Nature Needs Positivity
Exploring GOSH's efforts to encourage nature positive practices and facilitate decentralization in biodiversity conservation
An Introduction In Numbers
50%. According to the World Economic Forum, 50% of the world’s GDP is in some way dependent on biodiversity. What do we mean by biodiversity? Let’s consult an encyclopedia:
“Biodiversity refers to the variety of living species on Earth, including plants, animals, bacteria, and fungi. While Earth’s biodiversity is so rich that many species have yet to be discovered, many species are being threatened with extinction due to human activities, putting the Earth’s magnificent biodiversity at risk.”
That’s 50%, Half, of the world’s money, in some way dependent on something at risk.
But, of course, money isn’t the main concern…
100%. According to common sense, 100% of homosapiens on Earth have their future survival threatened by the destruction of the planet; “Let's be clear,” these words are taken from the novel Jurassic Park, “The planet is not in jeopardy. We are in jeopardy. (...) But we might have the power to save ourselves.”
We agree we can save ourselves, but we make the point that the central way we must do so is through saving the world we live in. And yes, it is at risk, and yes this is a power we do have…
6. According to a study published in December 2022: “The planet has entered the sixth mass extinction” — otherwise known as the Holocene extinction. “Every day, up to 150 species are lost. Every year, between 18,000 and 55,000 species become extinct,” reads a paper by the UN Convention on Biological Diversity. And the paper states very clearly that: “The cause: human activities.”
Whichever way you turn it, it is evident that humans must, simply must, find a way to mitigate the effect our modern existence has on the world’s biodiversity.
Let’s get back to the World Economic Forum…
$711 Billion. The WEF estimates this “is the global biodiversity financing gap annually to reverse biodiversity decline by 2030.” And as the astute observer will surely note: that’s an awful lot of money. According to every economic logic, an awful lot of money needs one of two things: either a universal, intergovernmental agreement on how to spend it without getting bogged down in bureaucracy, or, financial instruments that incentivize private actors to, in the words of a Roman playwright, “spend money to make money.” We have no control over the former. As much as climate activists try, Minister X and President Y have proven themselves lugubriously unresponsive. This leaves us with the latter as, we believe, the best we can do to arrive at a solution to fixing the aforementioned financing gap. We must offer financial incentives for nature positive practices.
But how? What shape do these financial instruments take and how do we ensure they are impactful?
1. We believe Biodiversity credits are one of the most vital financial instruments that backs up meaningful ecological action that is underutilized and under-promoted.
We offer the WEF’s description as a primer: “Biodiversity credits are a verifiable, quantifiable and tradable financial instrument that rewards positive nature and biodiversity outcomes (e.g. species, ecosystems and natural habitats) through the creation and sale of either land or ocean-based biodiversity units over a fixed period.” And we’ll add to that the addendum that biodiversity credits are issued upon a guarantee of biodiversity preservation, restoration, or reclamation. In this regard biodiversity credits share a similar premise in common with another financial instrument used in ecology, namely, carbon credits.
Carbon credits often have “add-on” credit standards, and biodiversity credits are one of these most commonly cited. Called “co-benefits,” they often bear no relation to a credit’s quality. But that’s not how we feel it ought to be. We feel this is all in reverse, that it is in fact carbon that ought to be an add-on to biodiversity, after all carbon deduction is often present in biodiversity issuance due to the prevalence and importance of trees and other flora. Don’t get it twisted, we don’t mean to discount the good done by carbon offsets, but we would be remiss to not also point out that they are often used by buyers as excuses to increase their emissions. They are ‘offsets’ not solutions. In addition, practical questions of efficacy persist—the question of carbon credits’ collective value is one fraught with doubt as to their traceability and transparency and a lack of due diligence. Due to genuine and 'permanent' carbon removal not existing as a prerequisite to carbon credit issuance, those who purchase carbon credits as offsets to their emissions often make little impact in the long term, contributing to the ever increasing emissions despite ever increasing carbon credit sales. We don’t believe the solution is to keep inflating markets around ecology while doing nothing to address the root emissions themselves. The danger with any financial instrument is that it requires growth in perpetuity, so carbon credits, if given an animus, require pollution to increase to be worth more and more. While this could be said of biodiversity, there is a key distinction.
Biodiversity protection through regenerative finance eventually reaches a line of balance. Biodiversity credits are not all permanent, that may be true, but when an actor retires them, it is because they stymie biodiversity somewhere else, meaning they cannot use them again. This acts as an anti-double-spend mechanism. Once retired, these credits become permanent, because some part of them was destroyed somewhere else. There is, however, another opinion: an actor could buy and hold credits, limiting how many of them can be retired, thereby shrinking the amount of biodiversity that can be destroyed. In a cruel twist of fate, Biodiversity credits are what we should really be HODLing (as in, not retiring). The limited supply is literally defined as the mass of the world’s ecosystems. This is why we believe carbon credits that are add-ons to biodiversity have more impact than carbon credits alone, which do not have a physical delineation which makes them permanent.
The earlier we begin the more we protect
Education is a crucial topic in biodiversity proliferation — one of the most groundbreaking subjects in ecology. When anchored around principles of high-integrity, equity and inclusion, and transparency, biodiversity credits can generate benefits for the Indigenous People and local communities - the ultimate custodians and stewards of nature which have safeguarded it for generations. Simultaneously, biodiversity credits can create positive value for business by reducing exposure to physical nature risks, keeping pace with regulatory changes, supporting positive nature outcomes aligned with consumer preferences, and securing access to competitive finance.
We believe that biodiversity credits carry in weight just as much, if not greater, significance as carbon credits do. A vast majority of ecosystems have already been heavily damaged if not destroyed because of human activity. Biodiversity credits exist to preserve ecosystems, and even restore as many of them as possible, and not destroy more. It’s about more than just global warming. What’s the point of going completely carbon neutral if the marine life, flora, fauna, and greenery of the earth is destroyed and covered with skyscrapers and eight lane highways? And how can it be, at all?
The News
We write about all this to preface the announcement of a new partnership between Integrity Certificates and rePLANET to build an end-to-end decentralized pipeline for biodiversity credits, all of which is powered exclusively by GOSH. It offers financial instruments for rePLANET’s nature based credits issuance assuring widely established scientific methodology and decentralization to address the biodiversity crisis
Meet The Players
Integrity Certificates is a nature value chain certification partner which drives market success for nature-positive value chains through fast, reliable validation and certification, tailored to real-world business models and applications. rePLANET is a for purpose company driving large scale ecological restoration and protection through private sector funding through developing high quality carbon projects for investors where the biodiversity benefit is quantified; Biodiversity Led Projects that partially or completely rely on the issuance of Biodiversity Credits; Insetting, which quantifies the impact in terms of carbon emission reduction units and biodiversity gain units for investments for Insetting Projects; and Nature-based Consultancy.
Beginning from funding and going on to peer review, this end-to-end decentralized pipeline for nature based credits, built on GOSH, incorporates widely-established scientific methodologies of peer review of biodiversity projects with GOSH’s transparent, immutable, decentralized version control platform that offers tools for peer review, document management, form construction, git repositories, and more, all running entirely on-chain, available freely. Credits are issued on-chain and logged in a decentralized registry, whose architecture and stakeholder management is ensured by Integrity Certificates. Credits can then be traded on a primary marketplace and secondary market decentralized limit order book exchange for commodities. Finally funds are redistributed from every project to local communities, to facilitate benefit sharing, which, too, is done in a decentralized way.
Buyers don’t need promises, they need guarantees. By eliminating the need to trust an entity, both those working on biodiversity development, and those who provide the vital private sector financing are assured that the results of any project are seen through until the end, and the interests of every actor across the value chain are aligned.
Addressing urgent planetary challenges, the climate emergency and biodiversity crisis, requires a significant increase in scale, and the main, much maligned, obstacle to scale is lack of trust in private and public institutions. The partnership allows rePLANET to leverage decentralization to ensure the integrity of large-scale biodiversity projects across the whole value chain, with scientific peer review verification, and certification at scale, unlocking necessary regenerative financing. As part of the agreement, Integrity Certificates assures the verification, issuance and registry services for rePLANET biodiversity credits. Coverage of rePLANET, in particular its Transylvania Grasslands Project, by the Dow Jones first weekly Biodiversity Market Report, which states that 11,683,980 credits are listed in rePLANET’s entire portfolio of projects, together priced at an estimated total value of $95,015,300 if generated at posted price levels, is evidence of the maturation of the nature capital market. Both in terms of project proliferation, credit issuance, and recognition by established financial institutions.
Only with end-to-end decentralization can we be certain that every step we take to saving the planet’s biodiversity is guaranteed to be reflected in the credits people buy. GOSH offers an immutable attestation that every essential prerequisite to ensuring that the whole pipeline is decentralized, from peer review to issuance and registry, to the market, and finally to the local communities. The solution developed by Integrity Certificates in partnership with GOSH and rePLANET ensures verified biodiversity gains on the blockchain, bringing full integrity and trust to Biodiversity credits, aligned with the market needs for trust and integrity.
Commodity Marketplace
Most current efforts around biodiversity and carbon are project-based, where people associate credits with a particular project, the reason for this being that there is no ubiquitous standard for these credits. Thus, it is not a commodity, thereby preventing wider participation and distribution of this vital resource.
Why is it a vital resource? Well, because ecological action cannot be limited to token gestures or to the goodwill of governments. The human task of protecting the planet should be seen as something akin to a supply chain, ranging from international environmental policy at one end, and local action on the other, and while activity on both of those ends has been covered and encouraged, in between them are a wide range of actors: corporations, small businesses, city planners, telecom service providers, construction products, real estate developers, farmers, and individual consumers, to name a few. How do you provide a comprehensive framework for all of these actors the world over to significantly reduce their environmental impact? Moreover, how do you do that without resorting to calls for an end to the entire human cycle of production and consumption? After all, this cycle has undeniably allowed for increased living conditions for billions of people… The answers to these queries are manyfold and in constant discovery and review. But one of them, we strongly believe, is not only to involve the trade of carbon and biodiversity credits, but to facilitate strict and universal standards for their review, realization, and traceability. That’s exactly what GOSH in partnership with Integrity Certificates and rePLANET is doing.
Peer review of biodiversity credits necessitates specialized expertise, to weigh and assess each project. The natural problem this process faces, then, is very obvious: Specialized expertise doesn’t scale. (This is one of the reasons for the aforementioned failures in biodiversity certification.) And all the while we simply cannot afford for it not to scale, otherwise the planet will continue inching ever closer to the destruction of its environment. Therefore it is imperative, urgent, of paramount importance, that we turn biodiversity credits into commodities that anyone can buy, and participate in efforts to rid the economy of incentives for planetary destruction as much as we possibly can. The prerequisites to this end are:
Universal standards for biodiversity credit peer review; as well as open, transparent, and decentralized scientific peer review tools
Issuance of commodity certification, in this case an on-chain tokenization of biodiversity credits
A global platform for issuance and trade of biodiversity credits as commodities
And financial instruments that would enable markets to be plugged in
Enter GEX, The World’s First Decentralized Commodity Marketplace
What do we mean by secondary marketplace? When we issue credits, they can be issued to anyone, a fund, say, that sponsored development of the area denoted by a credit, but they are not the final destination, rather the final destination are enterprises like gsk who can buy credits on the open market as a commodity, and can use these credits to retire them, or they can resell them. Someone can speculate that the price of these credits can go up, and we build financial instruments on top of that on GEX. What are the financial tools offered and how are they unique? They are not unique to the commodity market, but we have futures and options, and all the other features on the chicago mercantile exchange. Why is it so important that it’s decentralized? How is that better than what we have today? Because of the huge problem with credibility with carbon certifications, which were not decentralized, leading to fraud. We want to eliminate all the points where credits can be tampered with or issued with the wrong methodology. Everything is transparent and immutable. Decentralization is the in-built mechanism that prevents fraud, exactly for the reason blockchain always prevents fraud: you have a well established scientific methodology and issuance process, now what we need is to ensure that this methodology is followed and everyone can check on that, and all the artifacts are available and immutable — so anything we say about any supply chain we can say here — also all the financial instruments should tightly follow the same principle, so we know when, where, and how the money has been distributed, so everything is transparent, because we also want to ensure that the money is really always going to the developer, to the local area, and is distributed in the correct way.
So that any corporation, small business, city planner, telecom service provider, construction product market, real estate developer, farmer, any entity or individual, can use GEX to buy and trade biodiversity credits that they can trust as they would any other commodity, without them needing to be experts or verifying the entire chain of what it is they are buying. In this way, it is no different to buying, for example, aluminium, or nickel, on a commodity market; there, like here, buyers don’t feel the need to verify the entire supply chain of that aluminium or nickel, they take it for granted that a commodity is verified. When we say ‘take for granted’ we don’t imply ignorance, but rather that certain assumptions are always made when trading — wheat, for instance, is always wheat; market actors can buy features on this wheat, on the implicit assumption that whatever the grade of quality of this wheat, it nevertheless conforms to a set of standards around wheat production. And now, biodiversity credits can say the same.
The underlying technology is provided by GOSH, running on the Acki Nacki blockchain; this technology includes decentralized peer review, based on its bespoke and most secure, formally verified implementation of git on-chain; GEX, the marketplace and secondary market exchange; and an issuance platform developed as an App on GOSH.
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