Appendix
Adding Value to Credits
Time Value of Environmental Credits
Carbon credits can vary dramatically in the impact that they are having on our planet. For example, a deforestation credit from 2012 does not have the same impact as a farming sequestration credit from 2022. With more recent credit sales, credit producers are directly relying on the sale of that credit to fund operations. With a 2012 credit, there is no economic benefit to the project producer with the sale of that credit. Meaning any impact from the purchase of that credit is going solely to the broker or secondary market holder of the credit.
Impact of Pre Purchasing Credits
What ecoToken does is more impactful than both of these because pre purchasing credits from environmental projects funds the operations allowing them to happen in the first place. This even further lowers the barrier to entry to act sustainably by kickstarting these projects. With the example of sustainable farming that leads to carbon sequestration in the soil, there is an immediate cost to farmers to implement these practices. If the farmer can create a methodology then they can apply to the ecoToken System to pre sell these credits, helping them to derisk their transition. This system can allow for more farmers on the fence about these practices to make the switch. So by pre purchasing, not only is the buyer directly funding the sequestration of that tonne of CO2, but they are also incentivizing more farmers to act in a similar fashion.
Impact to Value Through Story Telling
The next question is: how can impact = value?
If a business is simply looking for the cheapest way to achieve carbon neutrality through offsetting, then it makes sense for them to purchase the cheapest credits available such as the 2012 deforestation credits mentioned above. Although, as the carbon credit market has progressed, consumers are becoming more aware of "greenwashing" and the actual impact of credits on the market. The trend ecoToken is aiming to take advantage of is a more aware consumer that is skeptical of vague claims of carbon neutrality, which is why we are taking the quality approach.
Carbon credits offer more than just carbon neutrality. They also offer marketing value because the environmental project behind the carbon credit has a unique story to tell. Through ecoToken, businesses can become part of the story from the project's inception and share it with their customers. For instance, if XYZ company prefunds a project, the developers would feature the business' information early on and in project development videos. This enables the business to showcase the real-world impact they are having during the project's development, which they can use for marketing. In addition to the marketing benefits, the business receives a regular stream of carbon credits that they can use as offsets.
Risk Mitigation
ecoProjects that are preselling their credits through the ecoToken System are vetted either by the ecoToken team, or directly by the Regen Network team. Projects are only accepted that have fully done their due diligence and created a methodology for exactly how the credits will be created. This leaves them with a very clear path to credit creation. Initially, only projects that have already produced environmental credits on Regen or are being developed directly with ecoToken will be accepted for pre funding.
Water Credits
ecoToken is a key member of the WaterDAO which is working towards a water credit standard. The first project to be prefunded through the ecoSystem was a water credit project based in Florida.Water credits are a standardized unit of measurement for water treatment, similar to carbon credits for carbon reduction. In the context of the WaterDAO, one water credit represents one additional cubic meter of water that has been treated and put back into the water system from which it was created and credited. The goal of water credits is to incentivize clean innovation in water treatment and to provide a transparent and verifiable way for institutions to offset their water usage.To be considered a quality water credit, certain criteria must be met, including establishing credibility and scientific consensus, location-specific credits, a reason for water producers to use green methods of treatment, a liquid and transparent marketplace, transparent and verifiable data, transaction finality, and prevention of "double spending." Meeting these criteria can create a thriving water credit marketplace that benefits both the environment and those who participate in it.Co-benefitsWater Credits often come with co-benefits like carbon reduction and increased soil health. This gives them extra environmental impact on top of water treatment.
Environmental Credit Production
Regen NetworkEnvironmental credit producers go through a six-step process in order to bring credits on-chain through the Regen Network:
Credit class is created or an existing credit class is used for credits to be created.
Develop a methodology to show how the environmental impacts are being documented and verified.
Have the methodology pass peer review. This methodology can be used across multiple projects of a similar nature.
Establish a baseline for the project, so the results have a comparison.
Third-party verification of the data. All measurements and calculations of carbon reductions will be verified before being brought on chain.
The credits from each reporting period are issued in batches and given to project developers.
The credits are then made available and sold to individuals and corporations wanting to offset their environmental impacts.
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