An Argument in Favor of the Hyper-Complexity of Biodiversity Markets (Let’s Nerd Out)

By Trey Lord

Key Takeaways:

• At COP15, 196 countries committed significant efforts to conserve and restore 30% of biodiversity by 2030.
• Biodiversity credits have the potential to help unlock billions of dollar of public and private capital.
• Getting the science, economics, and implementation right is a tremendous challenge and opportunity for champions of natural capital worldwide.

As part of our ever-evolving crusade to change the trajectory of forestry, climate mitigation, and nature-based solutions, we are recognizing the pivotal and indispensable role of biodiversity in every forest biome. This intuitive concept of enhancing the biodiversity in restored forest ecosystem – whether for the extraction of sustainable commodities, development of carbon credits, or an assisted natural regeneration (ANR) regime – is a key (and Kew) principle for all stakeholders of reforestation. Enhancing biodiversity has become a fulcrum for scientific research, programmatic implementation, cultural appreciation, and financial investment/speculation.

As we move forward, it is important we progress our understanding of biodiversity’s inherent value in order to prioritize actions that realize, highlight, and parallel the hyper-complexity of nature itself.

During the UN Biodiversity Conference (COP15) this past December, at which the Global Biodiversity Framework (GBF) was agreed upon, there was a groundswell of interest around the potential for biodiversity markets. In the GBF, 196 countries (excluding the USA as it is not a party to the convention itself) agreed to conserve 30% of natural ecosystems and restore 30% of degraded ecosystems by 2030. It also identifies ecosystem specific goals, establishes long-term biodiversity outcomes, and acknowledges the financial requirements of potential stakeholders which need to be underwritten by long-term financial security and legal guarantees.

While not a part of the GBF, the United States has a made a similar 30×30 pledge through Executive Order, the America the Beautiful Initiative, and funding for reforestation in the Inflation Reduction Act.

Incubating Biodiversity Markets

If properly implemented, the GBF should create an enabling environment for biodiversity markets, steering global political and economic forces toward properly valuing natural systems and investing in biodiversity conservation and restoration. It will hopefully mobilize at least $200 billion annually from both public and private sources, with other estimates ranging between $722 billion and $962 billion annually to halt and reverse biodiversity loss.

Even if this magnitude of financial resources were to be raised (all historic evidence proves this to be unlikely), the scale of biodiversity loss running in parallel with and compounded by climate change will not be solved purely by direct infusions or clever micro-dosing. This problem is not unique to a biodiversity market. Both voluntary and compliance carbon markets as well as global crypto, stock, and all other financial markets have all gone through and continue to go through growing pains – all creating perverse incentives and predatory behavior. Biodiversity markets, however, need to be incubated in a much faster and more deliberate, collaborative, and transparent process before checks are written or pension funds are invested.

It is imperative for the health of ecosystems as well as “consumer” confidence for there to be significant and intentional efforts by all stakeholders to design, map-out, test, verify, and fully appreciate the purpose of these new market-based mechanisms (likely also blended into other financial products and markets such as green bonds or high-integrity carbon credits). . For biodiversity markets to efficiently translate the value of biodiverse ecosystems to the most accurate and equitable global and local economic benefit, they will need to compel stakeholders to participate either through either legal compliance, social incentives, or economic interest. It will also be paramount for stakeholders, particularly those analyzing them for media outlets, to fully understand that it will be an ever-evolving ecosystem needing more sunlight, nutrients, rainfall, patience, and a little bit of luck. Insert “mind-blown” GIF here.

The principle and universal unit of exchange and value in a biodiversity market is a biodiversity credit. It is fundamentally an economic tool to finance inputs, both active and passive, that result in a measurably positive outcome for biodiversity through the creation and sale of a determined unit of biodiversity. In a forest-specific context, it is a unit of conservation and/or restoration of a forest with all the trees, birds, bees, and buttressing inputs necessary for it to thrive, grow, and survive year-to-year. Much like the varied modalities for the creation of value in carbon markets, the complexity and value of biodiversity credits will range wildly based on the integral verifiability of these inputs. This holds true for any market.. A biodiversity credit generated by the restoration of a temperate forest in Appalachia will look significantly different from one derived from the conservation of a parcel in the Amazon, though the aggregate value of their disparate biodiverse parts should produce the same tradable unit.

“An eDNA strand, like me, is the blueprint for buildin’ a living market.”

Therein lies the fundamental problem of commodifying biodiversity itself, but also its inherent consequence: the hyper-complexity of any ecosystem, particularly forests, makes it nearly impossible to accurately quantify, qualify, and compare the intrinsic value of it.  There are many scientific, economic, political, and philosophical minds valiantly attempting to estimate the ecosystem service benefits of everything, such as the American bison in both agriculture and for the mitigation of forest fires, the potential for urban trees to help in crime reduction, or the interaction between particular mycorrhizae (fungi) and tree species in sequestering carbon.

Each organism in a biome has a distinct and hyper-complex interaction with everything else in that biome – from a single bacterial cell to a blue whale – as well as everything downstream including our global sustainable future in seemingly immeasurable ways. A recent study from the IMF estimates that a single forest elephant in the Congo basin creates $1.75 million in its ability to sequester forest carbon as it moves through and forages throughout the rainforest, thinning the density of smaller trees and plants to make way for larger ones to store more carbon, as well as fertilizing them and other carbon sequestering microbes with its fecal matter. The number of data points that could be monitored to measure the quantity, quality, and health of biodiversity and natural flows in each ecosystem are as numerous as the organisms in them.

With inclusion of visual identification and evaluation of mega flora and fauna, there is also environmental DNA (eDNA): the nuclear or mitochondrial DNA released into the ecosystem by an organism detected in cellular or extracellular (dissolved DNA) form. There are firms such as Nature Metrics that have been developing specialized technology and methodologies for the systemization of eDNA as a measure of an ecosystem’s health, thereby creating their own market for biodiversity based on the requirements of Environmental Impact Assessment (EIAs), the Endangered Species Act, and similar regulatory activities across the globe mostly for the development and extractive industries. This, however, does not make it a functional (or cost effective) biodiversity market to conserve and restore nature.

These infinite data points, while valuable (and profitable), can only help to shape a biodiversity market as they are site and biome specific, and need a significant amount of human and technological capacity to collect and produce in a timely manner (eDNA deteriorates in a matter of hours or days). Satellite-monitoring can play an additionally helpful role in the interpretation of this data (particularly if assisted by AI) though, again, this ultimately does not create a universal measure for the health of nature. How then can we derive a verifiable unit of biodiversity let alone attempt to assign it a financial value? This abstract and somewhat philosophical question must be solved to begin to properly allocate resources and action, and human history will prove that mandates and goodwill will not get the job done alone.

Entropy? EntroYou!

While there are many questions and few solutions, here is an exciting, novel, and seemingly cost-effective possibility for forests: entropy. In a recent conversation with Professor Arturo Sanchez-Azofeifa, Director of the Alberta Centre for Earth Observation Sciences at University of Alberta, he explained that this property of ecological thermodynamics (we too had to Ecosia it for a refresher) proves to be around 0.33 in all healthy mature forests regardless of biome. This means roughly that as forests grow toward healthy maturity, having all the necessary biodiversity inputs to do so, it will consume roughly 1/3 of the energy put into it by the sun and nutrient flows. This measurable data point can be derived from sophisticated satellites and LiDAR remote-sensing technology, which is increasingly being made opensource.

Entropy can be analyzed against the quantification of other essential planetary and climatic variables like what is being done by Planet Labs and their peers, as well as further advanced through the use of AI (CleanSkyNet? No?). There are many growing voices for data-sharing and increased transparency of data, as it would reduce marginal costs for the generation of biodiversity credits particularly in the developing world. However, the devil is in the details as well as a considerable about of cost, time, and concerns over equity for indigenous and forest-dwelling communities. The proper identification of minimal viable indicators unique to each biome need to be measured against a universally established Ecosystem Integrity Index (EII), and updated annually to account for climate shifts and variable changes such as El Niño and La Niña. There are several EII such as the Living Planet Index development by WWF, which could be further developed and validated with data-sharing and transparency. This again, is potentially a key role for AI to play, as much of the information is incongruently assembled, stored, and disseminated across a multisectoral landscape with disparate mandates, methodologies, tools, tolerances for error, and unfortunate corruptible influences.


We have a lot of work and an increasingly short amount of time to conserve and restore forest biodiversity. We need to build on previous lessons learned from forest carbon markets, conservation, and reforestation efforts. We need to combine process milestones related to the mitigation of deforestation and forest biodiversity loss, build on ecological milestones, and create adequate performance-based payment schedules that give conservation efforts appropriate financing. All of these efforts need to consult with, fully engage, empower, build the capacity of, employ, and compensate the indigenous and forest dwelling communities that are the primary human stakeholders of this process. What are we trying to say? We need to slow down, but not actually slow down. We lose between 200 and 2,000 species each year. However, we need to slow down the commodification and commercialization of an overly-simplified process – invest time and efforts practically and strategically so that we can do it right and speed up the process of conservation and restoration of biodiversity.


Trey Lord is Senior Technical Manager for US. He can be reached at