Stan Alcorn
Appearances
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
People. Real ones, no, it's actually marmalade sandwiches. No, so they eat mostly bromeliads.
Planet Money
The habitat banker
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?
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
And like every summit, there was also this sort of shadow conference filled with thousands of people who at least claimed to be trying to tackle the same problem from the private sector.
Planet Money
The habitat banker
A few months ago, freelance reporter Stan Alcorn was in a crowded hotel lobby in Cali, Colombia. Test, test, test.
Planet Money
The habitat banker
I think they care because they're here and they're willing to listen. 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.
Planet Money
The habitat banker
And there are, of course, several biodiversity credit products touting themselves as compatible with the blockchain. Including Mauricio's, 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.
Planet Money
The habitat banker
I have no idea. Mauricio later tells us that Terrasos' goal is to sell 10,000 biodiversity credits by the end of the year. There will eventually be more than 300,000 credits.
Planet Money
The habitat banker
The plan is to talk to clients. 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 in lanyards and business casuals.
Planet Money
The habitat banker
ISA 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.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
But then in the last couple of 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.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
Who's like top of the list? Top of my list for me, there's the head of sustainability of Unilever. Unilever, the massive conglomerate that makes everything from Vaseline to Ben & Jerry's ice cream to Axe Body Spray.
Planet Money
The habitat banker
But after two weeks with all the allegedly most biodiversity-loving companies in the world, Mauricio says they'd only sold about 280 more.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
The biodiversity credit companies packed up their giant Jenga blocks and tequila offerings, and the multinational executives jetted back to their corporate headquarters.
Planet Money
The habitat banker
Today's episode was co-reported by Tommaso Primni. It was produced by James Sneed, edited by Jess Jang, fact-checked by Sierra Juarez, and engineered by Sina Lofredo. Alex Goldmark is our executive producer.
Planet Money
The habitat banker
I know that you've been doing... 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?
Planet Money
The habitat banker
Then, all of a sudden, Mauricio spots his white whale walking across the room. It's him.
Planet Money
The habitat banker
This is the moment every budding entrepreneur, like, fever dreams about. Mauricio is about to be able to give a literal elevator pitch.
Planet Money
The habitat banker
I'll get it when you run it. Mauricio didn't want to run. Doesn't quite have that killer sales instinct yet.
Planet Money
The habitat banker
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 world?
Planet Money
The habitat banker
Bust out the marmalade sandwiches. As any 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.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
He says 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.
Planet Money
The habitat banker
For a while, they were some of the biggest landowners in the area. And apparently, they were super good at cutting down trees.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
And this problem isn't just happening at El Globo, it's happening all over the world.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
Mauricio realized that he and his family could be sitting on a biodiversity goldmine if he could just figure out a way to turn the cattle farm back into forest, back into nature.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
Mauricio understood this basically meant they were conserving ecosystems by taking money from the very same companies that were destroying them. Was there a part of you that was, like, conflicted at all about the model?
Planet Money
The habitat banker
Mauricio starts looking into Tarassos' 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 Tarassos to learn all about their habitat bank system.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
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.
Planet Money
The habitat banker
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. So how did you set the price?