- The EU will launch rules and a pilot program for “nature credits” by 2027, allowing farmers and foresters to earn from actions like tree planting and wetland restoration.
- A new expert group will shape certification and governance for the credits, aiming to bridge a €37B biodiversity funding gap without overburdening public budgets.
The European Commission (EU) announced on Monday, July 7, that the Union plans to create rules for “nature credits” that will pay farmers and foresters to protect ecosystems. The initiative aims to make environmental stewardship more economically viable while easing pressure on public budgets already stretched by priorities like defence.
Currently, the EU faces an estimated €37 billion ($43 billion) annual gap in the funding needed to protect biodiversity. Although the EU provides substantial agricultural subsidies under its Common Agricultural Policy, officials say additional tools are necessary to close this gap.
To move forward, the Commission will set up an expert group this year to develop methodologies for nature credits. This group will include government representatives, farming communities, scientists, and local stakeholders. By 2027, the EU plans to fund a pilot project to test the system.
Nature credits would allow companies or countries to purchase credits from farmers, foresters, and other land managers who take actions that protect nature. These actions could include planting trees, restoring wetlands, or adopting regenerative farming practices.
EU Environment Commissioner Jessika Roswall emphasised the purpose. “This is not about turning nature into a commodity, but about recognising and recognising that restore and sustain nature,” she said.
The proposal follows a model similar to carbon credits, where emission-reduction projects sell credits to companies aiming to offset their carbon footprints. However, the carbon credit market has recently faced criticism over credibility issues, with some projects failing to deliver the promised climate benefits.
Learning from those challenges, the expert group will also explore how to certify nature credits and build a well-governed market. Only after a thorough assessment will the Commission decide whether to enshrine the system in EU law.
Last week, the EU proposed a new climate target for 2040, which, for the first time, would allow member states to count international carbon credits toward meeting their goals. On Monday, July 7, the Commission acknowledged the risks and lessons from the carbon market, noting that those insights would shape the design of the nature credit system.
With this new initiative, the EU aims to align environmental protection with economic incentives, rewarding those who actively restore and preserve nature.