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The scientific community has demonstrated that restoring and rewilding oceanic islands is not simply a possibility—it’s achievable. Yet this work requires constant innovation, creativity, and optimism to keep pushing forward. And on a more basic level, it requires funding.
We spoke to Martin Schaefer, who is the director of the Fundacíon Jocotoco, a regional conservation organization based in Ecuador whose work focuses on the Galapagos Islands, and John Verdun, a professor from Duke University who studies marine conservation policy and tropical fisheries. They sat down to talk about some new and exciting strategies to help pay for the hard work of conservation.
Among these methods are biodiversity credit systems—not to be confused with carbon credits, which companies can buy to offset their carbon footprint—which are essentially financial assets that enable companies to invest directly in biodiversity projects around the world. There are also venture capital funds dedicated to conservation investments. But ultimately, without ordinary people—consumers—holding companies to account, these efforts could still falter.
Let’s begin with biodiversity credits. Can you explain what biodiversity credits are, how they work, and why they could be a game changer for conservation?
Martin Schaefer: Biodiversity credits are a kind of financial mechanism for companies to invest in restoring ecosystems. They can also help measure the percentage change in biodiversity you see in any given area and track how well a conservation strategy has worked by economically quantifying the impact. They’re different to carbon credits, because they are less to do with avoiding emitting carbon or offsetting carbon emissions, and instead are to do with contributing to the conservation or restoration of ecosystems, whether those ecosystems are in Miami or the Galapagos. To help us quantify our conservation outcomes, we use an academic peer-review system to instill trust.
It’s good marketing: You can show you are having a real impact.
Say we have a terrestrial biome, where we have frogs, birds, insects and they all respond in much the same way to protection and increase rapidly in numbers and in species richness, in abundance. Now, we can record the biodiversity using acoustic records—so recording the biome before and after the conservation work—or taking DNA samples. That data can then be exported to communities and regional conservation programs to scale up the work. Then, using the peer review process, we can get a fast, cost-effective, and trustworthy review and issue biodiversity credits based on the review.
My work is focused on the restoration of Floreana, an island in the Galapagos. We’re eradicating invasive species on that island and that will allow us to reintroduce 13 different extinct species. In turn, that will lead to the issuance of 2.75 million biodiversity credits. If you assume a moderate credit price of $12 per credit, then you can fund that ecosystem’s recovery over the next 20 years.
There have been some difficulties with the way that blue carbon credits, which focus on removing carbon from coastal ecosystems, have been issued and used. Can you highlight how biodiversity credits are different to carbon credits?
John Verdun: Before we had biodiversity credits, we had carbon credits. One of the big problems with the carbon credits is that applying them to, say, coastal ecosystem restoration for example, has been hard to measure and hard to monitor. And, importantly, many of these places are used by the local communities, and so that adds a layer of complexity because it begs the question of who you deal with when you buy and sell these credits.
It’s been 15 years or more now that blue carbon credits have been a thing, but the market is still relatively small. In turn, there’s just a small amount of money that’s been transferred for coastal ecological restoration in return for these carbon credits. There’s some optimism that that is changing, particularly as the price of carbon has started to go up. For example, Pakistan is doing the largest blue carbon project in the world involving 350,000 hectares of mangroves. Another example is a project I worked on in Guinea Bissau, where the Parks Authority sold 50,000 or so hectares of mangroves-worth of carbon credits to protect the mangroves.
But blue carbon projects also take a long time. To do them right, as it were, where you are measuring and monitoring and verifying the actual carbon that’s being sequestered and stored and you’re also ensuring that the local communities who depend on these ecosystems aren’t getting locked out of them … that takes a lot of upfront time and work. And it’s much more expensive than, say, putting solar panels on a building or other kinds of carbon credits. You need quick, flexible capital to develop these projects and build the market—and blue carbon just doesn’t have that.
So are biodiversity credits easier to benchmark?
Schaefer: Yes, I think because they are tangible and more transparent than what you can achieve easily in the carbon market. And also, they’re useful because everyone is moved by the creatures we can see. The sharks, the turtles, you name it—that provides an emotional connection, and that connection is what will ultimately help drive the corporate world to invest in restoration. It’s good marketing: You can show you are having a real impact.
How have big data and AI innovations transformed this space? Is that going to be key to moving the needle on investment in biodiversity?
Schaefer: Yes I think so, because we suddenly have data available we couldn’t have 20 years ago or even 10 years ago. And with AI, we can screen and sort the data in seconds. We can also now monitor threats like poaching, boats, or fishing activities remotely and in real-time, and that really allows us to act quickly to preserve our work. The same is true of tracking biodiversity. I believe that in five years, we will know so much more about biodiversity than we do now thanks to these tools.
And does that help us know who needs to pay to conserve biodiversity?
Verdun: That’s the hope. One of the things we have been trying to figure out is who is benefitting the most from using the oceans and where is the money going? We’ve had to do some sleuthing to be able to identify the economy that’s linked to the ocean directly, to be able to say who is using it as an operating space, or as an input to their production. And then you start to see whether there are “big fish” in the ocean economy, or the blue economy as some call it. And it turns out, just as in the global economy, we have a few key players driving most of the economy in the ocean, too.
About 60 percent of all revenue tied to the ocean is generated by 100 companies. So the question then becomes, how do we tap into that capital? One way, I think, is through better reporting and transparency to really show these companies how dependent they are on the ocean and that it’s in their best business interest to preserve it.
Do you think that more positive marketing—the benefits of being seen to make a difference, the fear of being seen to be a force for bad by consumers or investors—could drive more action by companies?
Verdun: It’s important to consider where the most leverage lies. So consumer sentiment is definitely one factor—consumers generally want to know that their fish was sustainably caught, or that the product they are using doesn’t somehow do damage to the ocean. And institutional investors can also have leverage, whether its banks setting new agreements for getting a loan that makes ocean restoration a priority, or setting new rules for companies trying to list on a stock exchange. These are all pinch points that could make these companies start to think it’s a financial risk not to invest in biodiversity.
Are there any sectors of the economy that you think are more likely to see that reputational risk than others?
Schaefer: I think the cruise ship industry has a huge reputational risk at stake. We’ve seen a lot of cruise liners become interested in investing part of their profits back into conservation—and for good reason, because they want to profit from tourists interested in visiting beautiful coastal areas. And there’s the seafood market, where, especially in luxury seafood, there is some reputational risk at stake. I think when there’s a consumer watching you, there’s more risk in not investing in biodiversity.
Another initiative that’s picking up popularity is debt-for-nature swaps, and in particular, a debt-for-nature swap negotiated by Ecuador which saw it create a new “Galapagos Bond.” Can you tell us how Fundacíon Jocotoco has benefited from this? What are the potential for these debt-for-nature swaps?
Schaefer: It has helped us tremendously. With the support of Re:wild, we lobbied for it and our government partners at the Ministry of Environment were all for it, but it never went anywhere until we had that mechanism of the debt-for-nature swap which brought the Ministry of Finance on board. A key thing we did was work with communities so that they were the ones asking for that change, and building up that social pressure made the government work and move forward on it.
In general, debt-for-nature swaps have huge potential because we know a lot of the countries at the frontline of climate change are in debt, and some have a risk of default. So as a creditor, if there is that risk then you want to get something out of your investment in return.
Verdun: These big deals take time, but we need them to get to the kind of scale we’re talking about. We hear about individual island restoration, but how do we go to thousands of islands, or tens of thousands of islands? We need these big deals. But at the same time, the communities that depend on these places have to be front and center. That doesn’t mean we have to flood them with money, but it does mean making sure they’re in the driver’s seat and they are the ones being empowered and it isn’t something being done to them, so to speak.
When there’s a consumer watching you, there’s more risk in not investing in biodiversity.
When it comes to venture capital there has been progress in the creating of funds that are funneling money through to really innovative companies trying to help the world achieve net-zero targets. Do you think it’s going to become harder to funnel money through to firms supporting biodiversity projects?
Verdun: Even if we don’t have regulations saying no net biodiversity loss or even we need net positive biodiversity, I hope the fear of those types of rules coming in will spur large corporations and more agile, small companies to be investing in biodiversity. I think getting out in front can be an incentive in itself.
Schaefer: We need regulations, but we can’t always rely on governments because they tend to be slow. So agile philanthropy can help kickstart processes, but I’m a big believer in private-private partnerships or private-public partnerships because you get the speed and innovation.
How crucial is it that the development banks (banks committed to investing in development to build economic resilience and sustainability around the world) remain the linchpin of this, as a backstop essentially?
Schaefer: They are crucial. But in Ecuador, for example, we get funding from development banks but it can be frustratingly slow. It can take years to come but we need to act now. We need different solutions.
Let’s turn to grant applications. Applying for a grant can be like a job in itself and it slows down so many of these projects. Do you think that the grant process is unnecessarily limiting?
Schaefer: In some cases they are very limiting, but not all. For example, Re:wild is very flexible with how we use the funding we get from them. But other institutions want to know the name of each employee that will be funded and exactly what they will be doing, and so we lose that flexibility. We need to be able to move fast.
What do you think is the best way for conservation projects to really harness the funds available to them? Philanthropists pledge millions, governments pledge billions—there are potential trillions of dollars available for this work.
Verdun: I don’t know if there is a single best way. But I am optimistic. We have a better idea now of where the big pools of cash are in the ocean economy and who the biggest corporate players are. The clearer and more transparent the ocean economy becomes, the more that accountability can lead to those companies investing in biodiversity credits, and investing in restoration at a much larger scale. The health of the ocean is material to them. It is a financial risk for them. They need to invest in it to keep doing their business. 
Lead image: Somphob Boonlaim / Shutterstock
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