The European Union (EU) is set to introduce regulations for ‘nature credits,’ which will compensate farmers and foresters for ecosystem management. This initiative aims to create economic incentives for environmental protection amid a funding shortfall of 37 billion euros ($43 billion) annually needed to safeguard biodiversity.
As public budgets face pressure from various priorities, including defense, the European Commission is exploring alternative funding sources for environmental initiatives. The proposed nature credits would allow companies and countries to purchase credits from land managers who engage in practices that benefit nature, such as tree planting, wetland restoration, or adopting regenerative agricultural methods.
To develop the framework for these credits, the EU will establish an expert group this year. This group will include representatives from governments, farmers, local communities, and scientists. Their task will involve creating methodologies for certifying nature credits and overseeing the market’s governance. A pilot project for the credit system is expected to launch by 2027.
EU environment commissioner Jessika Roswall emphasized that the goal is not to commodify nature but to acknowledge and reward actions that restore and sustain ecosystems. This approach parallels existing carbon credit markets, which allow projects that reduce carbon dioxide emissions to sell credits to companies seeking to offset their emissions. However, the carbon credit market has faced scrutiny due to scandals where some projects did not achieve the claimed environmental benefits.
Recently, Brussels proposed a climate target for 2040, allowing member states to count international carbon credits toward EU goals for the first time. The Commission recognizes the lessons learned from carbon credit markets and is proceeding with caution in developing the nature credits system. This initiative reflects the EU’s commitment to addressing environmental challenges while balancing fiscal responsibilities.
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