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Realizing the social value of impermanent carbon credits

Nature Climate Change volume 13, pages 1172–1178 (2023)Cite this article

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Abstract

Efforts to avert dangerous climate change by conserving and restoring natural habitats are hampered by concerns over the credibility of methods used to quantify their long-term impacts. Here we develop a flexible framework for estimating the net social benefit of impermanent nature-based interventions that integrates three substantial advances: (1) conceptualizing the permanence of a project’s impact as its additionality over time; (2) risk-averse estimation of the social cost of future reversals of carbon gains; and (3) post-credit monitoring to correct errors in deliberately pessimistic release forecasts. Our framework generates incentives for safeguarding already credited carbon while enabling would-be investors to make like-for-like comparisons of diverse carbon projects. Preliminary analyses suggest nature-derived credits may be competitively priced even after adjusting for impermanence.

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Fig. 1: Permanence as additionality through time, illustrated for a stylized deforestation-reduction programme.
Fig. 2: Derivation of EP for a stylized deforestation-reduction programme.
Fig. 3: Forecasting a release schedule and correcting for forecasting errors for a stylized 20-year reduced deforestation project.
Fig. 4: Application of the PACT framework to three archetypal 40-year NBS projects.

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Data availability

All data are available in the main text or the supplementary materials. For more information on PACT see www.cambridgepact.org.

Code availability

The code for producing carbon release schedules and calculating EP is available on request.

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Acknowledgements

This work was developed with support from the Royal Society, ESRC, NERC, Grantham Research Institute on Climate Change and the Environment, Frank Jackson Trust, Dragon Capital and the Tezos Foundation. We thank B. Balmford, G. Cerullo, A. Eyres, H. Hunnable, S. Jaffer, E. Quigley, E.-P. Rau and C. Wheeler for their help and ideas.

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Authors and Affiliations

  1. Department of Zoology, University of Cambridge, Cambridge, UK

    Andrew Balmford & Tom Swinfield

  2. Conservation Research Institute, University of Cambridge, Cambridge, UK

    Andrew Balmford, Srinivasan Keshav, David Coomes, Anil Madhavapeddy & Tom Swinfield

  3. Department of Computer Science and Technology, University of Cambridge, Cambridge, UK

    Srinivasan Keshav & Anil Madhavapeddy

  4. Grantham Research Institute on Climate Change and the Environment, London School of Economics, London, UK

    Frank Venmans & Ben Groom

  5. Department of Plant Sciences, University of Cambridge, Cambridge, UK

    David Coomes

  6. LEEP Institute, Department of Economics, University of Exeter Business School, Exeter, UK

    Ben Groom

Authors
  1. Andrew Balmford
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Contributions

All the authors conceived the initial idea. A.B., S.K., F.V., B.G. and T.S. developed the method. T.S. created the figures. A.B., S.K. and T.S. wrote the manuscript and all co-authors revised it.

Corresponding author

Correspondence to Andrew Balmford.

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Competing interests

A.B. is a trustee of the World Land Trust, a non-governmental organization that supports forest-based carbon projects. The Cambridge Centre for Carbon Credits (4C) has no commercial interest in carbon credits.

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Peer review information

Nature Climate Change thanks Per Kristian Rørstad, Susan Cook-Patton and Lucas Joppa for their contribution to the peer review of this work.

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Supplementary information

Supplementary Information

Supplementary Information, Tables 1–2, Figs. 1–8 and refs.1–17.

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Balmford, A., Keshav, S., Venmans, F. et al. Realizing the social value of impermanent carbon credits. Nat. Clim. Chang. 13, 1172–1178 (2023). https://doi.org/10.1038/s41558-023-01815-0

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