How new research helps buyers verify the authenticity of nature credits before investing

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by The Conversation, click this post to read the original article.

Global leaders have pledged to stop and reverse the degradation of nature in the coming decades. To meet these goals without relying entirely on strained public budgets, governments are looking at nature markets as a way to bring in private investment. These markets work by measuring ecological improvements—like planting trees or restoring wetlands—and turning them into credits that can be bought and sold. While the idea sounds promising, the reality is more complex. Not all nature credits accurately estimate environmental benefits, and some may end up supporting actions that would have happened anyway, regardless of investment.

As someone interested in the effectiveness of these markets, you should understand both their potential and their pitfalls. Offsets, such as those used in biodiversity or carbon credit markets, often aim to balance environmental harm in one area with improvements in another. However, unless these improvements are truly additional—meaning they wouldn’t have happened without the credits—they won’t have real impact. For example, some Australian projects have issued credits for tree regeneration in deserts with little ecological gain, while others, like U.S. wetland restoration programs, have shown more success.

To navigate these markets effectively, you need to consider how integrity is ensured. The credit should be based on measurable and scientifically supported indicators, like tree cover for carbon storage. Some markets use misleading proxies—one example being England’s biodiversity metric, which doesn’t always result in more diverse insect life due to factors like pesticide use. Ensuring that credits represent real, measurable gains is key to building trust and achieving environmental goals.

You also need transparency and long-term accountability. Every solid evaluation of a nature market has depended on the availability of public data. Without it, it’s impossible to assess whether the market is working as intended. Long-term success also depends on laws and regulations that hold participants accountable for maintaining ecological gains for decades. With strong planning, high transparency, and scientific oversight, nature markets have the potential to attract meaningful investment and deliver actual improvements to the environment.