Non-Carbon Environmental Process

Subtype

Definition: Non-carbon environmental process are environmental process derivatives unrelated to carbon, such as biodiversity derivatives that relate to the financialization of aspects such as species conservation, ecosystem services, and biological resources.

Description

A wide variety of environmental process derivatives are progressively drawing attention, such as biodiversity derivatives, which refer to the financialization of biodiversity metrics such as species conservation, ecosystem services, or biological resources. They are often formulated to fund biodiversity conservation projects, such as habitat formation or endangered species protection. Risks can emanate from failed conservation efforts, and these derivatives serve as a hedge against unfavorable outcomes, enabling investors and stakeholders to manage their financial exposure in biodiversity conservation projects.

Example

As far as we are aware, no tokenized commodity derivatives exist at present. However, it is possible to speculate about one, such as a tokenized biodiversity future.

A tokenized biodiversity future could create digital tokens that represent various elements of biodiversity, such as species, ecosystems, or conservation projects. These tokens could be bought, sold, or traded, enabling new forms of investment in and funding for conservation efforts.