Habitat Banks or HH are lands where compensation requirements are added and actions of preservation, improvement or restoration of ecosystems are implemented to compensate for negative impacts on biodiversity. Through Habitat Banks, quantifiable gains in biodiversity are generated, which are used by companies to compensate for environmental damages caused. This mechanism is based on the payment for environmental results scheme, which makes it possible to achieve increases in productivity, efficiency and quality of environmental compensation. To ensure the success of the Habitat Banks, they enjoy financial, technical and legal guarantees, aspects that are rarely considered in environmental investment mechanisms. According to the Protocol for the Issuance of Voluntary Biodiversity Credits, Habitat Banks are projects eligible for the issuance of credits, with the objective of generating positive and permanent impacts to biodiversity, in some Habitat Banks we are implementing this financing mechanism, which is complementary to mandatory offsets and investments.

As of December 2022, the Ministry of Environment and Sustainability has registered 11 Habitat Banks throughout the country, of which 8 have been registered by Terrasos, and 1 is in the process of registration. Our Banks are located in the departments of Meta, Casanare, Antioquia, Cesar, Santander and you can check their location in our Geovisor https://www.terrasos.co/geovisor. Terrasos Habitat Banks are strategically structured to meet the compensation needs of a large number of projects. To find out if our Habitat Banks meet the technical, legal and financial conditions to channel your offsets there, you can contact us through our website. https://www.terrasos.co/contacto. This way we will understand the obligations generated by the project and we will review the opportunities and solutions we have within our portfolio.

Terrasos has been developing Voluntary Biodiversity Credits as an alternative for individuals and companies to make voluntary contributions to exceptional conservation projects such as Habitat Banks. To guarantee the quality of the credits, the Protocol for the Issuance of Voluntary Biodiversity Credits has been developed, a document that provides criteria for the design, structuring and operation of projects, as well as the value chain that must exist for their commercialization, allowing compliance with principles such as traceability, permanence, rigorousness, transparency, complementarity, applicability and additionality. Through the purchase of credits, the person or company contributes positively and permanently to the conservation of at least 10m2 of a threatened ecosystem for at least 20 years. The pilot for this financing mechanism is being developed in the Habitat Bank - Bosque de Niebla El Globo located in Támesis, Antioquia and you can currently purchase credits through ClimateTrade: https://market.climatetrade.com/projects?id=100. Soon you will be able to make your contributions to this and the Habitat Bank of Agua Dulce in Cundinamarca, directly from our website.

The Protocol for the issuance of Voluntary Biodiversity Credits is available for consultation by clicking here for the Spanish version and here for the English version. You can also access the PDFs in both languages through our Knowledge Generation page.

Biodiversity credits operate under a payment by results scheme in which there is a potential to issue credits but they are only released to the market once both management and ecological milestones are met according to the credit release scheme. The scheme is set up before the project is registered, in the design phase, and milestones are verified and assured by independent third parties. This scheme ensures that the actions in terms of conservation and restoration do generate positive results in terms of biodiversity.this scheme can be applied to any conservation project that is eligible (see question 5), for the specific case of protected areas of the National Natural Parks system, it is fundamental that the issuance of credits and the actions to be carried out are additional and it would not be possible to carry them out without this mechanism. It is also important to ensure that the actions are complementary, that is, that they are in line with the protected area's Management Plan. Finally, it is worth clarifying how the new flows of resources will reduce the financial gap for the implementation of the Management Plan and the fulfillment of conservation objectives.

The protocol has been and continues to be reviewed by international experts in the field and its applicability to other global contexts is currently being validated. More of our national and international references and standards can be found in section 11 of the Protocol. Some of the organizations that participated in the ideation and structuring of the protocol were the IDB Lab, P4F, Ecoregistry, XM, Cercabono, Climatetrade and WCS. Specifically, both the formula for calculating credits and the credit release scheme come from other crediting initiatives, targets and discussions at the global level such as Climate, Community and Biodiversity Project Design Standards (CCBA, 2005) and Mitigation banks and in-lieu fee programs (Code of Federal Regulation).

The protocol seeks to encourage the structuring of exceptional conservation projects, especially in threatened ecosystems and with difficulties in using other financing mechanisms or obtaining resources, such as areas with low demand for offsets, small properties where carbon projects are not viable. Consequently, projects wishing to issue credits must comply with the characteristics required by the protocol: Carry out restoration and/or preservation actions, Operate for at least 20 years, Generate additionality, that is, demonstrate that the actions to be carried out would not be possible without the financing of the credits,Be complementary to government or larger scale plans (National Development Plan, POTs, Action Plan Regional Autonomous Corporations),Establish clear indicators and the goals you want to achieve for each one (management milestones, Have a management plan and a monitoring plan,Have a credit release scheme tied to compliance milestones (management and ecological), Adopt or develop a mechanism for traceability of transactions, Make information on milestones and monitoring publicly available.In this sense, conservation areas within or outside the SINAP are eligible, whether or not they are registered in the RUNAP.

The Protocol does not limit the area of projects that can issue credits, which allows small project owners and project structurers to estimate a price per credit that covers the costs of structuring, administration and operation.

The diversity of projects that will issue credits makes it impossible to have a unified answer about the tax benefits associated with them. There is a possibility that will depend on both local and national environmental authorities, as well as tax authorities. For more information, please refer to Article 255 of the Tax Statute.

Companies and individuals that contribute to biodiversity through voluntary biodiversity credits may or may not follow the mitigation hierarchy, as this depends on their economic activity, as well as the type of projects and processes they carry out. When a company follows the mitigation hierarchy and still needs to offset its negative impacts, voluntary credits are not a mechanism to do so. In this case, it should evaluate the possibility of acquiring quotas in the Habitat Banks or other compensation alternatives established in the Biotic Component Compensation Manual.

a. Project owner: Refers to the owners of the biodiversity credits. Project owners must demonstrate that they have the legal right to control and operate the project activities. The Project Operator shall demonstrate ownership of potential credits or eligibility to receive potential credits by meeting at least one of the following: A. Own the land and potential credits on which the Project is located; or B. Own an easement, right to use, or equivalent ownership interest; or C. Have a written and signed agreement from the landowner(s).b. Structuring conservation projects: Any organization, NGO, community, among others, with the capacity to structure projects that develop preservation and restoration actions may make use of this Protocol for the quantification and release of VBC. At the same time, they may follow the recommendations established in the Protocol regarding monitoring, reporting and verification of credits, which seeks to increase the probability of obtaining public and private resources from investors and potential clients seeking exceptional projects that ensure results in terms of biodiversity.

The Protocol seeks to generate the conditions to mobilize public and private environmental investments (through credits as a transactional unit) towards exceptional conservation projects that adopt conservation measures based on areas with great ecological value, which are also managed based on financial, legal and technical guarantees, ensuring the generation of environmental, social and economic value in the territories where they are developed. Taking into account the above, the Voluntary Biodiversity Credits are an alternative for projects whose characteristics do not allow them to access other types of financing mechanisms. The Protocol and Terrasos discourage the overlapping of different environmental assets in the same area, in line with the principles of additionality, traceability and transparency established by the Protocol, also following the guidelines of the Ministry of Environment in the field of biodiversity offsets and the sale of carbon credits, where it is established that in the same geographical and temporal unit the overlapping of environmental offsets and the issuance of carbon credits is not allowed.

The connectivity factor proposed for the quantification of Voluntary Biodiversity Credits results from the weighted sum of 3 metrics, one for Patch, one for Class and one for Landscape. The detail of this is found in section 7.1.2 of the Protocol.

Before registering the project, in the structuring phase, the project owner sets out the compliance milestones (management and ecological), as well as the performance standards he/she expects to achieve, and according to these, the credit release scheme is designed. Although each project and ecosystem is different, our recommendation is to release all the credits by year 10, in a scheme of releasing 20% of the credits every 2 years.

The Protocol recognizes that for ecosystems where very few native remnants remain, preservation exercises are vital as they protect the composition, structure and function of mature ecosystems. However, it also recognizes the difference in resources needed to carry out restoration actions. Through this differentiation, the methodology seeks to mobilize sufficient resources to develop efficient restoration actions, with the necessary permanence to ensure that the intervened ecosystems recover their quantity, integrity and health, and to promote not only preservation projects of native ecosystem remnants, but also projects that contribute to recover and increase the quantity, integrity and health of biodiversity, increasing the coverage of the most threatened ecosystems, helping not only to halt the decline in their geographic distribution, but also to reverse it. On the other hand, the weight of the restoration action factor seeks to promote conservation projects with restoration actions that aim to create connectivity between native forest remnants, and thus reduce habitat fragmentation, which has increased rapidly in recent decades and is postulated as one of the main threats to biological richness and diversity.

Projects must ensure biodiversity gain over time. To that extent, they should avoid any type of action that would prevent reaching the long-term goal. In other words, activities such as ecotourism, production of non-timber forest products and beekeeping activities are compatible with preservation and restoration, to the extent that they do not affect the fulfillment of milestones for the correct release of credits.

In order to register the project, it is necessary to prepare and present the project's biodiversity baseline, using indicators that make it possible to know the current status and project long-term goals (at least 20 years). It is also necessary to present the monitoring plan with the same indicators and monitoring frequency, so that biodiversity gains can be quantified. In summary, biodiversity indices are quantified on a permanent basis, starting from year 0 (baseline) and taking into account that they must be monitored according to the specific periodicity that allows meeting the milestones of the credit release scheme.

There are two types of compliance milestones, management milestones and ecological milestones, which in turn determine performance standards. The milestones are proposed by conservation project developers or project owners and are verified by the insurer. The Protocol is based on the fact that project developers must ensure an audit by informed and impartial third parties to determine whether their conservation project can register on the selected platform, and verify compliance with the milestones and ecological performance standards, in order to approve the release and marketing of VBCs.Underwriters are third parties that perform the monitoring and verification of conservation and restoration actions, as well as the accounting of the VBCs issued by a conservation and restoration project. Underwriters are guarantors that the management of the VBCs is being done in a transparent manner and that their sale is reflected in demonstrable gains in biodiversity. For more clarity on the role of underwriters see section 10.3 of the Protocol.

The insurers are independent third parties that perform an initial verification of the application of the protocol to the project (definition of factors, baseline, definition of performance standards, and others required by the protocol), allowing the registration to be successful. Subsequently, according to the monitoring plan, the release scheme and the milestones established, periodic verifications are carried out to guarantee the release of the next 'package' of credits. The verifiers are independent third parties that guarantee the transparency of the processes and, therefore, the reliability of the information.

This protocol does not address pricing issues. Each project or project owner should set a price per credit that ensures the permanence and sustainability of the project taking into account the fair distribution of benefits and all project costs and expenses.

The protocol does not make any recommendations on financial issues of cost or pricing as this depends entirely on the type of project.

The registration platform, still under development and currently in Beta version, is located at the following URL: https://biotrust.com.co/