New Global Study Maps Policy for Nature Credit Markets, Revealing Diverse Approaches Across Six Continents

A comprehensive new study released today provides the first systematic global mapping of government-led approaches to nature credit markets.

The report, Learnings from Government-Led Approaches to Nature Credit Markets, published by the International Advisory Panel on Biodiversity Credits (IAPB) in collaboration with the Environmental Policy Innovation Center (EPIC) and Forest Trends’ Ecosystem Marketplace, represents the most extensive assessment to date of how governments worldwide are designing, regulating, and implementing nature credit schemes to help close the estimated $942 billion annual biodiversity financing gap.

Drawing on interviews with over 70 stakeholders from more than 35 countries—including government officials, Indigenous Peoples and local communities representatives, and country experts—the study examines frameworks spanning diverse biomes and sectors, from Brazil’s Environmental Reserve Quota system to England’s Biodiversity Net Gain policy, and from established markets that have operated for decades to pilots launched just this year.

Three Pathways Emerge

The research identifies three distinct “market archetypes” that characterize how governments are engaging with nature credit markets:

Principle-driven approaches, where governments set standards and provide enabling infrastructure but leave market administration largely to the private sector (examples include Canada’s Conservation Exchange Pilot and New Zealand’s emerging Voluntary Nature Credit Market);

Shared governance models, where governments provide regulatory oversight and manage some market functions while the private sector handles others such as credit transactions (including schemes in Colombia, England, France, Germany, and the United States); and

Centralized governance frameworks, where governments assume responsibility for operating the majority of market functions, sometimes acting as regulator, administrator, and even buyer or seller of credits (such as Australia’s Nature Repair Market and India’s Green Credit Programme).

Notably, all principle-driven schemes identified were voluntary contribution frameworks, while the majority of shared and centralized governance schemes involved compliance compensation requirements or a mixture of compliance and voluntary mechanisms.

Significant Market Activity Already Underway

The findings challenge assumptions about nature credit markets being primarily theoretical or nascent. Habitat banking systems in the United States and Germany, for instance, have been transacting in significant volumes for years.

Compliance requirements are the primary demand driver in most jurisdictions. Corporate disclosure obligations and ESG considerations are also increasingly important.

Progress on Integrity, But Critical Gaps Remain

When compared against IAPB’s 21 High-Level Principles for high-integrity biodiversity credit markets—released at CBD COP16 in October 2024—the assessment revealed both encouraging progress and concerning gaps.

Areas of strong performance include transparent governance arrangements, with most governments maintaining publicly accessible registries tracking credit generation, sales, and retirements. All frameworks assessed require some form of monitoring, reporting, and verification, and most incorporate provisions for additionality and durability of outcomes (typically 20-30 years, with some requiring permanence). The research found that 11 of the 14 operational frameworks assessed explicitly integrate the mitigation hierarchy and no net loss principles into their legislation and guidance—fundamental safeguards for ensuring credits deliver genuine biodiversity outcomes.

Significant weaknesses emerged around equity and inclusion. The study finds that “explicit measures to uphold Indigenous Peoples and local communities’ rights and ensure equitable benefit sharing are not clearly or consistently integrated” across frameworks. Protocols ensuring free, prior and informed consent (FPIC), “no harm” provisions, benefit-sharing mechanisms, and respect for data sovereignty were “conspicuously absent in many of the frameworks assessed.” This finding is concerning. Indigenous Peoples and local communities are stewards of lands containing approximately 80% of the world’s remaining biodiversity, and their rights and leadership are fundamental to effective nature conservation.

Likewise, data gaps present major obstacles. Lack of baseline ecological data and fragmented information on land titling and ownership, especially where Indigenous Peoples and local communities are key actors, emerged as persistent challenges. Several governments are developing national biodiversity inventories and maps identifying both critical ecosystems and rights-holders as foundational steps.

Emerging Activity 

Beyond the 19 operational frameworks, the study identifies numerous “emerging initiatives” where governments are actively developing nature credit approaches, including pilots in Argentina’s Misiones Province, Chile’s new voluntary biodiversity credit programme, the European Union’s Nature Credits Roadmap, framework development in Guyana and Peru, and Scotland’s Ecosystem Restoration Code.

This pipeline of emerging schemes, combined with references to biodiversity credits in multiple countries’ National Biodiversity Strategy and Action Plans, suggests significant momentum toward expanding government engagement with nature credit markets as tools for meeting commitments under the Kunming-Montreal Global Biodiversity Framework.

Practical Insights on Credit Design and Implementation

Beyond high-level governance questions, the research surfaced important practical insights about how biodiversity credits function in real-world market conditions.

Advance mitigation creates supply certainty. Governments employing habitat banking approaches, where credits are generated before development impacts occur, reported multiple advantages. Banks can provide developers with guaranteed, immediately available credits, dramatically reducing the time required to secure environmental authorizations. Several governments are strategically developing offset banks in areas where they anticipate future development pressure (such as renewable energy installations), essentially creating “proactive offsetting” that smooths the path for necessary infrastructure while ensuring compensation is delivered. However, this approach requires careful attention to ensuring banks deliver real, durable biodiversity gains before credits are sold.

Liability transfer as a market enabler. A critical but often overlooked factor in compliance market functionality is whether legal responsibility for achieving conservation outcomes can be transferred from permit-holders to credit providers. In jurisdictions where liability remains with the company even when purchasing offsets, many firms are hesitant to use third-party credits, as they lack expertise to oversee 20-30 year habitat management commitments. Markets where liability successfully transfers to habitat banks – with appropriate government oversight and financial assurance mechanisms – have seen significantly higher uptake.

The perverse incentive problem. Several government officials candidly acknowledged a troubling dynamic: in some jurisdictions, companies may choose to pay relatively modest non-compliance fines rather than conduct required Environmental Impact Assessments and associated compensation. (Imagine a $10,000 fine versus millions for restoration and long-term maintenance.) This highlights that effective nature credit markets depend not just on good framework design, but on robust enforcement of underlying environmental regulations. Without credible deterrents to non-compliance, compensation requirements may be undermined.

Learning from carbon markets. Many governments are actively drawing lessons from their experience with carbon credit schemes, leveraging existing infrastructure (registries, verification protocols, institutional capacity) and aligning requirements to minimize confusion for market participants. Several jurisdictions including Australia are developing methodologies that allow projects to generate both carbon and biodiversity credits simultaneously though they emphasized the two market types differ in crucial respects and parallels shouldn’t be overstated.

A Tool Among Many

The research emphasizes that for most governments, nature credits represent one instrument within a broader toolkit for nature finance, not a silver bullet. As one interviewee noted, any mechanism that can unlock responsible private sector investment merits consideration, while ensuring credits don’t substitute for essential public finance and traditional conservation funding.

Download the Report

The full report, “Learnings from Government-Led Approaches to Nature Credit Markets,” is available for download here.

The study was conducted by IAPB in collaboration with the Environmental Policy Innovation Center and Forest Trends, with research involving extensive stakeholder consultation and building on existing biodiversity offset inventories including Forest Trends’ 2017 State of Biodiversity Mitigation report and the IUCN’s GIBOP database.