Could someone please explain how iNaturalist determines that a species is vulnerable? Is it with reference to IUCN conservation status?

Many sources. Iucn is one. At a national or subnational level national Red lists or equivalent, NatureServe, legislative acts are other sources.

If you think a species information is wrong, flag the taxon for curation. I include links to an external status page in my flags.

A note - some common species may designated as vulnerable in other areas. I have encountered this a number of times with Canadian moths which are at their theoretical northern limit.

VU conservation status

General

Topic		Replies	Views
Species not appearing as Vulnerable, not obscured General	8	1271	July 17, 2019
Comprehensiveness of conservation statuses on iNaturalist? General	22	2139	March 6, 2020
Conservation status not being reflected accurately on iNaturalist Australia General question	12	1759	October 10, 2021
Updating IUCN Red List conservation statuses Curators	43	5153	January 18, 2022
Clarification wanted - what list does iNat use for threatened status in observation searches? General question	19	2279	August 22, 2020

VU conservation status

Related topics