Market-based instruments (MBIs) are increasingly promoted in international biodiversity and climate governance. This article argues that biodiversity policy has distinct dynamics and complexities that require approaches beyond economic instruments. By analyzing key concepts such as ecosystem services, biodiversity offsets, and MBIs, this study examines the implications of applying economic mechanisms to biodiversity policy. For this purpose, secondary literature and official documents of the Convention on Biological Diversity (CBD), the United Nations Framework Convention on Climate Change (UNFCCC), and their subsequent agreements and related official press releases and websites were analyzed. The findings highlight three key implications: (1) biodiversity should be embedded as a cross-cutting issue across policy areas to address its social, economic, and environmental dimensions; (2) regulatory approaches should be prioritized over MBIs; and (3) synergies between biodiversity and climate policy should be strengthened. The article addresses a research gap by providing insight into the differences between biodiversity and climate change governance, highlighting their different relationships with different policies and instruments, in particular, MBIs.
Policy implications
- First, biodiversity should be recognized not only as an economic asset but also in its social, economic, and environmental dimensions. To effectively address biodiversity loss, it should be embedded as a cross-cutting issue in various policy areas. This integration can leverage synergy effects, including cultural and health benefits from biodiverse ecosystems, economic benefits through sustainable resource management, and climate resilience through the preservation of robust ecosystems.
- Second, regulatory approaches should be prioritized over MBIs that rely on quantification and commodification. This requires an active role for governments in establishing strong regulatory frameworks and administrative oversight for land-use, land-use change, and forestry (LULUCF) and financial practices. Effective regulatory instruments may include LULUCF standards, pollution limits, or restrictions on development in ecologically sensitive areas. The emphasis should be on preventing harmful interventions and ensuring sustainable coexistence with biodiversity, rather than treating it as a tradable resource.
- Third, fostering synergies between climate and biodiversity policies presents a critical opportunity for improving outcomes in both areas, as both crises are closely intertwined and mutually reinforcing. For example, results-based payment mechanisms, such as those implemented under REDD+, should incorporate robust safeguards and comprehensive metrics to ensure that they actively support biodiversity conservation and social considerations beyond carbon emission reductions. Recognizing the pivotal role of LULUCF in both policy areas, initiatives such as nature-based solutions or climate-smart forestry can align biodiversity and climate goals. As net-zero targets gain prominence, a holistic approach that balances climate action with ecosystem conservation will become increasingly essential.
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