Can Biodiversity Markets Deliver Inclusive and Collaborative Nature Recovery?

My job is to as far as possible objectively study private investment in nature and nature markets, the good and the bad, to learn lessons about what works and what doesn’t. Now, one of the things about nature markets that I find especially interesting and powerful is the way they trigger a massive amount of entrepreneurship, & my hunch is it triggers more new business creation than alternative nature investment methods like agri-environment subsidies (although it should be noted that these have also been some of the key cashflows that have enabled major nature-businesses like the Knepp estate, so it’s not a clear dichotomy).

In Biodiversity Net Gain (BNG), I have been amazed by the rapid entrepreneurship, which has produced innovative solutions all over the place – to local government data issues, to securing land for BNG, to coordinating large groups of actors at landscape scales – in BNG we even allowed private businesses to become our de-facto regulators by encouraging them to become Responsible Bodies. Not all this innovation has been good for nature, mind – have definitely seen some places where business models misaligned with ecological outcomes. But I definitely think this dimension of nature markets is worthy of study.

In our new paper in Environmental Policy & Governance led by Mattia Troiano, we explored one domain of this innovation: the variety in ways and institutional arrangements through which different habitat banks produce credits for the off-site BNG market. Mattia interviewed tens of BNG and habitat banking providers in Oxfordshire, and explored the real-world implications of different business models. Mattia asked what the implications of different business models are for inclusivity (here, we mean which landowners can feasibly enter the market), and landscape-scale coordination (basically, how many stakeholders a project engages with and its integration into local plans like the LNRSs). I found the results super interesting. We found some of the most commercially-driven providers actually performed well on inclusion, by insulating landholders who enrol from financial risks to their businesses. But their commercial efficiency came at a cost to landscape-scale coordination, with other models potentially developing closer and more extensive relationships with local decision-makers and other stakeholders, including other habitat banks – so less of an emphasis on competition, more on collaboration.

One of the outputs of The Agile Initiative’s Sprint on How the UK can achieve its financial commitment to biodiversity which I led. Paper led by Mattia Troiano with Mark Hirons Natalie Duffus Isobel Hawkins Sarah Gall Raphaella Mascia Matt Whitney Huw Thomas and myself; in collaboration with The Leverhulme Centre for Nature Recovery