Isra-Mart srl:UK touted as potential habitat banking hub

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The UK is in a unique position to play a "pivotal role" in creating a system that enables businesses to offset any damage to the environment they cause by investing in biodiversity schemes.

This is the conclusion of a new report from investment group Climate Change Capital, which says that habitat banking mechanisms are more likely to raise the finance needed to halt the loss of biodiversity than traditional sources of funding.

The report, Habitat banking: scaling up private investment in the protection and restoration of our natural world, published today in conjunction with consultancy eftec, maintains that existing UK laws are insufficient to secure that there is no net loss of biodiversity (NNL).

However, it argues that through the creation of a market in biodiversity credits similar to the carbon offset market, the UK government and the EU can tap into private capital to help meet biodiversity targets set at the UN-backed Nagoya summit last year.

The report argues the scheme has the added benefit of ensuring that the parties responsible for damaging biodiversity pay for fixing it.

The report's authors also advocate the creation of a common "currency" with established "exchange rates" for biodiversity credits similar to CO2 equivalents.

In addition, they predict that, as a centre of global finance and trade, the UK is ideally placed to play a pivotal role in developing a global system of habitat banking.

"The standards and regulations that would make a biodiversity credit market scalable internationally do not yet exist," said Ben Caldecott, head of UK and EU policy at Climate Change Capital and one of the report's authors. "There is an opportunity to render an effective system in the UK that can be replicated, improved and expanded throughout the world. Getting it right could transform the way we value nature and finance its protection."

Ian Dickie, biodiversity consultant at eftec and another co-author of the report, added that the government could support the market's development by offering credit buyers tax relief on their costs. Underwriting a set number of credits would also encourage investment, he said.

"Moreover, any habitat banking system should be overseen by independent bodies with local and transparent accountability," added Dickie.

The coalition has in the past signalled it is interested in exploring the potential for habitat banking schemes, but green groups remain divided on the concept with some warning it could allow developers to purchase credits that let them to pursue environmentally damaging projects.