Will a voluntary ‘nature credits' market really help biodiversity?

The Spinoff

15-06-2025

The idea is for businesses to fund conservation projects and benefit from the eco-friendly association. The government sees potential and wants to get involved, but how much difference can such a scheme actually make?
Late last week, associate minister for the environment Andrew Hoggard announced the government was 'supporting the expansion of the voluntary credits nature market [sic]'. Details were scarce on what the government's role would be, but in a press release, Hoggard said, 'We want to connect those caring for the land with investors who support conservation. Nature credit markets help fund trusted environmental projects that actively protect and restore ecosystems.'
The press release mentioned nine voluntary nature credits market pilots, conservation projects such as restoring exotic forestry or farmland to native bush. One of those is a partnership between Sanctuary Mountain Maungatautari, a Waikato wildlife reserve that has struggled with funding issues, and environmental financing business Ekos, which began in 2022. 'This represents a significant move away from reliance on traditional grant funding and towards private sector investment to support New Zealand's biodiversity future,' said Sanctuary Mountain Maungatautari CEO Helen Hughes in response to Hoggard's announcement.
Hoggard suggested the voluntary nature credits market would act as an alternative to the SNA (Significant Natural Areas) framework of the National Policy Statement on Indigenous Biodiversity, following the government's 2024 suspension of the requirement for councils to map SNAs on private land, a move that was widely criticised. 'Farmers and other private landowners are doing their part to protect native biodiversity and want to do more. Supporting voluntary natural credits markets is a chance for the government to show them the carrot, not just the stick,' said Hoggard. 'We will test the role for government which may include setting principles, and a framework for standards, to build market confidence and ensure quality.'
So what are 'nature credits' or 'biodiversity credits'? The concept is based on the existing 'carbon credits' market. Under that framework, businesses that wish to recognise the CO2 they emit into the atmosphere that is otherwise difficult to immediately address can voluntarily buy carbon credits as a contribution to climate action. The money from buying carbon credits goes towards environmental projects that remove or mitigate the release of CO2. Voluntary credits can be configured in different ways, and include nature and other co-benefits which are recognised in the price per tonne of CO2 of the credits.
Biodiversity credits are similar, but instead of offsetting actions that have negative effects on the environment, they seek to provide an opportunity for businesses to finance positive environmental action. A large barrier to lasting conservation action is money. Planting trees, pest control and protecting wildlife comes at no small cost, and these efforts need to be financed somehow. Introducing: biodiversity credits. To generate a biodiversity credit, actions need to be undertaken that demonstrably improve biodiversity, and by investing in biodiversity credits and financing such activity, businesses can associate themselves with an eco-friendly image.
But how much difference do biodiversity credits actually make? Many concerns with the concept of biodiversity credits stem from existing issues within the voluntary carbon credits markets. Far too often carbon credits have been sold to finance environmental efforts that have little real effect on the environment, meaning that businesses get all of the positive publicity for helping the environment, without properly addressing the negative climate impacts of their company. Some criticise carbon credits as a 'pay-to-win' system, allowing businesses to just throw money at the climate crisis and engage in greenwashing – pretending to be an eco-friendly company before actually doing anything positive for the planet. The biodiversity credits system presents a similar risk if not regulated properly. Businesses could generate credits without having a measurable impact on the environment, stagnating environmental action.
In comments made via the Science Media Centre, Sebastian Gehricke, a senior lecturer in finance and director of the Climate and Energy Finance Group at the University of Otago, echoed this concern. 'The global voluntary carbon credit markets face significant scrutiny around the credibility and integrity of credits,' he said. '[As] we're still grappling with the complexities of carbon, something comparatively easier to quantify, then I am really concerned about applying similar models to nature and biodiversity, which are far more complex to quantify and very context dependent.'
While Forest & Bird cautiously welcomed Hoggard's announcement, saying it was a 'useful step' that would 'help support people and organisations who wish to voluntarily invest in biodiversity', the potential for greenwashing was also a concern. 'We need to ensure that any external biodiversity incentive system has high integrity and is sustainable – that real, enduring outcomes for nature are achieved and it is not used to mask environmental damage,' said Richard Capie, Forest & Bird's group manager for conservation advocacy and policy.
Gehricke was sceptical of the lack of detail in Hoggard's announcement of what the government actually plans to do. 'It appears the government is indicating potential future involvement in a market that private actors are already working to develop. This isn't so much a clear incentive as it is a signal of interest,' said Gehricke. 'Shifting focus toward a voluntary credit market, which is still in its early stages, risks diverting attention from the more immediate and proven impact of regulatory protections.'
The broader policy context was important, he said, pointing to the SNA suspension referenced in the press release and other 'significant climate and environmental protection policies' the government had 'recently rolled back'. 'Making a statement of vague support for a 'nature credit market' does not compensate for the tangible loss of safeguards that were already in place, and which many experts already considered insufficient.'
Similarly, Green Party agriculture spokesperson Steve Abel called the nature credits announcement 'a bandaid on a gaping wound'. 'While credit schemes and covenants are an important pathway to protecting vital biodiversity on farmland, these alone are not nearly enough to address the biodiversity crisis in Aotearoa,' he said. 'One tiny step in the right direction does not make up for the significant damage this government is doing to the environment in many ways.' He also expressed concern that 'market and corporate-driven biodiversity credits can be little more than a greenwashing tool – and there's proven to be very little demand without regulatory requirements for them'.