Global leaders have pledged to halt and reverse the degradation of nature over the coming decades, but limited public finances mean governments are increasingly turning to nature markets as a way to mobilise private investment. These markets are designed to measure ecological improvements—such as restored habitats or increased carbon storage—and convert them into tradable credits. In principle, this approach can diversify funding sources and scale up investment in nature restoration. In practice, however, delivering real environmental gains through markets has proven far more complex.
Nature markets encompass both voluntary and mandatory systems for carbon and biodiversity credits. Examples include the EU’s nature credits roadmap, England’s biodiversity net gain policy, and the international voluntary carbon market. Most operate as offset markets, allowing buyers to claim net neutral outcomes by compensating for environmental damage in one place with improvements elsewhere. While such mechanisms have existed for more than 30 years, their performance has been mixed. Some, such as wetland mitigation markets in the United States, have successfully channelled investment and now generate almost as much new wetland as is lost annually. Others, including Australia’s human-induced regeneration carbon credits, have delivered weak ecological outcomes and raised concerns about credibility.
To address these issues, recent research has synthesised lessons from seven major nature markets worldwide and proposes a checklist to assess whether a nature-based credit represents a genuine improvement. A central requirement is integrity in what is being measured. The environmental attribute traded must closely correlate with the desired outcome. For carbon storage, metrics linked to tree cover or biomass are generally robust. Problems arise when markets rely on proxies that do not reliably reflect ecological reality. For example, habitat-based biodiversity metrics may fail to capture actual gains in species diversity if other pressures, such as pesticide use, undermine ecological health.
Another critical issue is additionality—ensuring that credited improvements would not have occurred without market incentives. Many carbon credits, particularly those based on avoided deforestation, have struggled here, often rewarding protection that would have happened anyway. Advances in satellite data and statistical methods now allow researchers to more rigorously estimate additionality by comparing credited sites with realistic counterfactuals. Evidence shows that issuing credits only after outcomes are demonstrated—rather than in advance—significantly improves credibility and ensures that only successful projects are rewarded.
Transparency is equally essential. Every evaluation of nature markets to date has relied on public data, and all have found that markets fall short of their full environmental objectives. Without open data, it is impossible for citizens, buyers, or regulators to assess performance or improve design. Public access to data is therefore a prerequisite for trust and learning.
Finally, because nature credits often promise benefits over decades, strong legal and regulatory frameworks are needed to prevent reversals. Long-term accountability, enforceable obligations, and clear liability are crucial to maintaining integrity over time. With scientifically grounded metrics, proven additionality, transparent data, and robust governance, nature markets can better fulfil their promise of attracting high-quality private investment while delivering real and lasting benefits for nature.
https://theconversation.com/how-to-make-sure-the-nature-credits-you-buy-are-real-new-research-273090