Scaling Up Biodiversity‑Positive Incentives

8. Designing effective policy mixes

Abstract

Designing effective policy mixes is key to amplifying the impact of biodiversity-positive incentives and advancing wider environmental and societal objectives. This chapter examines how such incentives interact, highlighting both the potential synergies and risks when they are combined. It underscores the need to embed biodiversity-positive incentives within broader policy frameworks, ensuring coherence to maximise co-benefits and minimise conflicts or inefficiencies. The chapter also explores how development co-operation can support the uptake of biodiversity-positive incentives in developing countries.

Key messages

• Combining biodiversity-positive incentives can enhance participation in environmental markets and improve environmental outcomes. However, it also raises challenges related to additionality, double counting (e.g. the same environmental benefit is counted by multiple actors to offset their adverse impacts), governance and market dynamics, which must be carefully considered and managed.

• Government grants, loans and guarantees can be used to encourage participation in environmental markets and support the development of new ones. However, subsidies must be well targeted and efficient.

• Biodiversity-positive incentives should be integrated into a broader policy mix, including regulatory (e.g. protected areas, standards) and informational instruments (e.g. disclosure, ecolabelling). The right policy approach depends on context and should consider environmental effectiveness, economic efficiency, cost effectiveness, ancillary benefits and equity.

• Broader policy coherence beyond biodiversity is also crucial. Misalignment of fiscal, sectoral and other policies can constrain the potential of biodiversity-positive incentives and lead to inefficiencies, while policy coherence can promote co-benefits across policy areas.

• Biodiversity-positive incentives can promote nature-based solutions for climate mitigation and adaptation. However, to maximise their effectiveness and minimise policy trade-offs, these solutions must consider biodiversity, ecosystem services and societal impacts more consistently.

• Development co-operation can accelerate the expansion of biodiversity-positive incentives in developing countries, helping to mobilise domestic public and private resources. Through grants, loans, and technical assistance, it can support piloting of new incentives, scale up existing schemes and strengthen the broader enabling environment.

When seeking to scale up biodiversity-positive incentives and enhance their effectiveness, policy makers need to consider how these instruments interact with each other and other policies. The previous chapters examined specific examples of biodiversity-positive incentives, opportunities for scaling up and good practices for their design and implementation. This chapter delves into the interactions between instruments and outlines key considerations for designing effective policy mixes. The focus is first on the interaction between biodiversity-positive incentives and opportunities for linking environmental markets. The chapter then examines the relationship between biodiversity-positive incentives and other types of policy instruments, highlighting the importance of policy coherence and the role of data and digital technologies. The chapter concludes with an international perspective, illustrating how development co-operation can play a role in enhancing biodiversity-positive incentives in recipient countries and mobilising new sources of domestic finance.

8.1. Combining environmental incentives

Biodiversity-positive incentives can be combined with each other and with other environmental incentives to enhance their impact. For example, government subsidies can help scale other incentives, such as biodiversity mitigation banking and PES. Additionally, stacking ecosystem services from a single site and selling them in different markets could increase incentives for private landholders to adopt biodiversity-positive actions, improve environmental outcomes and attract private investment. However, combining incentives also raises concerns regarding additionality, double counting and regulatory compliance. This section explores these opportunities and risks, identifying good practices to address them.

8.1.1. Enhancing environmental markets through subsidies: opportunities, risks and good practices

Landowners face significant costs and risks when participating in environmental incentive schemes such as PES and biodiversity mitigation banking. For instance, engaging in direct payment schemes (Chapter 3), and mitigation banking (Chapter 6), entails opportunity costs from foregone income (e.g. lost agricultural production), direct expenses from adopting conservation practices (such as ecosystem restoration activities), and private transaction costs related to contract negotiation, environmental monitoring and reporting requirements.

Moreover, landowners are exposed to performance-related risks. Due to the complexity and unpredictability of environmental systems, they cannot be certain that their actions will generate the expected ecological outcomes required to receive results-based payments or produce valid biodiversity units or credits. Landowners may also face uncertainty regarding demand for the services they provide. These costs and risks can present significant barriers to participation (Chapters 3 and 6), particularly for smaller landowners or those with limited access to capital.

Subsidies can enhance the attractiveness of participating in environmental markets by reducing the financial and performance-related risks for landowners. Grants, for example, can help cover upfront costs associated with preparing land for the provision of ecosystem services, such as the costs of ecological assessments or initial restoration activities, thereby ensuring a pipeline of projects. This may be beneficial when markets are still young. For example, in the UK, providers of nutrient credits and of biodiversity units under the Biodiversity Net Gain scheme (BNG) (Chapter 6) are eligible for public grants, for example through the Natural Environment Investment Readiness Fund, to support project preparation, including ecological advice (DEFRA, 2024[1]). Similarly, US government bodies such as the United States Department of Agriculture have provided funding to support the development of wetland mitigation banks (USDA, 2024[2]). Favourable tax conditions for landholders participating in schemes may further alleviate their financial burden and have been used to promote biodiversity conservation and restoration in various countries (Chapter 3). For example, in New South Wales, Australia, landowners entering into biodiversity stewardship agreements, which is a mechanism for providing biodiversity offsets, receive land tax exemptions (New South Wales, 2020[3]).

Governments could also consider the use of guarantees to suppliers of biodiversity credits or units. For example, the (now closed) Woodland Carbon Guarantee had a GBP 50 million budget to support landowners creating woodland in England that meets the Woodland Carbon Code standards (Woodland Carbon Code, 2024[4]). Successful applicants receive guaranteed income for verified Woodland Carbon Units every 5 or 10 years until 2055/56, with prices set through auction. However, participants can choose instead to sell credits on the open market if the timing and prices was preferable. TNC (2021[5]) posited that a similar approach could be taken to provide guarantees to providers of biodiversity units in England’s BNG scheme (Chapter 6) but noted that care is needed to set the price right so that payments are efficient and do not inadvertently undercut supply or reduce market confidence.

In addition to supporting individual landholders to engage in environmental markets, public subsidies can be used to investigate, design and pilot new biodiversity-positive incentives domestically (and internationally – Section 8.3). Australia, for example, funded a grant programme, the Carbon+Biodiversity Pilot, which informed the development of the Nature Repair Market (Chapter 3). In the UK, the Natural Environment Investment Readiness Fund is not only supporting landholders to develop projects, but also funding research and innovation to develop and pilot new mechanisms that could be used to create domestic credit or unit issuance schemes, such as exploring carbon quantified from marine habitats, hedgerows, soil, rewilding, and biodiversity benefits from freshwater habitats and urban greening (DEFRA, 2023[6]). One beneficiary is the Rivers Trust scheme, which aims to increase water volume in a catchment through environmental interventions that produce “replenish” credits that businesses can buy to offset their water use.

While subsidies can play a key role in supporting environmental markets, care is needed to ensure they are an efficient use of scarce public resources for biodiversity. A primary risk is the lack of additionality – i.e. the possibility that subsidies fund actions that would have been undertaken anyway, without delivering additional biodiversity benefits. Another potential risk is that subsidies crowd out private finance (TNC, 2021[7]) and is used to de-risk private initiatives in lower-risk lower-impact projects (Mazzucato, 2025[8]) (Box 8.1). Governments should seek to reduce these risks, for example through robust screening criteria for eligibility and prioritisation of projects with high additionality potential.

Subsidies should be regularly evaluated and adjusted as needed. As schemes mature, policy certainty strengthens and investor confidence grows, subsidies may become less critical and less cost effective. For example, while some wetland mitigation banking schemes benefit from subsidies, the combination of clear regulations and a well-established market in the US has enabled providers of wetland mitigation credits to attract private investment – initially from angel investors willing to accept higher risk and then later institutional investors – to cover the costs of preparing land for credit sales (Chapter 6).

Box 8.1. Reshaping international financing architecture around the SDGs

“Blended finance, often heralded as a silver bullet, has fallen short: public resources dominate blended deals, often de-risking private initiative in lower-risk, lower-impact projects. To redirect this trajectory, the international financing architecture must be reshaped around the SDGs. First, the SDGs must be placed at the centre of economic planning, supported by robust public investment pipelines. These pipelines enable the public sector to guide and strategically mobilize private investment toward high-impact, mission-driven projects. Second, SDG-anchored conditionalities should be embedded across public-private ventures to ensure concessional public finance actively steers investments, rather than merely subsidizing private returns. Third, mechanisms to socialize risks and rewards must be introduced, reinvesting returns to scale transformative SDG financing. Finally, while mobilizing additional financing remains critical, an equally pressing challenge lies in effectively utilizing significant public funds already available in budgets and development banks.”

Source: Extract from (Mazzucato, 2025[8]), Reimagining financing for the SDGs: From filling gaps to shaping finance. Policy Brief, No. 170. Special Issue.

8.1.2. Stacking in environmental markets

Biodiversity-positive incentives reward the production of ecosystem services (e.g. habitat provision, pollination, water filtration, carbon sequestration) or practices that are assumed to maintain or enhance these services. Often a single site or intervention generates multiple ecosystem services, yet not all these services are promoted or rewarded by a biodiversity-positive incentive. Stacking is one approach for rewarding the provision of multiple ecosystem services. It presents opportunities for scaling up biodiversity-positive incentives but also risks and challenges, which are discussed below.

The different ways of packaging ecosystem services

Ecosystem services can be packaged for sale in two main ways: bundling and stacking. Bundling is when multiple ecosystem services from the same piece of land are sold together as a single unit of trade or credit to one buyer, with one payment covering the combined services. The services included in the bundle may be explicitly measured (e.g. carbon stored) or implicitly represented by a general proxy like the area of forest or wetland. Stacking is when overlapping ecosystem services provided from the same area are measured separately and packaged into different credit types (von Hase and Cassin, 2018[9]). Each service can be sold individually to different buyers, with separate payments received for each service.

There are three types of stacking (Cooley and Olander, 2011[10]; von Hase and Cassin, 2018[9]):

• Horizontal stacking: A project applies different management practices at two or more non-overlapping areas and receives a single payment for each practice. For example, a landholder could get paid for carbon credits generated from forest management in upland areas of their property while receiving payments for nutrient credits generated from restoring forest buffer along a stream on another part of their property.

• Vertical stacking: Overlapping ecosystem services provided from the same location (e.g. habitat provision, carbon sequestration and water filtration) are measured and separately packaged into different credit or unit types, which together form a stack. The different credit or unit types can then be sold individually to different buyers with separate payments received for each set of services. In “true stacking” (stacking with unbundling), each credit or unit type is considered independent and payments can be received for all credit and unit types.

  An alternative approach to “true stacking”, is stacking without unbundling, which considers credits/units to be linked. In this approach, a service provider can choose which component credit/unit to sell (e.g. depending on market prices) but must retire the other associated credits/units.

• Temporal stacking: Vertical stacking but with payments for different ecosystem services occurring at different times. For example, payments could be made at the beginning of a reforestation project based on the carbon benefits provided, while habitat services which may take time to mature are paid for later.

Bundling and stacking both have pros and cons (Table 8.1). Here the focus is on stacking, as it is typically more contentious and can involve combining various incentives, such as biodiversity offset credits, payments for ecosystem services, biodiversity-positive subsidies, water quality credits and carbon credits. These credits can be stacked in numerous ways, sometimes combining regulatory and voluntary markets.

Table 8.1. Bundling and stacking: Benefits and drawbacks

	Opportunities and advantages	Risks and disadvantages
Single-service schemes	Eliminates risk of double counting Easier (but still challenging) to illustrate additionality Lower transaction costs Less burdensome from a governance perspective	More likely to result in unaccounted trade-offs among ecosystem services May not provide sufficient incentive for landholders to participate May lead to adoption of suboptimal activities due to financial constraints
Bundling	Can increase economic incentives for land managers by aggregating benefits Lower transaction costs than for stacking as only involves one scheme Eliminates risk of double counting associated with stacking Can promote consideration of multiple ecosystem services and their linkages, rather than prioritising one at the expense of another, helping to efficiently deliver on biodiversity, climate, water and other objectives	Buyers may not be willing to pay extra for the bundle of ecosystem services Accurately assigning single credit unit to diverse services with different attributes requires complex set of methods Different ecosystem services may be subject to different regulatory policies
Stacking	Can increase economic incentives for land managers to participate by rewarding multiple benefits Can incentivise higher-quality environmental practices Depending on best time to sell ecosystem services, stacking gives land managers better negotiation space	Risk of double counting and lack of additionality, which is particularly concerning when offset (compensation) credits are involved Requires co-ordinated measurement and accounting approaches Aggregate benefit from ecosystem depends on sellers’ capacity to negotiate remuneration and number of ecosystem services for which interested buyers can be identified Stacking may incur higher transaction cost for sellers Sellers may not benefit from whole range of services as benefits depend on availability of buyers

Source: (Cooley and Olander, 2011[10]), Stacking Ecosystem Services Payments: Risks and Solutions, https://nicholasinstitute.duke.edu/sites/default/files/publications/stacking-ecosystem-services-payments-paper.pdf (Lankoski et al., 2015[11]), Environmental Co-benefits and Stacking in Environmental Markets 10.1787/5js6g5khdvhj-en; (von Hase and Cassin, 2018[9]), Theory and Practice of Stacking and Bundling Ecosystem Goods and Services: A Resource Paper, https://www.forest-trends.org/bbop_pubs/stacking_and_bundling.

Potential benefits of stacking

Rewarding service providers for the provision of multiple ecosystem services by stacking can increase the financial reward for participants, better covering the opportunity costs of providing ecosystem services. This could increase participation, for example in direct payment schemes and the provision of biodiversity offset sites. For example, allowing farmers in the US Corn Belt region to stack water quality credits with carbon credits increases their participation in carbon offset markets (Lankoski et al., 2015[11]). Stacking could also help attract private investment in biodiversity projects because projects with greater – and diverse – revenues may have a more attractive risk-return profile for investors.

In addition to increasing participation and private investment, stacking can improve the overall environmental benefits provided by a single project site. First, stacking incentivises landholders to account for and deliver multiple ecosystem services, as opposed to maximising a single service (Asbjornsen et al., 2022[12]; von Hase and Cassin, 2018[9]). This is important because synergies and trade-offs can occur across ecosystem services. Single ecosystem service schemes often ignore the ecological interactions between ecosystem services, leading to unintentional losses in ecosystem services and, as a result, unsustainable outcomes (Nalle et al., 2004[13]). They also fail to capitalise on the economies of joint ecosystem service production for synergistic ecosystem services (Asbjornsen et al., 2022[12]).

Second, stacking may incentivise higher-quality environmental practices that are not economically feasible through a single payment scheme. For example, the Corn Belt study illustrated that some potential land-use practices to generate carbon offsets are profitable without water quality offsets (e.g. shifting from conventional tillage to no till in some contexts) but others such as reduction of nitrogen application and the establishment of green set-asides only becomes profitable if participants also benefit from water quality offsets (Lankoski et al., 2015[11]).

Third, horizontal stacking can encourage landholders to manage their entire property for environmental objectives. This could incentivise biodiversity protection and restoration activities at a landscape scale. Evidence shows that successful restoration initiatives are typically those that are delivered at scale or strategically located, with a mosaic of different habitats (Gawecka and Bascompte, 2023[14]; Hillman, Lundquist and Thrush, 2018[15]; Lawton, 2010[16]). By incentivising practices that promote different ecosystem services across an entire property, horizontal stacking could help promote such a mosaic of healthy habitats and enhance ecological resilience. Moreover, it can potentially increase the diversity, quantity and quality of environmental benefits produced by a single property and capture synergistic outcomes. For example, riparian buffers along agricultural fields can filter pollutants and enhance water quality, while adjacent forest patches provide habitat for pollinators that boost crop yields.

Risks, challenges and key considerations

While stacking offers potential benefits, it also poses risks related to additionality, double counting and regulatory compliance. These risks are more prominent for vertical stacking, particularly “true stacking”, and are less of a concern for horizontal stacking. Ensuring additionality (i.e. that the environmental benefits exceed what would have occurred without the financial incentive) is already a challenge for many biodiversity-positive incentives. As outlined earlier, lack of additionality in payment schemes is inefficient, while lack of additionality in offset/compensation schemes can lead to net environmental harm. Vertical stacking could make it even more difficult to verify additionality, leading to a situation where the same biodiversity and ecosystem service outcomes are paid for more than once.

A closely linked issue is that of double counting. Double counting happens when stacked credits represent overlapping or redundant ecosystem services (Cooley and Olander, 2011[10]). For example, a wetland restoration project might generate wetland credits that already include improvements to water quality. If those credits are sold to one buyer, and separate water quality credits from the same project are sold to another, the same water quality benefit is being used twice. This means two different environmental impacts are being offset by a single ecological gain, which can lead to an overall decline in environmental outcomes (Cooley and Olander, 2011[10]). This issue manifested in North Carolina, US, when wetland and stream ecosystem services were first sold as wetland credits (i.e. offsets) and a decade later as water-quality improvement credits, despite a lack of additional environmental improvements (Program Evaluation Division, 2009[17]). The state has since changed its rules around bundling and stacking to no longer allow temporal stacking (TNC, 2021[7]).

A third, and related issue, is that of measurement and accounting. Measurement and accounting for biodiversity and ecosystem services present significant challenges in incentive-based schemes like PES and biodiversity offset. Common proxies tend not to reflect the full range or quality of services provided, making it difficult to assess what is being delivered or offset. This can lead to incomplete and asymmetrical accounting where there is a difference between the services accounted for at an impact site and at an offset site (von Hase and Cassin, 2018[9]). While stacking could increase the measurement and accounting of multiple services – and therefore provide a more comprehensive view of losses and gains – it can also accentuate accounting challenges (von Hase and Cassin, 2018[9]). For example, the incentive for comprehensive accounting is high for the ecosystem service provider seeking to maximise their revenues but low for those impacting ecosystem services who wish to reduce the cost of their compensatory measures, unless strict requirements are in place (Cooley and Olander, 2011[10]).

Furthermore, as stacking can involve different schemes, actors, jurisdictions and a large number of environmental credit types accounting can become increasingly complex, increasing private transaction costs and the administrative costs of schemes (Curtis et al., 2021[18]; Duguma et al., 2018[19]). The importance and challenges of accounting is apparent when considering stacking of credits that involve compensatory measures. A biodiversity offset typically intends to compensate for a range of impacts on an ecosystem, even if these are not all measured individually and accounted for explicitly. In other words, the offset site should provide a bundle of services. Any other credit type stacked with such a bundle will likely overlap with one of the services that is included in the bundle leading to double counting (Cooley and Olander, 2011[10]). While robust measurement and accounting remains important, vertical stacking without unbundling can reduce the risk of double counting (Box 8.2).

Box 8.2. Vertical stacking without unbundling – the Willamette Partnership

The Willamette Partnership's Counting on the Environment (COTE) initiative, launched in 2009 by a coalition of US public, non-profit, and private stakeholders, aimed to pilot the trading of multiple environmental credit types. The scheme included four credit categories: wetlands, water quality, upland prairie, and salmonid habitat. An accounting and measurement protocol was developed to define eligibility and additionality criteria, incorporating methods to reconcile environmental credit revenues with public subsidies. The protocol allowed multiple credit types to be generated from the same management activity, with the number of credits proportionately reduced when credits of another type were sold. For example, the sale of wetland credits from a given plot of land would result in a proportional reduction of species credits from the same plot. This approach provides landowners with the flexibility to sell the most valuable credits at any given time while safeguarding against double counting.

Source: (Poulton, 2014[20]), Stacking of Multiple Environmental Credits: An Alberta Discussion Paper (August 28, 2014). http://dx.doi.org/10.2139/ssrn.2560656; (von Hase and Cassin, 2018[9]), Theory and Practice of Stacking and Bundling Ecosystem Goods and Services: A Resource Paper.

Underpinning the above challenges is the complexity of the ecological dynamics underpinning ecosystem service provision. Understanding how different ecological structures, processes and functions operate and inter-relate – and how they respond to management practices – is fundamental for ensuring ecological integrity of vertical stacking approaches (von Hase and Cassin, 2018[9]), which inherently depend on identifying discrete and divisible functions and services of an ecosystem (Robertson et al., 2014[21]).

Stacking ecosystem service units or credits can also influence market dynamics, such as unit/credit supply and, consequently, prices. For example, a service provider that can sell multiple types of units or credits may accept a lower price for each credit than if they only provided one service, given their overall payment would still be higher than when they were selling only one unit type (von Hase and Cassin, 2018[9]). Furthermore, by increasing participation rates, certain credits may become oversupplied, particularly if environmental markets are local and small, with limited demand for credits (Lankoski et al., 2015[11]). Consequently, equilibrium credit prices and service providers’ credit revenue would decrease. It has also been shown that environmental markets are linked, so credit price changes in one market will shift credit supply in another market, thus affecting equilibrium prices (Lankoski et al., 2015[11]).

Good practice lessons

While there has been considerable interest in its potential, there appears to be little experience with vertical stacking. Lack of transparency and explicit accounting of biodiversity and ecosystem service outcomes and payments complicate efforts to identify stacking in practice (von Hase and Cassin, 2018[9]). Nevertheless, the theory and empirical evidence identify a range of potential benefits and risks of stacking. They also highlight lessons to consider when combining positive incentives to reward stacked ecosystem services.

First, clear rules and guidance on stacking – whether it is permitted and under what conditions – are fundamental for providing clarity and certainty to stakeholders and promoting environmental integrity. Where well-considered rules and guidance are lacking, the risk of non-additionality, double counting and low stakeholder confidence may increase. Such rules should be underpinned by the best available knowledge on the environmental, economic and governance implications of stacking. While some schemes or jurisdictions have clear rules – some preventing or allowing stacking – many have vague or no explicit rules. Furthermore, sometimes rules are inconsistent across jurisdictions and schemes. For example, Australia’s national Biodiversity Offset Policy prohibits stacking of carbon and biodiversity credits, while several states have their own policies formally enabling it (TNC, 2021[7]). The UK provides an example of a recent effort to clarify rules and guidance around environmental markets, issuing guidance (DEFRA and Natural England, 2023[22]) which appears to allow true stacking and establishing a Nature Markets Framework that sets out principles around e.g. additionality, bundling and stacking with a view to grow nature markets by ensuring clarity and confidence.

Second, robust measurement, accounting and additionality tests are vital for ensuring the environmental integrity of environmental markets, particularly when stacking is involved. Measurement and accounting practices should be based in sound science (Robertson et al., 2014[21]). While they should seek to be as comprehensive as possible, they must also remain practical if markets are to function effectively (von Hase and Cassin, 2018[9]). Co-ordination across different schemes, agencies and jurisdictions may become increasingly important for ensuring accurate accounting of ecosystem service provision and impacts (Cooley and Olander, 2011[10]).

Third, transparency and regulatory oversight have an important role for biodiversity-positive incentives. Achieving transparency in stacking ecosystem service units and credits can be more challenging due to their complexity, involving multiple policies, markets, and stakeholders. Relevant project information and units could be made publicly accessible via credible registries and multi-credit tracking tools to prevent double counting, issuing, or selling (von Hase and Cassin, 2018[9]). Additionally, robust, independent validation, monitoring, and verification processes will be needed of baselines, impacts, and outcomes. Transparent reporting will strengthen ecosystem service markets by fostering trust and certainty.

8.2. Integrating biodiversity-positive incentives into a wider policy mix

Biodiversity-positive incentives are essential for halting and reversing biodiversity loss. However, economic incentives alone are insufficient; they must be part of a broader policy mix that includes regulatory measures and informational tools (Table 8.2). The challenge for policy makers is to select the appropriate policy response to address a specific biodiversity issue and to design effective policy mixes to halt and reverse biodiversity loss. Each policy instrument has its strengths and weaknesses. For instance, taxes can be a cost-effective way to regulate the use of natural resources in certain contexts. However, where ecosystems are at risk of reaching irreversible tipping points, quantity-based measures – such as protected areas, strict quantity standards or tradable permits – may be more effective  (Dasgupta, 2021[23]). This is due to the challenge posed by setting a tax rate sufficiently high to ensure the aggregate pollution or resource extraction is within safe environmental limits whilst also avoiding over-regulation (Dasgupta, 2021[23]). The choice of policy instrument depends on several factors, including a country’s international commitments (e.g. the Kunming-Montreal Global Biodiversity Framework), the specific environmental objectives, the state of the ecosystem, and the social, political, and economic context. There is no universal solution; policy makers must carefully tailor their approach to the issue and context at hand evaluating their policies against key criteria (Box 8.3).

Table 8.2. An overview of biodiversity policy instruments

Regulatory (command-and-control)	Economic (biodiversity-positive incentives)	Information and voluntary instruments
Spatial planning and zoning	Taxes and fees	Voluntary corporate commitments
Protected areas and other restrictions on access and use	Subsidies	Lender requirements (investor performance standards)
Environmental assessment requirements (e.g. Strategic Environmental Assessment and Environmental (and Social) Impact Assessment	Payments for ecosystem services	Voluntary industry guidelines
Environmental licensing and permitting requirements	Biodiversity offsets	Nature-related disclosure
Environmental quality, quantity and design standards	Tradable permits	Ecolabels and certification
	Reform of environmentally-harmful subsidies
	Non-compliance fines

Note: These categories may not be mutually exclusive and alternative categorisations exist e.g. EIA can also be considered to be a regulatory instrument or an informational instrument. Disclosure is an informational instrument but could be considered to be regulatory if it is mandated.

Source: Elaborated by the Authors.

Box 8.3. Criteria for evaluating policies

Policy makers can use various criterium to help select he most appropriate policy response and to evaluate policy responses to facilitate adaptive management. Key criteria for policy makers to consider include:

• Environmental effectiveness: the capacity of instruments to achieve the stated biodiversity objective.

• Economic efficiency: balancing costs and benefits of policy intervention (i.e. marginal value of environmental improvement is higher than or equal to marginal costs of generating the improvement).

• Cost effectiveness: costs of achieving the stated biodiversity objective. The cost-effective option is the cheapest option that achieves the objective.

• Ancillary benefits and costs: effects of the instrument on other policy objectives. For example, subsidies to restore grasslands and wetlands to provide biodiversity habitat can also support climate mitigation and adaptation.

• Equity (distributional effects): the fairness of the distribution of economic costs and benefits among different parts of society (e.g. producers, landholders, consumers, taxpayers etc).

Source: Adapted from (OECD, 2010[24]), Guidelines for Cost-effective Agri-environmental Policy Measures, Summary and good policy practices, 10.1787/9789264086845-11-en.

For an effective policy response, policy makers must also consider the interaction between the different policy instruments for biodiversity. Regulatory, economic and informational instruments can work to complement and reinforce each other. Some instruments are inherently linked. For example:

Complementary

• While protected areas are critical for safeguarding areas of particular importance for biodiversity and ecosystem functions and services, complementary measures such as biodiversity-positive taxes and subsidies can help promote ecological connectivity, biodiversity and ecosystem service provision across production landscapes.

• While effective at improving fish stocks, ITQs (section 5.2.1) alone are insufficient to address the broader ecological impacts of fishing, which requires complementary measures such as gear and area restrictions and fishing seasons (OECD, 2017[25]).

Reinforcing

• Tax incentives can reinforce efforts to achieve protected area targets by encouraging private actors to commit their land to the protected area network as is done in South Africa (Chapter 3).

• Robust spatial planning based on sound biodiversity data can reinforce the avoidance stage of the mitigation hierarchy by steering development away from the most sensitive areas (OECD, 2024[26]). This can help to reduce the need for – and ensure the appropriate use of – biodiversity offsets. Additionally, spatial planning can be used to identify strategic sites for delivering biodiversity offsets (Chapter 6).

• Water quality standards have been shown to drive demand for PES programmes from corporates in some contexts, while due diligence and nature-related disclosure could function similarly for PES (Chapter 3) and biodiversity credit in-setting (Chapter 7).

Inherently linked

• Tradable permits are inherently linked to quantity or quality standards. They involve a regulatory cap, with trading introduced to increase economic efficiency (Chapter 5).

• Fees are often leveraged on permits and license (e.g. fishing permits) (Chapter 4).

Broader policy coherence across environmental, sectoral, fiscal, trade and other policy areas is also critical. By ensuring well-aligned policies, policy makers can minimise trade-offs, while seeking co-benefits and synergies. The ability to scale up biodiversity-positive incentives may be constrained by other policy areas. For example:

• Environmentally harmful subsidies in sectoral, fiscal and trade policies can increase the financial attractiveness of unsustainable activities, making it more difficult for biodiversity-positive incentives and the activities they promote to compete. It also sends conflicting policy messages and leads to inefficiencies (zu Ermgassen et al., 2025[27]).

• Infrastructure regulations and technical standards which are typically designed with grey infrastructure in mind can constrain the role of natural infrastructure approaches (OECD, 2020[28]). Adjusting these regulations to better recognise ecosystem services, as Peru has done, can create opportunities for scaling up incentives for biodiversity (Chapter 3).

• Tax policy can disincentivise private actors’ participation in voluntary environmental markets. For example, in the UK1, agricultural land qualifies for agricultural property relief from inheritance tax, but farmers feared losing this benefit if they committed their land to voluntary environmental schemes. In response, the UK Government launched a public consultation, forming a joint HM Treasury and HMRC working group with industry to clarify tax rules for ecosystem service markets. From April 2025, agricultural property relief applies also to land under environmental agreements with government bodies or approved organisations (HM Treasury, 2024[29]).

While trade-offs and conflicts occur, there are also potential co-benefits and synergies that can be harnessed across biodiversity and other policy areas. Promoting biodiversity can help achieve various policy objectives, with Sustainable Development Goals 14 and 15 being described as “multipliers of co-benefits across the goals” (SCNAT, 2021[30]). One example of this is climate change mitigation and adaptation (Section 8.3). Similarly, efforts to achieve other policy objectives can deliver benefits for biodiversity. For example, the Danish pesticide tax which has helped reduce pesticide use in the country was promoted and earned support based on human health concerns (Chapter 4). Aligning policy objectives can help justify and garner support for biodiversity-positive incentives while also ensuring efficient use of resources.

Designing and implementing effective policy mixes for biodiversity also requires a strong enabling environment, including robust data, institutional capacity, political commitment, and inclusive stakeholder engagement. Reliable environmental and economic data are essential for evidence-based policy making, enabling policy makers to assess effectiveness, trade-offs, and unintended consequences, and is facilitated through technological innovation (Box 8.4). Adequate institutional capacity, including skilled staff, technical expertise, and well-resourced agencies, is crucial for policy design, enforcement, and monitoring. Institutional coordination across government agencies, sectors, and levels of governance helps align policies, reduce conflicts and enhance policy coherence. Meaningful stakeholder engagement, particularly with local communities and Indigenous peoples, is vital to ensuring policies are socially equitable, contextually appropriate, and benefit from traditional knowledge. Political will is also key, as ambitious environmental policies often require overcoming vested interests and short-term economic pressures (OECD, 2017[25]).

Box 8.4. Harnessing data technologies and innovation

Biodiversity-positive incentives rely on high-quality data, yet data collection and processing often present significant challenges due to their complexity and cost. Digital technologies and other innovations offer solutions to overcome these barriers by enhancing biodiversity assessment, improving the targeting of measures, reducing transaction costs, and strengthening monitoring, transparency, and evaluation.

While biodiversity policy has long benefited from digital technologies such as earth observation, recent advances in such technologies, and the emergence of new technologies, have vastly expanded opportunities to enhance data collection and processing. Tools like drones, sensors, satellites, environmental DNA (eDNA), and bioacoustic recordings are revolutionising data collection, while AI-enabled solutions facilitate more efficient data processing, analysis, and management. In particular, the growing availability of highly granular spatial data on land-use practices and ecosystem characteristics – combined with AI – enables the design and implementation of more spatially targeted, monitorable, and dynamically adaptive policies.

Moreover, digitalisation can streamline administrative processes, lowering the transaction costs of biodiversity schemes while enhancing transparency and accountability. For example, Terrasos, a biodiversity mitigation bank developer in Colombia, has partnered with Regen Network to strengthen the integrity, credibility, and effectiveness of biodiversity credit markets through distributed ledger technology (DLT). This approach anchors project data in a public, immutable format, offering developers, clients, indigenous groups, and local communities reliable, real-time access to verified project information – a key step towards building trust and scaling biodiversity finance.

While digital innovations offer opportunities to enhance the scale and effectiveness of biodiversity-positive incentives, harnessing these opportunities demands new skills and capacities among land users, advisory services and programme administrators. Evaluation of capacity needs and targeted measures to address these may therefore be necessary. Furthermore, care should be taken to avoid new digital divides by ensuring equal access to technologies and capacity development opportunities.

Source: (Bennets et al., 2024[31]), Strengthening the Integrity, Credibility and Effectiveness of Terrasos Biodiversity Units through the Application of Distributed Ledger Technology; (Hedberg and Sipka, 2020[32]), Improving biodiversity: How can digitalisation help?; (OECD, 2023[33]), Policies for the Future of Farming and Food in the European Union (Regen Network, 2024[34]), Terrasos and Regen Network: Pioneering Transparent, Scalable Markets for Biodiversity Credits Through Distributed Ledger Technology, https://medium.com/regen-network/terrasos-and-regen-network-pioneering-transparent-scalable-markets-for-biodiversity-credits-7fb23b38979a.

8.3. Aligning biodiversity and climate change incentives

Climate change and biodiversity loss are inextricably linked global challenges. Climate change is the fastest-growing driver of biodiversity loss. It has already altered species distributions, disrupted ecological interactions, and caused mismatches in migration, breeding, and food availability (IPBES-IPCC, 2021[35]). Climate trends and extremes are pushing ecosystems closer to critical thresholds, heightening the risk of irreversible damage (Harris et al., 2018[36]). As climate change accelerates, biodiversity is increasingly threatened, with cascading effects on ecosystem services that underpin human well-being (Nunez et al., 2019[37]; Smith et al., 2018[38]).

At the same time, healthy ecosystems are vital for carbon sequestration and resilience to climate-related hazards, such as floods, drought and intense heat. Measures to conserve, sustainably use and restore forests, grasslands, wetlands, and agricultural lands could reduce CO₂-equivalent emissions by 23.8 gigatonnes by 2030, with half of this potential being cost-effective (under 100 USD per tonne of CO₂-e) (Griscom et al., 2017[39]). Such measures to protect and restore ecosystems also enhance society’s resilience to climate-related hazards, such as floods and landslides. For example, Florida’s mangroves prevented an estimated USD 1.5 billion in damages from Hurricane Irma (Narayan, S. et al., 2019[40]).

Given their close links, there are significant opportunities to align goals to combat climate change, desertification and biodiversity loss through biodiversity-positive incentives, including by promoting nature-based solutions (NbS) (Box 8.5). Biodiversity-positive incentives such as direct payment schemes and taxes can contribute simultaneously to these goals by, for example, incentivising forest and wetland restoration (Box 8.6), sustainable forest management, green set asides on agricultural land, and reduction of nitrogen-based fertilisers and other potential greenhouse gas pollutants. However, for biodiversity-positive incentive schemes to deliver on their objectives it is increasingly important to account for risks and uncertainties associated with climate change in the design and implementation of schemes, and to promote adaptive management (Hily, Dreschler and Wätzold, 2017[41]; MacDonald, 2016[42]; Ranjan, 2020[43]).

Box 8.5. Nature-based solutions

The 5^th United Nations Environment Assembly (UNEA 5.2) defined nature-based solutions (NbS) as “actions aimed at protecting, conserving, restoring, and sustainably managing natural or modified terrestrial, freshwater, coastal, and marine ecosystems, which address social, economic and environmental challenges effectively and adaptively, while simultaneously providing human well-being, ecosystem services, resilience and biodiversity benefits”.

Ecosystem-based approaches to climate change adaptation and mitigation, and disaster risk reduction, as referred to in the Convention on Biological Diversity, are examples of nature-based solutions.

Source: (CBD, 2018[44]), CBD/COP/DEC/14/5 Climate Change. https://www.cbd.int/doc/decisions/cop-14/cop-14-dec-05-en.pdf; (UNEA, 2022[45]), United Nations Environment Assembly 5.2, Resolution 5: Nature-based Solutions for Supporting Sustainable Development. https://www.unep.org/resources/resolutions-treaties-and-decisions/UN-Environment-Assembly-5-2.

While potential co-benefits and synergies exist, without careful planning land-based measures seeking to deliver climate benefits could harm biodiversity. Voluntary carbon market projects and government initiatives to achieve carbon emission reductions have often involved monoculture plantations or afforestation in non-native areas, which tend to be detrimental to biodiversity (i.e. not aligned to the UNEA definition of NbS) (Lewis et al., 2019[46]; Seddon et al., 2020[47]). When seeking climate benefits through land-based measures, it is crucial to consider biodiversity and societal impacts to highlight potential trade-offs and more efficiently address interlinked crises (Donatti et al., 2022[48]; Seddon et al., 2020[47]). Explicitly considering biodiversity is not only important for protecting nature but also for ensuring the long-term viability of mitigation and adaptation projects. This is because diversity of plant and animal species is fundamental for ecosystem resilience, and therefore the ability of ecosystems to continue providing mitigation and adaptation benefits in the future (Hutchison et al., 2019[49]; Oliver et al., 2015[50]).

Land-based mitigation projects or NbS can benefit from robust principles and standards underpinned by ecological and social science to help ensure projects are designed to minimise trade-offs and maximise co-benefits (Donatti et al., 2022[48]; Seddon et al., 2020[47]). In the voluntary carbon market, for example, the Climate, Community and Biodiversity Standards2 were developed to evaluate land management projects from the early stages of development through implementation. For nature-based solutions more generally, the IUCN Global Standard for Nature-based Solutions (IUCN, 2020[51]) provides users with 8 Criteria and 28 indicators for 1) assessing the extent to which a proposed solution qualifies as an NbS and identifying what actions can be taken to further strengthen the robustness of the intervention, using a scale of strong, adequate, partial and insufficient; 2) enabling purposeful design of a solution to adhere to the criteria and indicators, while building in adaptive management mechanisms to maintain the relevance and robustness of the solution through its lifespan.

Biodiversity-positive incentives can also seek co-benefits through explicit bundling and stacking approaches (Section 8.1.2). Accounting for and rewarding multiple ecosystem services can reduce the risk that one ecosystem service is optimised without considering its impacts on other ecosystem services.

Box 8.6. Tackling biodiversity loss and climate change with subsidies: Canada’s 2 Billion Trees Programme

The Government of Canada launched the 2 Billion Trees programme in 2020 to contribute to its commitments to addressing climate change and biodiversity loss. Led by Natural Resources Canada's Canadian Forest Service (CFS), up to CAD 3.2 billion will be invested in tree planting efforts across Canada from 2021-31. The funding will be used to support provinces, territories, third-party organizations (including for-profit and not-for profit) and Indigenous organizations in meeting the target. The programme allows for afforestation, reforestation and forest habitat restoration. It emphasises the role of forest biodiversity for underpinning resilience and the importance of planting the right tree in the right place. The programme also supports the planting of shrubs together with trees because of their multiple benefits, even though shrubs do not count towards the 2 billion target. Although afforestation projects can be financed, they cannot occur on land where other ecosystems provide unique habitats for plants and animals. Furthermore, the scheme emphasises additionality, which means funds will not be issued to help organisations meet their legal obligations or to regenerate forests as part of business-as-usual commercial forestry. In addition, funds are not issued if they replace or displace other secured funding sources. The scheme is supported by targeted research with an aim of grounding the programme in the latest science and it is advised by an external Nature Based Climate Solutions Advisory Committee. Since 2021, 2BT-funded projects have planted over 220 species at more than 2 900 site across Canada. 90% of these projects planted more than 2 types of trees. Two-thirds of the 179 projects implemented to date planted more than 6 types of trees. Funding has gone to non-profit (32%), for-profit (16%), indigenous led (20%), municipal or local government (17%), provincial or territorial government (8%), conservation authority (4%) and federal government (3%) projects.

Source: (Government of Canada, 2023[52]), 2 Billion Trees Commitment, https://www.canada.ca/en/campaign/2-billion-trees.html.

8.4. Scaling biodiversity-positive incentives with development co-operation and finance

While biodiversity-positive incentives are typically implemented domestically, development co-operation can play a critical role in increasing their use and effectiveness. Development co-operation has various entry points for supporting biodiversity-positive incentives, from piloting new incentives to scaling up existing ones. Through strategic interventions development co-operation can support domestic efforts to achieve not only KMGBF Target 18 but also Target 19 (Box 8.7), while also harnessing synergies and co-benefits with climate policy (Section 8.3) and efforts to combat desertification. Development co-operation can also facilitate lesson-sharing and the application of global good practices and standards for scaling up biodiversity-positive incentives.

Development finance for biodiversity is provided by a range of actors, including bilateral providers (e.g. DAC members, South-South and Triangular co-operation providers, development agencies and bilateral development banks) and multilateral institutions (e.g. multilateral development banks and environmental funds such as the World Bank and the Global Environment Facility) (OECD, 2024[53]). Private finance is another important component of development co-operation and includes philanthropic funding and private finance mobilised by public development interventions.

Box 8.7. Finance for finance: International finance as a lever for domestic resource mobilisation

Target 19 of the Kunming-Montreal Global Biodiversity Framework includes two quantitative goals: increasing financial resources from all sources to USD 200 billion by 2030 and, as part of this, increasing total biodiversity-related international financial resources, including official development assistance (ODA), to developing countries to at least USD 30 billion per year by 2030 (and at least USD 20 billion per year by 2025). Strategic increases in development finance will enable countries not only to achieve the USD 30 billion target but also to help mobilise the necessary domestic public and private resources in developing countries to attain the USD 200 billion target. Supporting recipient countries to develop and extend biodiversity-positive incentives and other biodiversity finance solutions (such as those identified in BIOFIN countries national finance plans) could be an effective way of promoting domestic resource mobilisation.

Source: Authors.

Development finance encompasses direct funding (typically grants and concessional loans) and capacity development, as well as leveraging mechanisms (e.g. guarantees) to mobilise private finance. It may be delivered directly to recipient governments or through intermediaries such as intergovernmental organisations and non-governmental organisations. Development finance and capacity development, including technical assistance, are important levers for enhancing the use and effectiveness of biodiversity-positive incentives by supporting domestic efforts to:

Identify, evaluate and prioritise opportunities to scale up and improve the use of biodiversity-positive incentives: Development finance can assist countries to determine any gaps or weaknesses in their existing policies and financing for biodiversity, and to identify measures to address these. This is perhaps most clearly illustrated through the example of the Biodiversity Finance Initiative (BIOFIN) of the UNDP.

• Eight DAC members3 fund BIOFIN to support country efforts to reduce the current global biodiversity funding gap by increasing funding, reducing funding needs and using existing resources more effectively. BIOFIN has developed a five-step methodology broken into three stages. In the diagnostic stage, countries develop a Policy and Institutional Review (step 1); a Biodiversity Expenditure Review (step 2); a Financial Needs Assessment (step 3). In the development stage, countries design a Biodiversity Finance Plan (step 4) to prioritise financing solutions, which include instruments such as fees, subsidies and biodiversity offsets. In the implementation stage these financing solutions are executed (step 5) (UNDP, 2024[54]). Work is now underway to identify biodiversity harmful subsidies, with the view to repurposing them (UNDP, 2024[54]) (Section 3.3.2).

Pilot, design and establish biodiversity-positive incentives at national or subnational level: Development finance can provide the necessary capital and expertise to support the early-stage development of incentives by covering initial costs, reducing financial uncertainty, and demonstrating proof of concept. Public finance could also help de-risk private investment, making investment in PES (Chapter 3), mitigation banking (Chapter 6) and biodiversity credits (Chapter 7) and more attractive to businesses and financial institutions. Furthermore, development finance institutions can support partner countries to establish the legal, regulatory and institutional frameworks necessary for incentives to operate. Examples include:

• GEF has a long history of supporting PES dating back to the 1990s (STAP, 2010[55]). From 2018-2022 alone, GEF provided over USD 1 billion across more than 90 projects that include PES (GEF, 2023[56]). Typically, GEF resources are used to help establish legal frameworks and funds for PES; to facilitate consultations among buyers and sellers; and to provide seed money for early payments to sellers.

• The Inter-American Development Bank and Multilateral Investment Bank, supplemented with private financing, provided Terrasos with the necessary concessional financing and patient non-concessional financing to establish Colombia and Latina America’s first habitat bank (i.e. biodiversity mitigation bank) in 2017. Additionally, non-governmental organisations such as The Nature Conservancy and Terrasos provided technical assistance to the Ministry of Environment and Sustainable Development to improve the legal framework to enable and regulate habitat banking, which resulted in the adoption of Resolution 1051 in June 2017 (IDB, 2021[57]).

• The groundwork for South Africa’s fiscal innovation to incentivise landholders to establish Nature Reserves or National Parks was supported by development finance provided by the GEF (Chapter 3).

• The French Development Agency (Agence Française de Développement) launched its Blue Carbon Facility in 2024. This EUR 6 million fund intends to be a testing ground for new blue carbon credit financing mechanisms for biodiversity protection projects with the aim of promoting the conservation and restoration of coastal ecosystems (AFD, 2024[58]).

• Luxembourg supports a Global Trust Fund on Sustainable Finance Instruments to accelerate the adoption of sustainable financial instruments, including green bonds and debt-for-nature swaps (GGGI, 2023[59]).

Improve and scale up existing biodiversity-positive incentives: International development finance can also be used to enhance the design, effectiveness, and reach of existing incentives. By funding research, monitoring, and adaptive management, these financial sources can help refine biodiversity-positive incentives to ensure they deliver measurable conservation outcomes while incorporating stronger social and environmental safeguards. This includes improving transparency, ensuring fair benefit-sharing, and integrating the perspectives of Indigenous peoples and local communities to enhance social inclusion and equity. Additionally, development finance can provide the necessary capital to expand successful mechanisms across new ecosystems, sectors, or regions. Examples include:

• The Latin America Water Fund Partnership created in 2011 pooled funding from the Inter-American Development Bank (IADB), the FEMSA Foundation, the Global Environment Facility (GEF), International Climate Initiative (IKI) and The Nature Conservancy (TNC) to scale up watershed PES (and other initiatives) across Latin America (OECD, 2019[60]; TNC, 2025[61]).

• The World Bank Group is providing technical assistance to Costa Rica to extend the PES approach to marine ecosystems (World Bank, 2025[62]).

• The Global Fund for Coral Reefs’ strategy includes a focus on expanding sustainable finance mechanisms, including PES (e.g. blue carbon) and biodiversity credits. The GFCR is a public-private partnership driven by more than 60 member states, UN agencies, financial institutions, philanthropies, impact investors, and conservation organisations (GFCR, 2025[63]).

Strengthen the broader enabling environment for biodiversity positive incentives: More generally, development co-operation can support a sound enabling environment for establishing and scaling effective biodiversity-positive incentives by addressing structural barriers, improving data, developing local capacities and fostering political and public support. For example, efforts to strengthen property rights through legal reforms and land tenure clarification can facilitate the establishment of mechanisms such as PES and offsets. Additionally, robust biodiversity data are crucial for designing and implementing environmentally- and cost-effective incentives. Development co-operation can enhance monitoring systems, invest in natural capital accounting, and support open-access biodiversity databases. Examples include:

• Since 2021, the Swedish International Development Co-operation Agency is funding an extensive programme for capacity building in Eastern Africa for an Inclusive Green Economy (IGE). The programme trains civil servants from Ethiopia, Kenya, Uganda, Rwanda and Tanzania on economic instruments for transitioning towards an IGE. It is delivered by the EfD Global Hub at the University of Gothenburg, Sweden, in close collaboration with the EfD Centres in Eastern Africa (EfD, 2023[64]).

• Development finance to UNDP BIOFIN is supporting efforts by the South African National Biodiversity Institute to build capacity on biodiversity offsets by training the developer/applicant; the Environmental Assessment Practitioner (EAP); the biodiversity specialist responsible for determining impact significance of a given application; the biodiversity offset specialist responsible for determining offset design and implementation requirements; the competent authority who needs to assess and monitor the development application; as well as parties that may be responsible for implementing the biodiversity offset in line with the National Biodiversity Offsets Guideline that was published in 2023 (UNDP, 2024[65]).

• As part of the EU- and Italy-funded Programa de Asistencia Técnica DRET II (AICS, 2025[66]), the Italian Agency for Development Cooperation and FAO supported local authorities, civil society organisations, and rural communities in Colombia through small grants for pilot projects. These focused on preparing for the deployment of PES schemes regulating water resources in key biodiversity areas across four departments. Activities included baseline studies, analysis of ecological, economic, and social aspects, and prioritization of rural properties. Although modest in scale, the pilots helped overcome key barriers for small producers to access incentives and laid the groundwork for operational PES schemes – some of which have already led to proposals for regional public funding.

Development finance can also contribute to efforts to scale up and increase the effectiveness of biodiversity offsets by adopting and applying biodiversity performance standards to development projects in their broader portfolio of development assistance. Performance standards such as IFC’s Performance Standard 6 and the Inter-American Development Bank’s Environmental and Safeguards Compliance Policy are an important tool for promoting application of the mitigation hierarchy and no net loss or net gain goals through biodiversity offsets (Chapter 6).

References

[58] AFD (2024), Three Measures to Step Up Biodiversity Mainstreaming in Finance, https://www.afd.fr/en/actualites/three-measures-step-biodiversity-mainstreaming-finance.

[66] AICS (2025), DRET II: Technical Assistance Programme for Public Policies in the Agricultural Sector in Colombia, https://bogota.aics.gov.it/es/dret/ (accessed on  June 2025).

[12] Asbjornsen, H. et al. (2022), “Multi-Targeted payments for the balanced management of hydrological and other forest ecosystem services”, Forest Ecology and Management, Vol. 522, p. 120482, https://doi.org/10.1016/j.foreco.2022.120482.

[44] CBD (2018), CBD/COP/DC/14/5 Climate Change, https://www.cbd.int/doc/decisions/cop-14/cop-14-dec-05-en.pdf.

[10] Cooley, D. and L. Olander (2011), Stacking Ecosystem Services Payments: Risks and Solutions, https://nicholasinstitute.duke.edu/sites/default/files/publications/stacking-ecosystem-services-payments-paper.pdf.

[18] Curtis, T. et al. (2021), Stacking and Bundling: Background Paper, https://irp.cdn-website.com/82b242bb/files/uploaded/Background%20Paper%20Stacking%20and%20Bundling%20Wo-0001.pdf.

[23] Dasgupta, P. (2021), “The Economics of Biodiversity: The Dasgupta Review”, https://assets.publishing.service.gov.uk/media/602e92b2e90e07660f807b47/The_Economics_of_Biodiversity_The_Dasgupta_Review_Full_Report.pdf.

[1] DEFRA (2024), Combining environmental payments: biodiversity net gain (BNG) and nutrient mitigation, https://www.gov.uk/guidance/combining-environmental-payments-biodiversity-net-gain-bng-and-nutrient-mitigation.

[6] DEFRA (2023), Nature markets: A framework for scaling up private investment in nature recovery and sustainable farming, https://assets.publishing.service.gov.uk/media/642542ae60a35e000c0cb148/nature-markets.pdf.

[22] DEFRA and Natural England (2023), Guidance: Combining environmental payments: biodiversity net gain (BNG) and nutrient mitigation, https://www.gov.uk/guidance/combining-environmental-payments-biodiversity-net-gain-bng-and-nutrient-mitigation.

[48] Donatti, C. et al. (2022), “Ensuring that nature-based solutions for climate mitigation address multiple global challenges”, One Earth, Vol. 5/5, pp. 493-504, https://doi.org/10.1016/j.oneear.2022.04.010.

[64] EfD (2023), Inclusive Green Transformations, https://www.efdinitiative.org/programs/inclusive-green-transformations/initiatives/inclusive-green-economy-ige-program.

[14] Gawecka, K. and J. Bascompte (2023), Habitat restoration and the recovery of metacommunities, Cold Spring Harbor Laboratory, https://doi.org/10.1101/2023.02.10.527972.

[56] GEF (2023), Payments for Ecosystem Services, https://www.thegef.org/sites/default/files/documents/2023-02/GEF_Payments_ecosystem_services_2023_02.pdf.

[63] GFCR (2025), Global Fund for Coral Reefs: About, https://globalfundcoralreefs.org/about/.

[59] GGGI (2023), Global Trust Fund on Sustainable Finance Instruments, https://www.greenpolicyplatform.org/initiatives/global-trust-fund-sustainable-finance-instruments.

[52] Government of Canada (2023), 2 Billion Trees Commitment, https://www.canada.ca/en/campaign/2-billion-trees.html (accessed on  July 2024).

[39] Griscom, B. et al. (2017), “Natural climate solutions”, Proceedings of the National Academy of Sciences, Vol. 114/44, pp. 11645-11650, https://doi.org/10.1073/pnas.1710465114.

[36] Harris, R. et al. (2018), Biological responses to the press and pulse of climate trends and extreme events, Nature Publishing Group, https://doi.org/10.1038/s41558-018-0187-9.

[32] Hedberg, A. and S. Sipka (2020), Improving biodiversity: How can digitalisation help?, https://www.epc.eu/content/PDF/2020/Digitalisation_v3.pdf.

[15] Hillman, J., C. Lundquist and S. Thrush (2018), “The Challenges Associated With Connectivity in Ecosystem Processes”, Frontiers in Marine Science, Vol. 5, https://doi.org/10.3389/fmars.2018.00364.

[41] Hily, E., M. Dreschler and F. Wätzold (2017), “Cost-effectiveness of conservation payment schemes under climate change”, Working Papers - Cahiers du LEF 2017-01, Laboratoire d’Economie Forestiere, AgroParisTech-INRA, revised Jan 2017..

[29] HM Treasury (2024), Consultation outcome: Taxation of environmental land management and ecosystem service markets, https://www.gov.uk/government/consultations/taxation-of-environmental-land-management-and-ecosystem-service-markets.

[49] Hutchison, C. et al. (2019), “Author Correction: Effect of diversity on growth, mortality, and loss of resilience to extreme climate events in a tropical planted forest experiment”, Scientific Reports, Vol. 9/1, https://doi.org/10.1038/s41598-019-53618-z.

[57] IDB (2021), Impact Investment for Biodiversity Conservation: Cases from Latin America and the Caribbean, https://publications.iadb.org/en/impact-investment-biodiversity-conservation-cases-latin-america-and-caribbean.

[35] IPBES-IPCC (2021), Scientific outcome IPBES-IPCC Co-sponsored Workshop on Biodiversity and Climate Change.

[51] IUCN (2020), Guidance for using the IUCN Global Standard for Nature-based Solutions: first editions, IUCN, International Union for Conservation of Nature, https://doi.org/10.2305/iucn.ch.2020.09.en.

[11] Lankoski, J. et al. (2015), “Environmental Co-benefits and Stacking in Environmental Markets”, OECD Food, Agriculture and Fisheries Papers, No. 72, OECD Publishing, Paris, https://doi.org/10.1787/5js6g5khdvhj-en.

[16] Lawton, E. (2010), Making Space for Nature: a review of England’s wildlife sites and ecological network. Report to DEFRA, https://webarchive.nationalarchives.gov.uk/ukgwa/20130402170324/http:/archive.defra.gov.uk/environment/biodiversity/documents/201009space-for-nature.pdf.

[46] Lewis, S. et al. (2019), “Restoring natural forests is the best way to remove atmospheric carbon”, Nature, Vol. 568/7750, pp. 25-28, https://doi.org/10.1038/d41586-019-01026-8.

[42] MacDonald, E. (2016), “Promoting Resilience to Climate Change in Australian Conservation Law: The Case of Biodiversity Offsets”, UNSW Law Journal, Vol. 39/4.

[8] Mazzucato, M. (2025), Reimagining financing for the SDGs: From filling gaps to shaping finance. Policy Brief, No. 170. Special Issue..

[13] Nalle, D. et al. (2004), “Modeling joint production of wildlife and timber”, Journal of Environmental Economics and Management, Vol. 48/3, pp. 997-1017, https://doi.org/10.1016/j.jeem.2004.01.001.

[19] Namirembe, S. et al. (eds.) (2018), Packaging ecosystem services: bundling and stacking concepts and their implications for rewarding land managers, World Agroforestry Centre (ICRAF), https://apps.worldagroforestry.org/sites/default/files/Ch11%20Bundling%20and%20Stacking_ebookB-DONE2_0.pdf.

[40] Narayan, S. et al. (2019), Valuing the Flood Risk Reduction Benefits of Florida’s Mangroves, http://www.conservationgateway.org/SiteAssets/Pages/floridamangroves/Mangrove_Report_digital_FINAL.pdf.

[31] Network, T. (ed.) (2024), Strengthening the Integrity, Credibility and Effectiveness of Terrasos Biodiversity Units through the Application of Distributed Ledger Technology, https://www.terrasos.co/wp-content/uploads/whitepaper-biodiversity-units-tokenization-dlt-english.pdf.

[3] New South Wales (2020), Biodiversity Conservation Trust, https://www.bct.nsw.gov.au/sites/default/files/2020-09/BCT%20Landholder%20guide%20on%20taxation%20issues%20-%20Sep%202020.pdf.

[67] NMBA (2015), The Case for Tax Clarification for Mitigation Banks, https://www.finance.senate.gov/imo/media/doc/National%20Mitigation%20Banking%20Association%202.pdf.

[37] Nunez, S. et al. (2019), “Assessing the impacts of climate change on biodiversity: is below 2 °C enough?”, Climatic Change, Vol. 154/3-4, pp. 351-365, https://doi.org/10.1007/s10584-019-02420-x.

[53] OECD (2024), Biodiversity and Development Finance 2015-2022: Contributing to Target 19 of the Kunming-Montreal Global Biodiversity Framework, OECD Publishing, Paris, https://doi.org/10.1787/d26526ad-en.

[26] OECD (2024), Mainstreaming Biodiversity into Renewable Power Infrastructure, OECD Publishing, Paris, https://doi.org/10.1787/357ac474-en.

[33] OECD (2023), Policies for the Future of Farming and Food in the European Union, OECD Agriculture and Food Policy Reviews, OECD Publishing, Paris, https://doi.org/10.1787/32810cf6-en.

[28] OECD (2020), “Nature-based solutions for adapting to water-related climate risks”, OECD Environment Policy Papers, No. 21, OECD Publishing, Paris, https://doi.org/10.1787/2257873d-en.

[60] OECD (2019), Making Blended Finance Work for Water and Sanitation: Unlocking Commercial Finance for SDG 6, OECD Studies on Water, OECD Publishing, Paris, https://doi.org/10.1787/5efc8950-en.

[25] OECD (2017), The Political Economy of Biodiversity Policy Reform, OECD Publishing, Paris, https://doi.org/10.1787/9789264269545-en.

[24] OECD (2010), “Summary and good policy practices”, in Guidelines for Cost-effective Agri-environmental Policy Measures, OECD Publishing, Paris, https://doi.org/10.1787/9789264086845-11-en.

[50] Oliver, T. et al. (2015), “Declining resilience of ecosystem functions under biodiversity loss”, Nature Communications, Vol. 6/1, https://doi.org/10.1038/ncomms10122.

[20] Poulton, D. (2014), “Stacking of Multiple Environmental Credits: An Alberta Discussion Paper”, SSRN Electronic Journal, https://doi.org/10.2139/ssrn.2560656.

[17] Program Evaluation Division (2009), North Carolina General Assembly. Report No 2009-04.

[43] Ranjan, R. (2020), “Protecting warming lakes through climate-adaptive PES mechanisms”, Ecological Economics, Vol. 177, p. 106782, https://doi.org/10.1016/j.ecolecon.2020.106782.

[34] Regen Network (2024), Terrasos and Regen Network: Pioneering Transparent, Scalable Markets for Biodiversity Credits Through Distributed Ledger Technology, https://medium.com/regen-network/terrasos-and-regen-network-pioneering-transparent-scalable-markets-for-biodiversity-credits-7fb23b38979a.

[21] Robertson, M. et al. (2014), “Stacking ecosystem services”, Frontiers in Ecology and the Environment, Vol. 12/3, pp. 186-193, https://doi.org/10.1890/110292.

[30] SCNAT (2021), “Achieving the SDGs with Biodiversity”, Vol. 16/1, https://api.swiss-academies.ch/site/assets/files/17299/sdg_factsheet_e_def.pdf.

[47] Seddon, N. et al. (2020), “Understanding the value and limits of nature-based solutions to climate change and other global challenges”, Philosophical Transactions of the Royal Society B: Biological Sciences, Vol. 375/1794, p. 20190120, https://doi.org/10.1098/rstb.2019.0120.

[38] Smith, P. et al. (2018), “Impacts on terrestrial biodiversity of moving from a 2°C to a 1.5°C target”, Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences, Vol. 376/2119, p. 20160456, https://doi.org/10.1098/rsta.2016.0456.

[55] STAP, G. (2010), Payments for Environmental Services and the Global Environment Facility: A STAP Documentary, https://stapgef.org/sites/default/files/2020-02/Payments-for-Environmental-Services-and-GEF.pdf?null=.

[61] TNC (2025), Latin America, https://www.nature.org/en-us/about-us/where-we-work/latin-america/stories-in-latin-america/water-funds-of-south-america/.

[7] TNC (2021), Biodiversity Net Gain in England: Developing Effective Market Mechanisms, https://www.nature.org/content/dam/tnc/nature/en/documents/TNC_BiodiversityNetGain_England.pdf.

[5] TNC (2021), Biodiversity Net Gain in England: Developing Effective Market Mechanisms. Discussion Paper., https://www.nature.org/content/dam/tnc/nature/en/documents/TNC_BiodiversityNetGain_England.pdf.

[54] UNDP (2024), BIOFIN 2024 Workbook, https://www.biofin.org/sites/default/files/content/knowledge_products/Workbook-2024-Compressed.pdf.

[65] UNDP (2024), Develop training modules on biodiversity offsets and the national biodiversity offset policy: Request for Proposal, https://procurement-notices.undp.org/view_negotiation.cfm?nego_id=15646.

[45] UNEA (2022), United Nations Environment Assembly 5.2. Resolution 5: Nature-based Solutions for Supporting Sustainable Development, https://www.unep.org/resources/resolutions-treaties-and-decisions/UN-Environment-Assembly-5-2.

[2] USDA (2024), USDA Invests $7 Million in Eight Wetland Mitigation Banking Projects to Support Producers and Protect Wetland Ecosystems, https://www.nrcs.usda.gov/news/usda-invests-7-million-in-eight-wetland-mitigation-banking-projects-to-support-producers-and.

[9] von Hase, A. and J. Cassin (2018), Theory and Practice of Stacking and Bundling Ecosystem Goods and Services: A Resource Paper, https://www.forest-trends.org/bbop_pubs/stacking_and_bundling.

[4] Woodland Carbon Code (2024), Woodland Carbon Guarantee, https://woodlandcarboncode.org.uk/woodland-carbon-guarantee.

[62] World Bank (2025), Costa Rica and World Bank pioneer Marine Environmental Payments to protect mangroves and coastal livelihoods, https://www.worldbank.org/en/news/feature/2025/06/05/costa-rica-banco-mundial-pioneros-uso-pagos-servicios-ambientales-marinos-proteger-manglares (accessed on 1 July 2025).

[27] zu Ermgassen, S. et al. (2025), “The current state, opportunities and challenges for upscaling private investment in biodiversity in Europe”, Nature Ecology & Evolution, Vol. 9/3, pp. 515-524, https://doi.org/10.1038/s41559-024-02632-0.

Notes

← 1.  Similar concerns about tax and the importance of tax clarity have also been raised in the context of US Mitigation Banking (NMBA, 2015[67]).

← 2.  https://www.climate-standards.org/ccb-standards/.

← 3.  Belgium, Canada, European Union, Flanders (Belgium), France, Germany, Norway and the United Kingdom.