Remote sensing and smart contracts for biodiversity data

Treeconomy's project revolves around the need for enhanced monitoring of biodiversity data within the rapidly growing and maturing natural capital/nature-based solutions investment sector.

Significant institutional investment is now being made into natural capital, with the majority of this focussed on carbon removal or avoided CO2 emissions schemes as the primary ecosystem service. While admirable and much needed, there is a substantial risk of focussing on carbon as the only attribute for projects, leading to actions that actually degrade a landscape (e.g. the planting of non-native monoculture plantations) with significant long-term detrimental impacts on mitigation actions as well as resilience to future shocks (e.g. climate change, pests, disease).

The first step is to be able to quantify and track biodiversity attributes at high resolution within project sites, such as forest schemes or landscape regeneration.

The second half of the proposal is to then consider how these data are embedded into project characteristics and can therefore become actionable and have a material financial consideration. Treeconomy proposes the use of smart contracts and wider blockchain adoption for this. Being able to immutably encode biodiversity metadata into projects or to be encoded into smart carbon credits would permanently embed these attributes in financial transactions and enable tracking through supply chains, an increasingly important consideration for financial institutions.

The customers in mind are asset managers branching into the natural capital sector. There is a secondary customer - the Government, specifically Defra. The UK Government is rolling out the Environmental Land Management System, conceived as a "public payments for public goods programme" replacing the EU Common Agricultural Policy for land-based subsidies. These public goods include the preservation and enhancement of biodiversity. Measurement and reliable tracking of ecosystem services will be absolutely vital to the successful realisation of ELMS. Our proposed solution could lay the groundwork for automated payments based on real-world monitoring data, to the extent that Defra subsidy payments can be dynamically updated based on location and quantity of environmental goods that were achieved or supported.

This would tackle impact disclosures, climate outcome and transition risks associated with climate mitigation activities. The solution is built around high resolution but scalable remote sensing data, with smart contracts designed to track ecosystem service impacts through digital supply chains for ecosystem service payments.