A rare catalyst for a wicked problem

The emerging commercial market for biodiversity credits has forced a renewed interest in achieving consensus on a biodiversity unit. Economic theory predicts that without a standardized unit of measure, market mechanisms will not achieve accurate price discovery, leading to confusion that will reduce buyer demand (8). But many people flocking to work on this problem are surprised at the need, why hasn’t the unit problem already been solved?

The answer is that the biodiversity unit is what paradox theory and policy science call a ‘wicked problem’, a problem that cannot be resolved through science or data advancements, because the real conflicts are about values, interests, and perspectives (9).

Yes, biodiversity has all the regular technical headaches for natural systems science. Complexity in measurements and data, path dependence (unlike carbon, biodiversity will always be localized to the context or ecosystem where it evolved), unknowns of species themselves, and messy ontologies (10–12). However, these problems are exacerbated by deeper conflicts between the stakeholders who need to use a biodiversity unit (Nature, notably, is not among them — merely needing to tangibly benefit from a unit’s application).

Charities dominate the current $81 billion biodiversity market, but commercial interests and innovation dominate the $180 billion emerging biodiversity credit market, competing both ideologically and for public and/or private funding for biodiversity protection and uplift (13, 14). Indigenous Peoples have 80% of the conserved biodiversity but are unified in their dislike of quantifying or commercializing Nature and as yet undecided on biodiversity markets — although they have been clear in their disdain of the way carbon markets have unfolded (15–18). Governments are committed to tracking and regulation but have an estimated $700 billion finance gap to execute on biodiversity goals, and have failed to achieve any timely or meaningful regulation on carbon (3, 19). Industry currently extracts an estimated $7.3 trillion dollars annually from natural capital and has few incentives to fund a reversal of this behavior (20). Corporations profiting from biodiversity loss are legally bound to maximize that profit, and yet claim to be paradoxically self-regulating — even possibly leading regulation through voluntary cutbacks like the Taskforce on Nature-related Disclosures (21)? It is clear that a biodiversity unit must work for all of these parties, yet none of them parties share values, interests, or perspectives. In fact, quite the reverse.

In management science, paradox theory is used to address and tame wicked problems with high tensions (22). So how do we “measure what matters” for biodiversity when we can’t agree about what matters?

Political science tells us that some of the tools to solve a wicked problem are to: 1) identify it accurately, 2) treat the problem as unique, 3) avoid science- and data-driven solutions in favor of negotiation, and 4) reduce the compounding factors of complexity, uncertainty, and disagreement (9).

The emerging market for biodiversity credits has created a rare opportunity to solve this problem by aligning stakeholders, thus reducing disagreement, because every stakeholder could potentially use a well-designed marketplace. Many parties see an opportunity to iterate on the working model of the carbon market while solving some intransigent problems with biodiversity funding and climate equity (14). Certainly, government funding for climate and forests is not currently reaching Indigenous Peoples (23), and we know that commercial innovation is better at optimizing markets (24). However, the disciplines of history, law, and political science are clear on the risks of using capitalistic structures to innovate in fields that need to be protected ethically or for minority groups (25).

Therefore, the ideal biodiversity unit will be useful in a commercial or charitable market, protect equity to the extent possible, and function immediately to capture this rare opportunity for concordance. We’ll address the requirements in turn, and then discuss a negotiated area-based unit that is achieving market traction.