Environmental Markets

Around the world, new environmental markets are emerging in response to an urgent challenge: how to rapidly accelerate investment into nature at the scale required to address climate change and biodiversity loss.

These markets take many forms—carbon, biodiversity, water and plastics—but share a common purpose. They provide credible frameworks to quantify and verify measurable environmental improvements, which can then be purchased, connecting private capital with on ground outcomes.

For investors, they represent an opportunity to support nature positive outcomes while responding to growing regulatory, reputational and market expectations.

Why are they being developed?

Most people are familiar with the climate crisis. Less widely recognised—but equally important—is the biodiversity crisis: the accelerating loss of plant and animal species and the degradation of ecosystems globally.

This is not just an environmental issue. Biodiversity loss threatens food security, human health, social stability and economic prosperity. More than 50 per cent of global GDP is considered moderately or highly dependent on nature.

These twin crises are interconnected and driven by human impacts on the natural world. Addressing them together is both possible and essential—but it requires coordinated action from governments, businesses, communities and landholders, supported by substantial investment.

Shifts in policy and significant increases in public environment funding are required to meet the scale and urgency of the challenge. However, financial input from the private and philanthropic sectors is also necessary to help bridge the significant funding gap. Environmental markets have emerged as one mechanism to help close this funding gap, by providing the framework to mobilise private capital into conservation, restoration and improved land management.

The global policy context

Momentum for nature positive investment has been strengthened by recent global policy developments.

At the United Nations Biodiversity Conference (COP15) in 2022, 195 countries and the European Union adopted the Kunming–Montreal Global Biodiversity Framework. A central commitment of the agreement is the protection of 30 per cent of the world’s land and water by 2030—the “30 by 30” target.

Delivering on these ambitious goals will require new financial mechanisms.

Environmental markets, including emerging biodiversity credit markets, provide a mechanism to channel private investment into nature protection and restoration at scale.

What’s happening in Australia?

Following the adoption of the Global Biodiversity Framework, Australia has moved to develop enabling policy settings and market infrastructure.

In 2024, the Australian Government released its Nature Positive Plan and announced the establishment of a national Nature Repair Market. The market is designed to enable private investment in projects that deliver verified, measurable improvements in biodiversity outcomes, creating new opportunities for investors to engage in nature positive action.

Alongside this national initiative, a range of state based and privately operated environmental markets continue to operate.

In Queensland, for example, the Reef Credit Scheme supports improvements in water quality flowing to the Great Barrier Reef. In New South Wales, Biodiversity Stewardship Agreements generate tradeable biodiversity credits under the Biodiversity Offsets Scheme. A growing number of voluntary programs also exist, catering to diverse environmental outcomes and investor preferences.

Within this evolving landscape, locally grounded, high integrity schemes play an important role in translating policy ambition into tangible outcomes on the ground.