Explained: India’s Biodiversity Credits Can Succeed If Communities Are Involved

Biodiversity credits are designed to channel funding from companies towards conservation and restoration.

India is at a decisive juncture in conservation finance.

According to its National Biodiversity Strategy and Action Plan, an average of Rs 81,664 crore will be required each year between 2024-25 and 2029-30 to meet the country’s biodiversity goals and targets for 2030 and 2050.

In this context, biodiversity credits have emerged as a promising tool.

With biodiversity loss accelerating, climate threats multiplying, and the Kunming-Montreal Global Biodiversity Framework’s 2030 targets drawing near, India can no longer afford to treat biodiversity credits as a distant experiment.

But what exactly are biodiversity credits, and what will it take to implement them effectively in India?

What are Biodiversity Credits?

Biodiversity credits are tradable units that represent measurable improvements in ecosystems or species.

To put it simply, these are financial instruments designed to channel funding from individuals and companies towards the conservation, restoration, and sustainable use of biodiversity-rich areas.

They are similar to carbon credits in concept, but they focus specifically on enhancing biodiversity rather than merely offsetting environmental damage. The idea of biodiversity credits gained momentum after COP15.

As part of a landmark agreement to halt and reverse biodiversity loss, nearly 200 countries committed to mobilising at least $200 billion annually by 2030 for global conservation efforts.

The pact, known as the Global Biodiversity Framework, also called for innovative financing tools such as biodiversity offsets and credits to help meet this goal.

For India, biodiversity credits present three key opportunities to advance conservation and community well-being.

• First, they can provide finance beyond government budgets.

Public funds alone cannot cover the huge costs of restoring degraded landscapes. Credits could attract corporate social responsibility (CSR) money, international finance, and even retail investors to underfunded ecosystems such as wetlands and grasslands. 

• Second, they can give corporate responsibility teeth.

Instead of vague sustainability claims, credits can provide verifiable results, aligned with global disclosure norms. This transparency would help companies demonstrate real action rather than symbolic gestures. 

• Third, biodiversity credits have the potential to link livelihoods with conservation.

Well-designed projects, like the mangrove restoration in Odisha or community-managed grasslands in Madhya Pradesh, can channel revenue directly to local stewards. In this way, conservation shifts from being a top-down mandate to a livelihood-enhancing opportunity. 

India Already Has the Groundwork in Place

The Green Credit Programme, launched in 2023, and the SEBI’s requirement for large companies to disclose their ESG (environmental, social, and governance) performance are creating a push for more transparent reporting of environmental impact.

At the same time, the Biological Diversity Act of 2002 gives local communities legal rights over biological resources and a share in any benefits.

Combining these frameworks into a functional biodiversity credit system could help India unlock much-needed conservation funding while ensuring fairness. But if communities don’t see real benefits, like extra income or secure rights, the system is unlikely to succeed in the long run.

How to Quantify a Biodiversity Credit?

Imagine a community in Chhattisgargh manages a hectare of forest land. After a year, if they can show measurable improvements, like an increase in forest cover, they could earn biodiversity credits representing those ecological gains and sell them to buyers seeking to support verified conservation outcomes.

In this context, the toughest question is: how do we measure biodiversity? Unlike carbon, which is counted in tonnes of CO₂, nature has many dimensions.

The emerging consensus is that a credit should represent a measurable improvement compared with a baseline. This could include species richness, the recovery of threatened plants and animals, or the overall condition of a habitat. 

The point is not to reduce nature to a single figure but to combine a basket of indicators into a transparent and verifiable unit that reflects real ecological improvements. 

For example, a wetland project might earn credits by showing an increase in bird species and improved water quality over five years, verified by independent monitoring. A grassland project could measure credits through gains in native vegetation cover and pollinator populations.

Communities Must be Kept at the Centre 

For biodiversity credits to work in India, three conditions are non-negotiable.

• Projects must have the genuine consent of communities where they are located. Without free and informed consent, credits will resemble extraction, not partnership.

• They must also deliver fair benefit-sharing through biodiversity management committees and panchayats, with communities receiving a majority of revenues.

• Finally, credits should support long-term commitments that fund local monitoring, conflict resolution, and ecosystem management beyond the initial years. Anything less would hollow out the very purpose of biodiversity credits. 

The Operational Push India Needs 

India now needs to move from discussions to implementation. The most effective way forward is to begin with careful assessments of projects in ecosystems where monitoring is feasible and community engagement is strong, such as mangroves, seagrasses, and agroforestry mosaics. These assessments can test methodologies, refine monitoring tools, and build community confidence. 

At the same time, the government should issue national guidelines outlining key principles like integrity, additional benefits, lasting impact, and transparency, while keeping them in line with the Biological Diversity Act.

Such guardrails would help prevent overlaps and ensure that biodiversity credits complement, rather than conflict with, carbon markets or green credit schemes. 

India should link biodiversity credits to the SEBI’s ESG reporting rules. This would allow companies to show their actual contributions to conservation, not just on paper, but through verified biodiversity projects that generate measurable results.

Companies would then have a recognised channel for demonstrating their contributions to biodiversity goals. To keep monitoring credible but affordable, a mix of satellite data, field surveys, and even citizen science initiatives can be deployed. 

Finally, the creation of a public registry will be critical.

This registry should issue, track, and retire credits in a transparent manner, ensuring that one conservation activity is not counted multiple times under different schemes. Such openness would build market confidence and protect the integrity of the system. 

The Dangers of Delay 

Without clear frameworks, India risks losing momentum. Globally, biodiversity credits are already being trialled in countries like the UK and Colombia. Today, credits generally sell for anywhere between $2 and $415.

If India lags, its market could be shaped by external standards, sidelining domestic priorities. 

More urgently, delay means lost trust. Communities that hear about credits but never see benefits will grow sceptical. Companies eager to demonstrate biodiversity outcomes may drift towards token projects or greenwashing. By the time rules are in place, credibility could already be eroded. 

The debate should no longer be about whether India needs biodiversity credits. The real question is how fast it can design them to benefit communities which are the first line of defence for biodiversity. 

Done right, biodiversity credits could turn conservation into a self-sustaining, livelihood-enhancing endeavour. Done wrong, they risk becoming just another market gimmick. 

(Sayanta Ghosh is Associate Fellow, Land Resources, and Dr Jitendra Vir Sharma is Senior Director, Land Resources, at The Energy and Resources Institute (TERI). This is an opinion piece, and the views expressed are those of the authors. The Quint does not necessarily endorse them.)