The European Union is developing a framework for “nature credits” to incentivize farmers and land managers to engage in environmentally beneficial practices, aiming to address a significant funding gap in biodiversity protection.

Addressing the Funding Shortfall

The EU faces an estimated annual shortfall of €37 billion in funding required to protect biodiversity. This gap arises as public budgets are increasingly strained by other priorities, such as defense. To mitigate this, the European Commission plans to establish an expert group comprising governments, farmers, local communities, and scientists to develop methodologies for nature credits. A pilot project is expected to be launched by 2027.

Understanding Nature Credits

Nature credits are designed to reward land managers for actions that restore and sustain ecosystems. These actions may include planting trees, restoring wetlands, or adopting regenerative agricultural practices. Companies or countries could purchase these credits to support environmental conservation efforts. The initiative aims to create a market-based mechanism that complements existing public funding without commodifying nature.

Expert Group and Certification Process

The expert group will be tasked with developing certification processes and governance structures for nature credits. This includes establishing transparent monitoring systems to ensure the credibility of the credits. The group will also assess whether to integrate this framework into EU law.

EU’s Commitment to Environmental Sustainability

EU Environment Commissioner Jessika Roswall emphasized that the nature credits initiative is not about turning nature into a commodity but about recognizing and rewarding actions that restore and sustain nature. This approach aligns with the EU’s broader efforts to meet ambitious climate and environmental targets, including the proposed 2040 climate goal that may incorporate international carbon credits.