Published by Global Banking & Finance Review®
Posted on July 7, 2025
2 min readLast updated: January 23, 2026
Add as preferred source on GoogleThe EU is developing nature credits to fund ecosystem protection, addressing a €37 billion biodiversity funding gap. An expert group will create methodologies by 2027.
By Kate Abnett
BRUSSELS (Reuters) -The European Union will develop rules for "nature credits" that pay farmers and foresters to take care of ecosystems, in an attempt to make this work more economically beneficial, the European Commission said on Monday.
The EU is hunting for ways to increase funding for protecting the environment, without further straining public budgets stretched thin by other priorities like defence.
The EU, which pays out huge subsidies to farmers under its Common Agricultural Policy, estimates it has a 37-billion-euro ($43 billion) annual shortfall in funding needed to protect biodiversity.
The Commission will this year form an expert group - including governments, farmers, local communities and scientists - to work on developing methodologies for "nature credits", and fund a pilot project for these credits by 2027, it said.
This would let companies or countries buy credits issued by farmers, foresters and other land managers protecting nature by, for example, planting trees, restoring a wetland, or switching to regenerative types of agriculture.
The expert group will assess how to certify nature credits and govern a market for them, before deciding whether to fix this into EU law.
"This is not about turning nature into a commodity, but about recognising and rewarding actions that restore and sustain nature," EU environment commissioner Jessika Roswall told reporters.
The idea mirrors a more developed market for "carbon credits", in which projects that reduce CO2 emissions sell credits to companies seeking to support efforts to address climate change. However, the carbon credit market has been mired by recent scandals in which projects that issued credits failed to deliver the climate benefits they claimed.
Brussels proposed an EU climate target for 2040 last week which would allow countries to count international carbon credits towards the EU goal for the first time.
The Commission said on Monday it was aware of the "challenges and opportunities" carbon credit markets had highlighted.
($1 = 0.8519 euros)
(Reporting by Kate Abnett)
Nature credits are a proposed system where farmers and foresters are paid to protect ecosystems, such as planting trees or restoring wetlands.
The EU aims to increase funding for environmental protection without further straining public budgets, addressing a 37-billion-euro annual shortfall in biodiversity funding.
The expert group will include various stakeholders to develop methodologies for nature credits and assess how to certify and govern a market for them.
Nature credits are similar to carbon credits, which allow projects that reduce CO2 emissions to sell credits, but nature credits focus on rewarding actions that restore and sustain nature.
The EU acknowledges the challenges and opportunities highlighted by carbon credit markets as it proposes new climate targets and considers integrating international carbon credits.
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