Biodiversity credits and offsets: A review of effectiveness, challenges, and future directions

Abstract

This manuscript presents a comprehensive review of biodiversity credits and offsets as emerging mechanisms for mitigating biodiversity loss and strengthening conservation initiatives. Unlike carbon credits, biodiversity credits function as market-based instruments that provide measurable, traceable, and verifiable incentives for the protection, restoration, and sustainable management of ecosystems. Despite their potential, the implementation of biodiversity credit systems is impeded by challenges such as inconsistent assessment methodologies, insufficient governance structures, and inadequate regulatory oversight. The review underscores the need for standardized biodiversity metrics, integration with international environmental frameworks, and the establishment of ecological safeguards to ensure the delivery of genuine conservation outcomes. A comparative analysis with carbon credit systems highlights the critical importance of embedding biodiversity considerations within broader climate strategies. The paper concludes with strategic recommendations aimed at enhancing the credibility and effectiveness of biodiversity credit markets through transparent valuation mechanisms, participatory governance models, and inclusive engagement of local and Indigenous communities. In advocating for the up scaling of biodiversity credit systems, the review affirms their potential role in addressing the global biodiversity crisis and advancing the objectives of the Kunming-Montreal Global Biodiversity Framework.