The habitat banker

Summary

Planet Money: "The Habitat Banker" – Detailed Summary

Release Date: December 20, 2024

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Introduction

In the latest episode of NPR’s Planet Money, hosts Alexi Horowitz Ghazi and Stan Alcorn delve into the innovative yet contentious world of biodiversity credits. Titled "The Habitat Banker," the episode explores the journey of Mauricio Serna, a passionate Colombian conservationist attempting to create a market-based solution to halt the rapid loss of biodiversity in the tropical Andes.

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Mauricio Serna’s Mission

The episode opens with Mauricio Serna striving to pitch his novel financial instrument—biodiversity credits—to potential clients. Filmed in a bustling hotel lobby in Cali, Colombia, Mauricio is introduced as a 29-year-old entrepreneur with a vision to merge conservation efforts with economic incentives.

Stan Alcorn [02:28]: "Imagine I'm the head of sustainability of Unilever. Like, what are you gonna say? What's your pitch?"

Mauricio’s goal is to convince major companies, such as Unilever, to invest in biodiversity credits, thereby funding the preservation and restoration of natural habitats threatened by industrial activities.

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Understanding Biodiversity Credits

Biodiversity credits are designed as a counterpart to carbon credits. While carbon credits aim to reduce greenhouse gas emissions, biodiversity credits focus on preserving and enhancing ecosystems to protect endangered species.

Mauricio Serna [03:57]: "Yeah. So a lot of people don't understand the biodiversity credit world yet."

Mauricio explains that biodiversity credits offer companies a way to compensate for their environmental impact by financially supporting conservation projects that safeguard diverse species and habitats.

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The Journey to El Globo

To illustrate the impact of biodiversity credits, the hosts visit El Globo—a sprawling 800-acre plot of land in the Andes owned by Mauricio’s family. Historically cleared for cattle ranching, El Globo is now the centerpiece of Mauricio's restoration efforts.

Stan Alcorn [09:22]: "El Globo is a big plot of land, more than 800 acres, situated on a mountain. There are rivers and wetlands."

The tour highlights the stark contrast between the barren cattle pastures and the vibrant, biodiverse remnant forests teeming with threatened species like the spectacled bear—the beloved Paddington Bear.

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Challenges in Conservation Efforts

Mauricio’s journey is fraught with obstacles. Initial attempts at restoring the land through ecotourism and beekeeping fell short, emphasizing the difficulty of balancing profitability with conservation.

Mauricio Serna [12:57]: "We're not doing it. I mean, we're not doing it."

Despite familial skepticism regarding the economic viability of conservation, Mauricio remains steadfast in his commitment to transforming El Globo into a thriving ecosystem.

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The Birth of Terrazos and Habitat Banks

Mauricio discovers Terrazos, a Colombian company pioneering the concept of habitat banks. These banks operate under Colombian law, which mandates that companies compensate for habitat destruction by funding equivalent conservation efforts elsewhere.

Stan Alcorn [15:17]: "The way it works is there's a law in Colombia that says if you cut down trees for certain kinds of big projects like dams and mines, you have to compensate for that."

Terrazos' model inspired Mauricio to innovate further, blending traditional habitat banking with the emerging concept of biodiversity credits to create a viable funding mechanism for conservation.

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Launching Biodiversity Credits

With Terrazos' support, Mauricio and his team develop a system to sell biodiversity credits to corporations. Each credit represents the protection or restoration of a specific area of land rich in biodiversity.

Stan Alcorn [17:51]: "So the price is really straightforward and simple."

They priced each credit at $25, covering the costs of long-term conservation efforts, including tree planting, fencing, and hiring rangers to prevent illegal activities.

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The UN COP16 Summit: Hopes and Hurdles

The pivotal moment arrives during the UN Global Summit on Biodiversity (COP16) in Cali. Mauricio seizes the opportunity to pitch biodiversity credits to a global audience of corporate executives and sustainability leaders.

Mauricio Serna [25:31]: "So my target was, okay, you need to go and sell this biodiversity credits mostly to anyone."

The summit buzzes with enthusiasm for biodiversity credits, with various creative promotional activities aiming to attract corporate interest. Mauricio manages to secure his first significant sale with ESA, a major electric transmission company in Latin America.

Stan Alcorn [27:46]: "One more sale."

However, despite the initial success, broader corporate interest proves limited. Many companies remain skeptical, hesitant to commit substantial funds to this untested financial instrument.

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Reception and Criticism

The episode introduces critical perspectives questioning the efficacy and sustainability of biodiversity credits. Mark Opel from the Campaign for Nature expresses concerns that these credits might serve as a distraction, diverting attention from the urgent need for substantial governmental action.

Mark Opel [30:03]: "We will never meet our goals by looking to the private sector to voluntarily make investments that don't maximize shareholder value."

Comparisons are drawn to the voluntary carbon credit market, which has faced significant challenges, including poor efficacy and diminished market trust.

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The Future of Biodiversity Credits

As the COP16 summit concludes without substantial uptake of biodiversity credits beyond initial sales, Mauricio grapples with the gap between supply and demand. Terrazos aims to sell 10,000 credits by year-end but falls short, raising doubts about the scalability and practicality of this model without broader institutional support.

Mauricio Serna [32:44]: "That's like a quarter of a hectare."

Efforts to secure government incentives or regulations that would make biodiversity credits more attractive to corporations are underway, but such changes remain uncertain.

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Conclusion

"The Habitat Banker" paints a nuanced picture of the intersection between conservation and capitalism. While Mauricio Serna's innovative approach to funding biodiversity preservation through market mechanisms holds promise, significant hurdles—both in garnering corporate trust and ensuring genuine ecological impact—remain. The episode underscores the complexity of addressing biodiversity loss in a world driven by economic incentives, highlighting the critical role of both private and public sectors in forging effective solutions.

Stan Alcorn [34:20]: "What I see is green rolling hills, what's actually called a green desert because there's almost no biodiversity here at all."

Ultimately, the story of Mauricio and El Globo serves as a microcosm of the global struggle to balance economic development with environmental stewardship, leaving listeners to ponder the true path forward for preserving our planet’s rich biodiversity.

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Notable Quotes with Timestamps:

• Mauricio Serna [03:57]: "Yeah. So a lot of people don't understand the biodiversity credit world yet."
• Stan Alcorn [09:22]: "El Globo is a big plot of land, more than 800 acres, situated on a mountain. There are rivers and wetlands."
• Stan Alcorn [17:51]: "So the price is really straightforward and simple."
• Mauricio Serna [25:31]: "So my target was, okay, you need to go and sell this biodiversity credits mostly to anyone."
• Stan Alcorn [27:46]: "One more sale."
• Mark Opel [30:03]: "We will never meet our goals by looking to the private sector to voluntarily make investments that don't maximize shareholder value."
• Stan Alcorn [34:20]: "What I see is green rolling hills, what's actually called a green desert because there's almost no biodiversity here at all."

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This summary was crafted to provide a comprehensive overview of Planet Money’s episode “The Habitat Banker,” ensuring that listeners and non-listeners alike gain a deep understanding of the discussions surrounding biodiversity credits and their role in conservation.

Transcript

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[Alexi Horowitz Ghazi]

A warning. There is some cursing in Spanish in this episode. It involves a man and a shrub.

[Stan Alcorn]

This is Planet Money from npr.

[Alexi Horowitz Ghazi]

A few months ago, freelance reporter Stan Alcorn was in a crowded hotel lobby in Cali, Colombia.

[Stan Alcorn]

Test, test. Okay. Yeah. I was there to meet a 29 year old Colombian who was trying to sell a new financial instrument he thinks could help save the planet. Good morning.

[Mauricio Serna]

Hello.

[Stan Alcorn]

What's the plan?

[Mauricio Serna]

The plan is to talk to clients.

[Alexi Horowitz Ghazi]

Mauricio Serna says the plan is to talk to clients. He's got long curly hair, an untucked green shirt, and on his phone a list of these potential buyers. They're standing all around the hotel lobby and lanyards and business casual.

[Mauricio Serna]

I have Sonny Pictures, Entertainment. I have PepsiCo, the Rockefeller Foundation.

[Stan Alcorn]

Who's like top of the list.

[Mauricio Serna]

Top of my list. For me, there's the head of sustainability of Unilever.

[Alexi Horowitz Ghazi]

Unilever, the massive conglomerate that makes everything from Vaseline to Ben and Jerry's ice cream to Axe Body spray.

[Stan Alcorn]

Okay, okay, so imagine I'm the head of sustainability of Unilever. Like, what are you gonna say? What's your pitch?

[Mauricio Serna]

So my pitch is, so you have a big procurement process of palm oil here in Colombia and in other parts of the world. I know that you've been doing.

[Alexi Horowitz Ghazi]

Mauricio is still pretty new to being a salesman. But in a nutshell, his pitch is Unilever. You get oil from palm tree plantations in Colombia, which aren't exactly great for native plants and animals. What if I told you there was an easy way to do something good for those ecosystems?

[Stan Alcorn]

And do you think, is there a point in that conversation where. Where you'll say the words biodiversity credits?

[Mauricio Serna]

Maybe.

[Stan Alcorn]

I think at the end, biodiversity credits. This is the new product that Mauricio is here to sell. And the idea is kind of a twist on carbon credits, but instead of reducing carbon emissions, biodiversity credits are aimed at saving some of the million plus species that are threatened with extinction. He says a lot of people have no idea how they work.

[Mauricio Serna]

Yeah. So a lot of people don't understand the biodiversity credit world yet.

[Alexi Horowitz Ghazi]

Then all of a sudden, Mauricio spots his white whale walking across the rim.

[Mauricio Serna]

It's him.

[Stan Alcorn]

It's the head of sustainability of Unilever. Can I follow you?

[Mauricio Serna]

I don't know if he wants, but, yeah, you can follow me.

[Stan Alcorn]

Mauricio makes a beeline across the lobby, taking big strides. The Unilever guy gets in the elevator.

[Alexi Horowitz Ghazi]

This is the moment every budding entrepreneur, like fever dreams about. Mauricio is about to be able to give a literal elevator pitch.

[Stan Alcorn]

But just as we are about to get there, the elevator doors close. Mauricio didn't make it, did it?

[Mauricio Serna]

When you run it.

[Alexi Horowitz Ghazi]

Mauricio didn't want to run. Doesn't quite have that killer sales instinct yet.

[Stan Alcorn]

Yeah, I mean, he really is new to all of this. He studied biology. What he cares about is protecting nature. And it's honestly a little awkward for him to try and win over the companies that are destroying it.

[Mauricio Serna]

So it's weird. And sometimes I'm like, what am I doing here? Who am I talking to? But on the other side, I'm like, this guy's knit to chip in.

[Alexi Horowitz Ghazi]

Hello, and welcome to Planet Money. I'm Alexi Horowitz Ghazi.

[Stan Alcorn]

And I'm Stan Alcorn. Our planet is in serious trouble, and I'm not talking about global warming. There are a million species of plants and animals in danger of extinction and the biggest cause is companies destroying their habitats to farm food, mine minerals, all to make the stuff that you and I consume.

[Alexi Horowitz Ghazi]

Today on the show, we follow budding salesman Mauricio Serna on his quest to make a market for this newish financial instrument, the Biodiversity Credit. And we peek under the hood to try to figure out how these credits actually work. Is the hype around them a bunch of hot air? Or could they be a critical tool for saving thousands of species around the.

[Stan Alcorn]

World, including one of the most charismatic megafauna in the game, star of what has been called the greatest film of all time? None other than Paddington Bear.

[Alexi Horowitz Ghazi]

Bust out the marmalade sandwiches.

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[Alexi Horowitz Ghazi]

Planet Money listener will know, the way we often try to understand some obscure newfangled financial instrument is to just buy one. Get some skin in the game.

[Stan Alcorn]

So my reporting partner Thomas Uprimni and I decided to do just that. So let's go buy a biodiversity credit. Okay, we get on the website for Mauricio's company and there they are. For 25 bucks, we'll get a credit, basically a certificate saying we've protected a little piece of nature. 10 square meters of Andean cloud forest. And they show some of the animals that we'll be saving. The yellow eared parrot, the tree ocelot, and of course, the threatened spectacled bear. The Paddington Bear.

[Alexi Horowitz Ghazi]

For listeners who haven't watched the Paddington movies, first, I'm sorry for your loss. What you need to know is that these bears are the only ones in South America. They are Dangerously cute, with little white circles around their eyes, hence the name. And some ecologists argue they're kind of an umbrella species. If you protect them, you know, you're protecting a bunch of other species. A whole tropical Andean ecosystem.

[Stan Alcorn]

Are you ready to own our own little piece of the cloud forest? I'm ready to save Paddington. I enter my credit card details and click Buy. We did it.

[Mauricio Serna]

Done.

[Stan Alcorn]

And we are now the proud owners of biodiversity credit number 0281. But it still isn't clear what exactly we've bought. So we decided to go see our 10 square meters for ourselves, see what these credits look like on the ground. And the ground in this case is also the land that first turned Mauricio Serna into a conservationist.

[Alexi Horowitz Ghazi]

It's a plot of land owned by Mauricio's family high up in the tropical Andes of Colombia. They call the place El Globo, or the Balloon, because they like to joke it was so remote that for a long time, the only way to get there was by hot air balloon.

[Stan Alcorn]

These days, it takes a plane and a bus and a motorcycle to get there. Are we in El Globo now? Like, this is all part of this.

[Mauricio Serna]

Is El Globo right now.

[Stan Alcorn]

El Globo is a big plot of land, more than 800 acres, situated on a mountain. There are rivers and wetlands. But Mauricio directs our attention up toward the mountain top.

[Mauricio Serna]

If you see here, there's a, like a patch of forest that has, like, white trees and a lot of, like, dark green colors. That is one of the most mature forests that we have, he says.

[Alexi Horowitz Ghazi]

A couple centuries ago, this whole area was mature forest, full of yellow eared parrots and these super rare Alma negra trees. That translates to black soul trees, kind of metal, and of course, plenty of Paddington's bear.

[Stan Alcorn]

But over the 20th century, more and more of the region was steadily cleared for cattle ranching. That's what Mauricio's grandfather did back in the 60s when his family bought the land.

[Alexi Horowitz Ghazi]

For a while, they were some of the biggest landowners in the area, and apparently they were super good at cutting down trees.

[Mauricio Serna]

There was a saying that Luglo was the best land and the most beautiful land in the region because it's the most clean. And clean means no trees, no shrubs, and nothing but grass for cattle.

[Stan Alcorn]

Nothing but grass. That's beauty to a cattle rancher. The more land you clear, the more cattle you can graze and the more money you can make. That simple economic logic has shaped this landscape for a century.

[Alexi Horowitz Ghazi]

But one Problem with that logic is that it's driven thousands of species to the brink of extinction because every acre cleared for cattle is one less for the paddingtons of the world. They've been forced into smaller and smaller tracts of remaining land, and their numbers have dwindled along with a bunch of other threatened species. And this problem isn't just happening at El Globo. It's happening all over the world.

[Stan Alcorn]

Mauricio says he really started thinking about all of this about a decade ago. He was at the university studying biology when he started to fall in love with the natural world and understand just how much of it had been destroyed by things like cattle ranching. And he says it was one class in particular that got him thinking about his family's land in the tropical Andes.

[Mauricio Serna]

I was studying biology, and I was actually studying how important tropical Andes is for conservation and how this was considered like a biodiversity hotspot. And that means that it has a lot of species per square kilometer.

[Alexi Horowitz Ghazi]

Mauricio started thinking about how his family land might actually hold the key to start pushing back against biodiversity loss. Because even though they'd cleared the land for cattle, even though they'd diminished the habitat for a bunch of vulnerable species that was not irreversible. Mauricio realized that he and his family could be sitting on a biodiversity gold mine if he could just figure out a way to turn the cattle farm back into forest, back into nature.

[Mauricio Serna]

And I started pitching to my family, hey, let's build a nature reserve. And my family being really traditional, we're like, no way. I mean, you're not getting any money from that. This is not a, like, economically viable project. So you're not. I mean, we're not doing it.

[Stan Alcorn]

Mauricio takes on this new challenge, how to restore the land to a more natural state while also generating a profit. He looks into ecotourism, which could be lucrative in theory, but El Globo is kind of remote. He starts up a beekeeping operation to try to make that honey money, but it isn't quite enough.

[Alexi Horowitz Ghazi]

Still, Mauricio's family is okay with it taking a few years to figure out how to restore the forest and find a way to monetize it along the way. So he forges ahead.

[Stan Alcorn]

Here, Mauricio catches what seems like a little break. He finds an organization that offers to plant 60,000 native trees on his land for free, doing a lot of the work he might otherwise have to pay for. So he decides to sign up.

[Mauricio Serna]

It was a good idea. I mean, there were good intentions behind that. Project.

[Alexi Horowitz Ghazi]

But we all know what they say about good intentions. And the results here were kind of a disaster. They planted the wrong trees in the wrong places. 70% of them died. And among the ones that lived is an invasive species, a shrub that is notorious for crowding out native vegetation.

[Stan Alcorn]

We actually ran into one as we were walking around El Globo.

[Mauricio Serna]

Ah, look at this. This is it. All this. This is it. Cotonea Serpanosis.

[Stan Alcorn]

And Mauricio got so mad, he started cursing at it. So the tree planting was a failure. But it was around this time that Mauricio stumbled on the company that would eventually help create the biodiversity credits that we bought.

[Mauricio Serna]

I was looking in the Internet and I don't know where, how and Terrazzos pop out.

[Alexi Horowitz Ghazi]

Terrazos is a Colombian company that seemed to have found a way to not only pay for conservation, but maybe to even make it profitable. It is a little controversial.

[Stan Alcorn]

Terrazos was pioneering a model for funding conservation in Colombia called Habitat Banks. The way it works is there's a law in Colombia that says if you cut down trees for certain kinds of big projects like dams and mines, you have to compensate for that. So if you mess up an acre of Andean cloud forest, you need to conserve at least an acre of that same forest. And one way you could do that is to pay Terrazos to protect some of the land in one of their habitat banks.

[Alexi Horowitz Ghazi]

Mauricio understood this basically meant they were conserving ecosystems by taking money from the very same companies that were destroying them.

[Stan Alcorn]

Was there a part of you that was like, conflicted at all about the model?

[Mauricio Serna]

Or maybe a little bit, but not really. I mean, many people were. And many people were like, okay, you are selling your soul to the capitalism. But I think at the end of the day, what's important is that the money was well planned, was well used, and was delivering positive ecological outcomes.

[Alexi Horowitz Ghazi]

Mauricio starts looking into Terrazzos model and quickly realizes it won't immediately solve his problem. At El Globo. There aren't any of those big projects destroying that particular part of the Andean cloud forest. But he decides to take a job with Terrazos to learn all about their habitat bank system.

[Stan Alcorn]

And then one day, after a few years of working there, Mauricio and his colleagues are throwing around ideas for how to set up a habitat bank system in places like El Globo. When they come up with a potential model, it was kind of a mix between Terrazzo's old model and, and what others had done with carbon credits.

[Alexi Horowitz Ghazi]

Now there are two Types of carbon credits. There are credits that companies buy because they basically have to by law, in places like Europe and California. But then there are also voluntary carbon credits that companies buy because they want to maybe in order to make some sort of PR claim, like they're carbon neutral or net zero.

[Stan Alcorn]

The new idea that Mauricio and others had was maybe they could do something like those voluntary carbon credits, but for biodiversity. So they'd sell a credit that promises long term protection of land rich with species, and companies would buy them so they could make claims about being nature positive or something like that.

[Alexi Horowitz Ghazi]

Mauricio says their theory was that companies wanted to make these kinds of claims. They wanted to invest in biodiversity. They just needed a way to do that that was easy and trustworthy.

[Mauricio Serna]

What we thought is that maybe the private sector needs an instrument to report on what's happening on the ground. And that's where biodiversity credits come along. It was a shot. I mean, it was like, let's try to make it work.

[Alexi Horowitz Ghazi]

And if they could make it work, Mauricio thought, instead of getting people to pay his family per head of cattle at El Globo, they could instead get companies to pay them per 10 square meters of restored cloud forest. Next, they needed to figure out how much those companies should pay.

[Stan Alcorn]

So how did you set the price?

[Mauricio Serna]

So the price is really straightforward and simple.

[Stan Alcorn]

Basically, they looked at how much it was going to cost to run the Habitat bank for the next 30 years. So they were going to need to buy and plant a bunch of trees and plants, put up fences, and also hire a ranger to prevent illegal logging or poaching.

[Mauricio Serna]

So you need to understand how much you're going to pay your ranger. You need to understand how many trees do you need to plant. And you need to understand the administrative costs, the sales costs, the marketing costs. You need to understand all those costs.

[Alexi Horowitz Ghazi]

They added up all these projected costs. Then they looked at the price of things of sort of similar offerings, like an Adopt a Jaguar program. But there was a big range, so they kind of arbitrarily picked a nice round number, $25 a credit, with a total pool of more than 300,000 credits that would cover their costs and maybe even make them a profit.

[Stan Alcorn]

But in order to actually sell any of these credits, he knew he'd have to offer companies some tangible evidence they were helping biodiversity that the companies could then flaunt to investors and customers. So he needed data, first, to show that El Globo was already home to a bunch of threatened species. And second, to prove that the Work they were doing to restore more and more of the land was actually improving biodiversity.

[Alexi Horowitz Ghazi]

For Mauricio, that meant doing a kind of wildlife census to get a baseline. A lot of El Globo is sort of barren from its cattle ranching past, but there was one super dense biodiverse patch of forest that was never cut down. And that is where the lion's share of El Globo's biodiversity lives.

[Stan Alcorn]

And so that's where he took us to show what we'd actually bought with our biodiversity credit. We start out hiking through what was recently ranch land. There are shrubs and waist high ferns. And then as we get higher up the mountain, we cross into the thick, dark tangle of the original jungle that used to cover everything.

[Mauricio Serna]

This is how it should look like. Like a really dense forest with a lot of plants growing in other plants, lots of palm trees growing. And there's also some bird species or some insect species, also some lizards and frogs. You will only see them in the growing old forest.

[Alexi Horowitz Ghazi]

This is the biodiversity that the biodiversity credit is supposed to protect, and it's the kernel that they're building on as they restore the rest of the land here to its former tropical Andean glory.

[Stan Alcorn]

Using wildlife cameras and stakeouts, Mauricio's determined that El Globo contains some 20 threatened species, including the ones we'd seen in the advertising when we bought our credit. The tree ocelot, the yellow eared parrot.

[Alexi Horowitz Ghazi]

And most dangerously cute of all, the spectacled bear himself.

[Stan Alcorn]

Mauricio had us play a little game of I Spy in the forest.

[Mauricio Serna]

So now I need you to look. I need you to find traces of the bear.

[Stan Alcorn]

Is it these broken off trees? No.

[Mauricio Serna]

What do birds eat?

[Stan Alcorn]

People.

[Alexi Horowitz Ghazi]

Real ones know it's actually marmalade sandwiches.

[Mauricio Serna]

No. So they eat mostly bromeliads.

[Stan Alcorn]

Bromeliads are a family that includes spiky plants like the pineapple. They usually live in the most jungly of jungles. They're on the forest floor all around us. And that's where I'm looking. We're failing the exam until Mauricio tells me how the bears actually climb trees to get at the biggest, juiciest bromeliads. So I should try looking up. Oh, I see.

[Mauricio Serna]

I see the. Wow.

[Stan Alcorn]

The scratch marks. It's like a horror movie.

[Mauricio Serna]

You climb all up over there and you see scratches all over the trees.

[Alexi Horowitz Ghazi]

Wow.

[Stan Alcorn]

Looking at these long claw marks in the bark, I felt like I was seeing evidence not just of bears, but that there's this whole rich web of life here. But as we started our hike back down the mountain. I couldn't help but puzzle over the thing we'd actually bought that brought us here in the first place. That $25 biodiversity credit. It wasn't a physical plot of land. There wasn't some 10 square meter patch with our names on it. We didn't get some fractional ownership of a spectacled bear. Really. The credit that we bought helped to cover the costs Mauricio says he'll need to protect and restore this place over the next 30 years. We basically donated $25 to his crowdfunding campaign and the swag we got in return was just an email with a certificate attached that says Biodiversity Credit on it.

[Alexi Horowitz Ghazi]

Which brings us to the existential question hanging over this whole project. Mauricio has sold one credit to Planet Money, but can he sell thousands or tens of thousands of credits to actual companies?

[Stan Alcorn]

And it just so happens that a few weeks after we visited Mauricio at El Globo, he was going to get a shot at some major potential buyers. Some of the biggest players in the world of corporate sustainability were about to descend on nearby Cali, Colombia, for the UN Global Summit on Biodiversity, the COP16. That was going to be a big test for Mauricio and for biodiversity credits.

[Mauricio Serna]

COP will be where we're going to see if companies are really willing to buy these credits and claim these results and add value to their companies.

[Stan Alcorn]

It's like the big coming out party or like the big debut for biodiversity credits.

[Mauricio Serna]

Yeah, that's it.

[Stan Alcorn]

After the break, Mauricio takes off his hiking boots, laces up his loafers and polishes up his pitch deck to see if companies are going to buy what he's selling.

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[Alexi Horowitz Ghazi]

Every two years, diplomats from around the world descend on one city for a week or two in order to try to save the planet's plants and animals and fungus from mass extinction. This year's summit, the COP16, took place in Cali, Colombia. And like every summit, there was also this sort of shadow conference filled with thousands of people who at least claim to be trying to tackle the same problem from the private sector.

[Stan Alcorn]

And that's where I met up again with Mauricio Cerna. He was in that hotel lobby trying to pitch corporate executives on Terrazzo's biodiversity credits.

[Mauricio Serna]

I think they care because they're here and they're willing to listen.

[Alexi Horowitz Ghazi]

Over the course of the last few years, Mauricio has gone from a biology student to a sort of evangelist for this new kind of financial instrument. One that he hopes might turn his family cattle ranch into a permanent refuge for threatened species like the spectacled bear.

[Stan Alcorn]

And he showed up at the COP16 this year with a mission.

[Mauricio Serna]

So my target was, okay, you need to go and sell this biodiversity credits mostly to anyone.

[Stan Alcorn]

But Mauricio is not the only guy selling biodiversity credits at this conference. It's kind of the hot new idea at the COP for how to incentivize the private sector to help protect the environment. The World Economic Forum projected a couple billion dollar market by 2030. And here at the conference, you can taste the hype. There's a tequila company giving out free shots in honor of a jaguar based biodiversity Credit. There's a 20 foot Jenga tower of terrariums that turns out to be a promotional sculpture for a biodiversity credit to save the ocean.

[Mauricio Serna]

Thank you so much.

[Alexi Horowitz Ghazi]

And there are of course, several biodiversity credit products touting themselves as compatible with.

[Stan Alcorn]

The blockchain, including Mauricios.

[Alexi Horowitz Ghazi]

In fact, now it isn't totally clear whether all of this is just a circus of hot air or maybe the start of a new gold rush. But Mauricio is hoping that all this marketing hype could mean more people will be willing to buy what he is selling.

[Stan Alcorn]

For the first couple days of the conference, Mauricio's getting his bearings, going to panel discussions. But by day three, he's starting to make some sales one credit at a time. That night at A networking event at a bar. We get to see him in action. He's talking to a guy with a website startup, and Mauricio gives him the pitch. You can click a few buttons, pay 25 bucks, and save 10 square meters of cloud forest. He likes how Mauricio has made it so easy to do something good. He says yes almost immediately.

[Mauricio Serna]

We made it.

[Stan Alcorn]

One more sale.

[Mauricio Serna]

One more sale.

[Stan Alcorn]

Just gotta do.

[Mauricio Serna]

I have no idea.

[Alexi Horowitz Ghazi]

Radicio later tells us that Terrazas goal is to sell 10,000 biodiversity credits by the end of the year. There'll eventually be more than 300,000 credits.

[Mauricio Serna]

That's a big inventory.

[Stan Alcorn]

That's why you need buyers that aren't just individuals you talk to.

[Mauricio Serna]

Yeah, so we need corporate buyers who can buy a big bunch of these credits.

[Stan Alcorn]

Later that week, a corporate buyer makes an announcement. Esa, one of the largest electric transmission companies in Latin America, says they've bought over a thousand of Mauricio's credits. And when I talk to the guy who directs their main corporate sustainability program, Juan Fernando Patinho, he tells me they're interested in biodiversity credits for a couple of reasons. For one, it's a way to kind of buy goodwill from the communities where they work. He calls it a social license. Also, they hope the credits will be worth more in the future, and companies like his could sell them at a profit later on. But if not, that's okay too.

[Alexi Horowitz Ghazi]

We have also the objective to learn.

[Stan Alcorn]

So sometimes learning has a price, and.

[Alexi Horowitz Ghazi]

We'Re able to pay that price. In this case, ESA is willing to take the risk on this new untested product. But as the conference goes on, it seems like they may actually be the exception. Other companies are a lot more reluctant.

[Stan Alcorn]

Over the course of the week, Mauricio is talking to people from a food packaging company, representatives of the construction industry, avocado farmers. But he isn't closing any deals. At one point, I watch him shoot his shot with two mining companies and a Big four accounting firm, only to get a resounding no, thanks.

[Mauricio Serna]

They're pretty skeptical. Yeah, because they don't see, like an actual. How do you put it in English?

[Stan Alcorn]

They're just too new to try to understand what Mauricio was up against and also how to square that with all the hype. I caught up with Mark Opel. He left a private equity firm to be a conservation finance watchdog at a group called Campaign for Nature. What's going on with biodiversity credits? Why are they getting this kind of attention? And is that good?

[Alexi Horowitz Ghazi]

We think they're a distraction Mark thinks these credits are a distraction. He's worried that governments might use biodiversity credits as an excuse to not cough up the money they've already promised to pawn off the biodiversity problem on the private sector. He's also skeptical that these credits will actually be able to deliver on what they promise.

[Stan Alcorn]

He points to what happened to carbon credits, the voluntary ones companies buy to claim they're carbon neutral or net zero, much like with biodiversity credits. When voluntary carbon credits were first taking off, there were some really optimistic projections about how big and important the market could become.

[Alexi Horowitz Ghazi]

But then in the last couple years, there's just been a steady drumbeat of damning research and journalism reports that consistently show the majority of those carbon credits didn't actually live up to those claims. And a lot of them didn't actually end up reducing carbon emissions at all. The voluntary carbon market has tanked as a result. It's a fraction of what it used to be. We think the biodiversity credits are going to suffer from all the problems of the carbon market.

[Stan Alcorn]

Mark thinks that some companies are going to buy cheap, low quality credits and then make outsized and ambiguous claims about being nature positive. Or they'll look at the example of the carbon market and just stay away.

[Alexi Horowitz Ghazi]

We will never meet our goals by looking to the private sector to voluntarily make investments that don't maximize shareholder value.

[Stan Alcorn]

At the end of the day, companies.

[Alexi Horowitz Ghazi]

Are in the business of generating shareholder value. There is not a business case for biodiversity credits to generate shareholder value beyond a token amount of philanthropy and marketing that they may get. And sure enough, a week or so into the COP conference, Mauricio seems to be learning firsthand some hard lessons about that lack of demand. He's talked to 30 or 40 companies, but there haven't been any big corporate windfalls yet. Terrazos was trying to sell 10,000 credits by the end of the year, and they had sold about 6,000 before the conference. But after two weeks, with all the allegedly most biodiversity loving companies in the world, Mauricio says they'd only sold about 280 more.

[Stan Alcorn]

So that's 2,800 square meters of land being protected for 30 years.

[Mauricio Serna]

That's it. That's like a quarter of a hectare.

[Stan Alcorn]

Or a little over half an acre. Enough habitat for like a ten thousandth of one spectacled bear.

[Mauricio Serna]

We are in a tough scenario where we will not do anything if we have tons of supply and no demand. We all hoped this was the other way around and that it was a problem of supply, not of demand.

[Stan Alcorn]

But it's just not a Recent report found that only about a million dollars have been spent so far on biodiversity credits. That's way off track from the billions the World Economic Forum was projecting by the end of the decade.

[Alexi Horowitz Ghazi]

Mauricio and his colleagues at Terrazos and a lot of other people in the world of biodiversity credits admit that the demand that they'd hoped for doesn't seem to exist right now. And so they are coming around to something. Their critics have been saying the only way to get companies to pay is if governments or institutions like the World bank get involved.

[Stan Alcorn]

What they're hoping for is some kind of new regulations or tax incentives or favorable loan conditions that would change the math and make it so that buying these biodiversity credits would become a more attractive business decision, which is possible even if at this point, it still seems a long way off.

[Alexi Horowitz Ghazi]

By the end of the COP16 conference, the world's biodiversity problem didn't seem to be any closer to being solved. The diplomats had not managed to come to an agreement on government spending on biodiversity. And not much had fundamentally changed in the private sector either. The biodiversity credit companies packed up their giant Jenga blocks and tequila offerings, and the multinational executives jetted back to their corporate headquarters.

[Stan Alcorn]

And I started thinking about what this all means on the ground in a place like El Globo. I thought back to this moment where I was standing with Mauricio looking out over the surrounding land that straddles his family's ranch.

[Alexi Horowitz Ghazi]

Wow.

[Mauricio Serna]

What do you see?

[Stan Alcorn]

What I see is green rolling hills, what's actually called a green desert because there's almost no biodiversity here at all.

[Mauricio Serna]

So those, like, crop kind of thing that you were looking at are avocado. Those, like big trees that look like a green carpet are pine trees. And all the rest is for cattle.

[Stan Alcorn]

Ranching, avocado farms, pine plantations and cattle ranches. Biodiversity credits haven't changed the fact that these are still the most profitable ways to use this land. With a push from government, maybe that could change.

[Alexi Horowitz Ghazi]

If not, Mauricio and his family will have a strong temptation to sell off the land or turn it back into a cattle ranch. And I think we all know what that means for Paddington. Today's episode was co reported by Tomas U. Prymni. It was produced by James Sneed, edited by Jess Jiang Fact checked by Ciera Juarez and engineered by Sina Lofredo. Alex Goldmark is our executive producer.

[Stan Alcorn]

This story was produced with support from the internews Earth Journalism Network. I'm Stan Alcorn.

[Alexi Horowitz Ghazi]

And I'm Alexi Horowitz. Ghazi this is npr. Thanks for listening.

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