came to the idea of biodiversity credits after watching the COVID-19 pandemic devastate tourism in Africa. “So much of our conservation efforts are underpinned by tourism,” he says. He thought, "‘Well, what else can we do?’" With his colleagues, he founded ValueNature, which is developing global biocredits that will each protect or restore one hectare of habitat and its wildlife for at least 10 years.

Morgan quickly realized that people in other parts of the world were doing similar work. The concept gained more momentum late last year after the parties to the Convention on Biological Diversity adopted the so-called Kunming-Montreal Global Biodiversity Framework, which set global conservation targets through 2030. Among other things, the parties agreed to provide funding for "innovative schemes such as payment for ecosystem services, green bonds, biodiversity offsets and credits, and benefit-sharing mechanisms, with environmental and social safeguards."

ValueNature is the acting secretariat of the Biodiversity Credit Alliance, which it founded last year and which is funded by the United Nations Environment Programme, the UN Development Programme and the