Verified Conservation Areas: A Real-Estate Market For Biodiversity?
A power company in Germany can use forest-carbon from Brazil to offset emissions because carbon offsets are standardized units, but an American city that damages the habitat of endangered species in Arizona has no such option – in part because habitat is as varied and localized as land itself. Frank Vorhies says VCAs are part of the solution.
21 August 2014
Author: Kelley Hamrick, Ecosystem Marketplace
There are markets for silver and there
are markets for houses, and it doesn’t take a genius to see the
difference between the two: an ounce of silver is an ounce of silver,
interchangeable with any other ounce of the same quality, but the value
of a house – or any piece of property – can fluctuate with the color of
Carbon markets resemble silver markets because a ton of carbon dioxide
has the same impact on the environment regardless of whether it comes
from a smokestack in Germany or a forest fire in Brazil. That made it
possible to create a global transparent marketplace designed to support
sustainable development and identify the most efficient ways to reduce
greenhouse gas emissions.
Biodiversity markets, however, have always been local because habitat is
often unique and irreplaceable. A road that damages a bit of sage
grouse habitat in the United States might be able to make good by
restoring or preserving habitat of equal or greater environmental
benefit in the same ecosystem, but even that approach has only a narrow
band of effectiveness. "You can’t offset an extinction,” as Joshua
Bishop of WWF Australia once said.
As a result, most biodiversity banking is confined to the developed
world, which has the resources – if not always the political will – to
balance development with conservation. Most degradation, however, is
taking place in the developing world, which has massive development
needs and little resources for conservation.
That got Frank Vorhies thinking: While we can’t offset biodiversity
loss in one part of the world by saving habitat in another, could we
somehow introduce the elements of transparency and accountability that
work so well in carbon into conservation? And if we do, might this free
up more capital for proactively supporting environmentally valuable
areas, regardless of their location?
These questions, posed in 2008, launched an evolutionary process that
drew on expertise from across the biodiversity spectrum and led to the
formulation of something called "Verified Conservation Areas”, which are
areas with specific conservation needs that have been identified and
specific conservation actions that have been defined. As envisioned,
many will be areas that haven’t yet been degraded, but that are under
some sort of threat that can be identified and then either avoided or
minimized through a process that is audited and transparent.
The areas and their action plans will be listed on the VCA Platform
, much as houses are listed on a real estate board. Nearly 20 VCAs are currently being considered
, and the first one is expected to be approved later this year.
Real Estate and Habitat
Vorhies, who set up the economics and business programs at the
International Union for Conservation of Nature (IUCN), says that to
understand VCAs, you have to look at the real estate market.
"People will tell you what the going rate is for apartments – to rent or
to buy – but each has got a different storyline, a different location,
and that’s what biodiversity is like,” he says. "Every bit of nature,
every landscape on the planet, has a different set of issues and
perspectives and legacies and threats and challenges.”
Intuitively, we all know this, and the conservation community has long
funneled money into protected areas around the world, but that money
hasn’t flowed in a standardized way that makes it possible to determine
its impact, and it rarely finds it way to areas that are environmentally
important but unprotected. Contrast this with carbon, where there are
extensive rules – both guidelines and methodologies – that must be
followed, starting with establishing a baseline to measure any changes
over time, and where the targets are explicitly those areas that aren’t
already protected by law, in the case of forest carbon.
Where’s the Guidance?
"Nobody’s providing practical guidance on area-based biodiversity
assessment,” says Vorhies, explaining that to improve the conservation
status of areas, we need to know baselines on ecosystems and their
services, species and their habitats, and both the conservation and
sustainable use of an area’s biodiversity.
"CI (Conservation International) produced a rapid biodiversity
assessment tool, but it only looks at wild species,” he explains. "CI,
IUCN, FFI (Fauna & Flora International) and others are helping
companies with biodiversity baselines, but these studies are generally
What’s missing, he says, are publicly-available tools for developing
conservation baselines that a critical mass of people can agree on.
2008: Why Reinvent the Wheel?
When the initiative first launched in 2008, the carbon markets were in
full swing. The Clean Development Mechanism (CDM), the first global
trading platform for environmental credits, was backed by the auspices
of the United Nations, and Europe’s compliance emissions trading program
meant that companies were eager to participate.
"So the folks over in the biodiversity world were saying, ‘Look at those
guys in the carbon world – they’re getting a stack of money. Why can’t
we create a Green Development Mechanism (GDM) for biodiversity
Thus the idea of a GDM was born, but it was a name without
structure; and, as Vorhies later learned, that name was as much of a
hindrance as a help in securing finance.
What’s in a Name?
When he approached different countries and investors for support of the
project, Vorhies encountered two types of people: those who liked the
CDM and those who didn’t. On top of that, he found that both camps read
too much into the acronym and, for better or worse, they both saw it as
more akin to the CDM than it was.
"So we had to change the name,” he explains ruefully, "After the 10th
Conference of the Parties to the Convention on Biodiversity (CBD) in
2010, we changed it to the Green Development Initiative, or GDI, to get
rid of the CDM-GDM association because it was driving us nuts.”
2010: Refining and Redefining
That letter change effectively stopped all comparisons between the two,
but the initial problem remained: what would the initiative stand for?
All Vorhies knew at the time was that he didn’t want it to be like the
"It was quite clear that it wasn’t a commodity market; biodiversity
isn’t a commodity,” he says. "The best market we could use was a
property market – to think of biodiversity as something that you would
recognize, trade and indeed celebrate like you do in property
With a property market, such as apartments, each location has unique
attributes: some might be close to public transportation; others may
have a pool on the rooftop; and others might have a view. But aside from
these additional features, all apartments can be described in terms of
size, number of bedrooms, and other constant features.
Similarly, every landscape will have characteristics that can’t be
replicated – just as they will also have basic qualities, like size and
ecosystem, which can be described anywhere around the world. Taken as a
sum of these descriptors, every conservation hectare has a story and a
This holistic approach led to another key difference between the GDI and
CDM, at a time when the latter began to crash in the carbon world. The
initiative wouldn’t be limited to offsets, although offsets could be one
of many options in a developer’s landscape management plan.
"The offset's only there for when you've gotten to the point of
irreparable damage and can't do anything else,” he explains. "But to get
to that point, you have to do a whole lot of good things: like avoid,
minimize, and restore. And that's the stuff that needs to be recognized,
celebrated and financed through making conservation visible.”
Good Deeds Unrewarded
Vorhies spoke from experience, having previously consulted Yemen LNG, a
natural gas company building a new harbor to export gas over a coral
reef ecosystem. The company tried to minimize its impact, and it even
contacted IUCN to review its decision to relocate the coral nearby, away
from where the piers needed to be. Vorhies says they spent large sums
on this innovative technique but received no recognition for their
efforts. With nothing of value to show their shareholders and no
external driver to conform to, the company couldn’t justify its costs.
"Do you see the coral reefs?” asked the company’s environment manager in
2011, explaining his conundrum. "No. Just leave them. We’ve now got to
get on with our business.”
Vorhies believes that if the company had to do a performance report
every year, and had an accountable action plan, that would at least give
the environment manager an opportunity to fundraise inside of the
company for a biodiversity budget. Indeed, they had already spent a
large amount on relocation, and it would not take nearly as much to
manage and monitor the conservation of the corals. The company and its
investors, could also be recognized publically for their in-situ
2013: Visibility, Accountability and Marketability
By now, Vorhies had a solid set of criteria for a biodiversity mechanism
that he thought would work, but the GDI acronym didn’t quite capture
it. "You try to do an elevator speech with the initials GDI – and people
say, that sounds really good but what is it?”
Thus, the Verified Conservation Area (VCA) Platform rose from its
rejected predecessors to become the final name of the initiative – for
now – and it came with the elevator pitch that fit the name.
The elevator pitch is this: the VCA Platform will provide visibility,
accountability and marketability to project areas, but the specific
improvements are up to the project developer. A verified conservation
area may then focus on carbon, water, or any other "benefit” – while,
ideally, the central focus would be a cohesive landscape approach – much
as the landscapes approach that’s evolving in the carbon world, where carbon sequestration is seen as a proxy for good land management
But how do you create a methodology that’s applicable in any ecosystem?
A Wing and a Toolkit
Recognizing this challenge, the VCA Platform instead relies on making
innovation as it goes – by only requiring those involved with the
project on the ground to have quantifiable metrics and present them
publicly and transparently. Armed only with the standard and a basic
toolkit approach, VCA hopes to develop best practice guidelines in this
"When it comes to actually measuring performance, we don’t have any
agreed metrics to do a baseline assessment, let alone performance
measurements,” Vorhies explained.
Instead, the toolkit provides the basic building blocks for designing a
management plan – requiring a baseline assessment, SWOT (Strengths,
Weaknesses, Opportunities, Threats) analysis, and a concrete action
plan. The latter goes onto the VCA Platform, with yearly updates
including independent audits. Every year, an annual performance report
will detail what exactly has happened in the area. Similar to an annual
financial report, the audit will provide transparency about detailed
activities in the area. Investors or donors could then go online, and
look at actual projects before contributing.
2014: Building up the Brand
Despite the long journey from GDI to VCA Platform, the brand still needs
greater recognition. For companies to buy into a new standard, they
need assurance that the standard itself is credible. The VCA Platform
doesn’t have that – yet.
Currently, the platform has started a pilot program and has a mandate
from two government agency donors – the Swiss and the Dutch – to
coalesce all of these ideas into a solid business plan for scaling up
This business plan is now being presented to potential investors in the
platform itself – seed capital to establish a new marketplace for
Already, there are a few protected areas (PAs) on the waiting list; even
though those areas traditionally have a government mandate for
conservation, they see the VCA as a way to state what they are
delivering and as a way to raise funds. There are also areas on the
other end of the spectrum: both private biodiversity restoration areas,
including a rainforest in Brazil and a savannah wilderness in
Mozambique, and projects linked to commodity supply chains or
traditionally suspect sectors like mining and oil and gas. Yemen LNG,
for example, has recently proposed to register its industrial harbor as a
Regarding working with extractive industries, Vorhies says, "I don't see
myself why mining can't be just as responsible as the tourism which we
run in our national parks in the U.S., with all the roads and hiking
trails and the campgrounds and facilities required for tourists. With
mining, they could come into a conservation area for 20-30 years and
leave an endowment; whereas with tourism, when do we get rid of these
people and what do they leave behind?”
Similarly with agriculture, a field is often seen as having "destroyed”
conservation areas, yet Vorhies remains optimistic about their
inclusion. This is evidenced by the growing use of sustainability
standards for various commodities including coffee, cocoa, soy, and palm
oil. The VCA Platform, however, brings a landscape level focus to
sustainable agriculture which is of real interest to major food
companies like Unilever.
"The VCA in that sense is not about recognizing that we've totally
damaged this part of the world and therefore must pay. It's more like
saying this is where we are today and this is what we can do to make it
better… It isn't a conservation story; it's a process of improvement.
That's the idea. We've tried to move the language from compensation to
good practice. If we want to conserve our planet, we need to create a
market for delivering conservation.”
Kelley Hamrick is an Associate in Ecosystem Marketplace's Carbon
Program. She can be reached at firstname.lastname@example.org
Copyright © 2014, The Ecosystem Marketplace, www.ecosystemmarketplace.com
The original article was published here
Tags: Ecosystem valuation | Biodiversity Indicators | Biodiversity policy | Financing biodiversity conservation | Finance Industry | Case Studies
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