Biodiversity Asset Trading 

Target 

Business

Problem

Existing mandatory biodiversity offset schemes face challenges with accessibility, price discovery, transparency and settlement time. Additionally, voluntary biodiversity markets are nascent, but likely to share the same issues as the existing mandatory market.

Solution

Tokenisation of biodiversity-related credits can create efficiency in the biodiversity credit market by providing greater transparency and trust, with near-instant settlement and no counterparty risk. The technology is also extensible to a central marketplace for mandatory and voluntary markets, enabling better price discovery and access to both markets.

CBDC Leverage

This pilot leverages CBDC as a risk free settlement asset.

The Opportunity

Biodiversity preservation is critically important for Australia’s future as we experience one of the highest rates of extinction in the world. The Australian government has committed to protect 30% of land and sea by 2030. Australian corporates will increase investment in biodiversity assets due to recommendations by the Taskforce for Nature Based Disclosures, facilitated by the federal Nature Repair Market bill.

This use case explores improving the efficiency of biodiversity offset schemes through tokenisation of biodiversity-related credits and enabling atomic-settlement using CBDC as a risk free settlement mechanism. Improvements to transparency and settlement efficiency can enable the expansion of this market, which is expected to reach $137bn by 2050.

Pilot

Demonstrated an atomic settlement of an existing biodiversity-related credit with ‘wrapped’ pilot CBDC reducing the settlement time from multiple weeks to real time. A risk-free and atomic settlement mechanism was seen as valuable to facilitate adoption and scale of an emerging marketplace.