As mainstream interest and investments in carbon credits rise, here’s how the market can maximise its potential.
At a Glance:
- The voluntary carbon market last year exceeded $1 billion in global value for the first time and could surpass $30 billion in annual value by the end of the decade.
- To ensure ongoing growth toward its full potential, the market must continue building trust, and stakeholders should adopt pragmatic investment strategies that balance carbon-removal and avoidance credits.
- Several global initiatives are helping the market to mature by developing standards for assessing the quality of carbon credits, better communicating their use, and more efficiently and transparently trading them.
The carbon market has reached a crossroads. After more than two decades as a niche tool for addressing climate change, mainstream interest and investments in voluntary carbon credits are on the rise. But many would-be investors remain wary due to the complexity of this nascent and often misunderstood market mechanism, and regular accusations against participants of greenwashing.
Greenwashing – presenting an environmentally friendly public image while avoiding or delaying costly changes to one’s own business model and operations – is a real issue if companies see carbon-credit purchases as an easy way out of the climate change dilemma. But the reality is that offsetting – the use of carbon credits to balance one’s carbon emissions – can play a legitimate, crucial role in tackling the climate crisis by putting a price on emissions’ indirect effects and funding activities that help resolve it.
If stakeholders find ways to increase trust and participation in the voluntary carbon market, charting a pragmatic path to scaling it up, it can become one of the most powerful climate change solutions at our disposal.
More investments, more challenges
The voluntary carbon market’s objective is to facilitate the flow of capital to projects that either avoid carbon emissions that would have occurred in their absence or remove and sequester carbon from the atmosphere. In 2021, the total market value exceeded $1 billion for the first time, reaching a global volume of about 160 million retired carbon credits. Those represent 160 million tons of avoided or removed carbon emissions across the four largest voluntary carbon standards. While this still pales in comparison to the size of traditional commodity markets, current projections indicate the voluntary carbon market could reach between $30 billion and $50 billion in value by 2030. This sort of scale will be necessary to compensate for the world’s combined annual emissions of about 46 billion tons of CO₂, even when considering increased technological options to reduce emissions.
Despite the growth of the carbon market and its potential to provide financial incentives for decarbonisation, the absence of a clear industry consensus on how to most effectively participate has left many businesses nervous about jumping in. A primary concern is susceptibility to accusations of greenwashing, while at the same time needing to demonstrate progress toward stated emissions-reduction goals. This has led to a recent pattern in which some companies increasingly shun avoidance credits (from projects such as forest conservation) in favour of removal credits (from projects that physically take carbon from the atmosphere, such as forest restoration).
The rationale for this is rooted in the 2018 Intergovernmental Panel on Climate Change’s (IPCC) report on Global Warming of 1.5C. This report’s scientific guidance toward emissions removals has been translated into several standards for achieving corporate net-zero emissions, such as the Science Based Target initiative’s (SBTi) net-zero framework, that initially prescribed the use of removal credits only.
It’s important to note, however, that the IPCC and SBTi are describing the net-zero end state, in which the world has reduced all but the hardest-to-avoid emissions, and the remaining emissions are balanced with removals to reach an equilibrium. In 2022, we’re far away from this end state: There are gigatons of annual carbon emissions to avoid before we can gradually switch to removing carbon from the atmosphere exclusively. This is reflected in more recent guidance from SBTi and its “beyond value chain mitigation” approach to reducing corporate emissions, which incorporates avoidance credits as well.
Furthermore, the carbon-removal market is still in its infancy and much smaller than many would-be participants realise. In 2021, only 6% of total carbon credits issued were classified as true removal credits by the Berkeley Carbon Trading Project. The long lead time for forest growth, availability of suitable land, and technology constraints will result in an undersupplied carbon credits market for decades, if avoidance credits don’t remain a part of the equation. While the higher demand and resulting high prices of removal credits will be beneficial for increased technology deployment (especially for innovative solutions such as carbon capture and storage), the market also needs to deliver on its objectives to finance ecosystem conservation as part of a comprehensive strategy against climate change.
Scientists estimate that the forest and land use sector can contribute 30% of the mitigation needed to prevent a warming increase of more than 1.5 degrees Celsius, with reducing deforestation being a key component of this. Carbon credits remain one of the few mechanisms left to address deforestation at scale, especially in jurisdictions where regulation has proven unsuccessful. According to data from the World Resources Institute, global loss of forest cover and resulting greenhouse gas emissions are near their all-time high (see Figure 1). Not only is nature loss a huge problem for ecosystems, but halting this represents one of the most cost-effective ways for corporate buyers and individuals to help mitigate climate change.
Carbon emissions from the loss of forest cover remain near an all-time high
Significant cobenefits are also achieved by nature-based avoidance projects, which often have tangible and quantifiable effects beyond the CO2 avoided. These can include increased biodiversity, local education and employment opportunities, access to clean water, pollution mitigation, and more. Buyers of these credits have a two-fold opportunity to compensate for their currently unavoidable emissions at the most effective cost, as well as align these investments with Sustainable Development Goals or overarching corporate sustainability or strategy goals.
Yet despite decades of commitments and the range of additional benefits, the global community hasn’t found a way to unlock the full scale of capital required for ecosystem conservation. Carbon markets could be the answer, but participants must find the right balance between financing much-needed development of carbon-removal technologies and the immediate conservation of natural carbon stocks through avoidance credits.
All this is to say, many buyers will have to adopt a more nuanced and blended approach to meet net-zero compliance by 2050, backing away from the ambition to achieve net-zero solely through removal credits. A singular focus on removal risks making the carbon market accessible only to highly profitable businesses and those with a vested interest in certain technological solutions, rather than a global mechanism through which stakeholders of all shapes and sizes can work toward achieving emission-reduction goals and financing global decarbonisation. As buyers ramp up pragmatic investments in both avoidance and removal credits to build healthy carbon portfolios, the market will be able to achieve the scale needed to assume its role as a major tool in mitigating climate change.
The trust factor
Now comes the hard part; increasing participation in the carbon market. This will fundamentally require building trust. For many years, only a few dozen companies have actively used voluntary carbon credits at scale, and these organisations often deployed complex diligence processes that aren’t practical for less sophisticated or smaller buyers. At the same time, varying claims about the use of carbon credits have confused consumers and customers, making it difficult to refute accusations of greenwashing. Skeptics have suggested the voluntary carbon market could end up an unregulated “Wild West,” with minimal accountability and lowest-common-denominator credits as the prevailing commodity.
This scenario looks increasingly unlikely, but we do see three areas in which the market needs to continue building trust. The good news is there’s cause for optimism for all three.
1. Supply of carbon credits. Trust in the quality of carbon credits is critical for buyers to engage and increase the flow of capital to projects. Unfortunately, faith in the market has been shaken at times by media reports on credits with low additionality (the degree to which credit purchases directly finance carbon reductions that wouldn’t have otherwise occurred), inflated baselines (overestimating the threat to a particular ecosystem, resulting in unjustified rewards for its protection), and insignificant payments to project developers on the ground.
The Integrity Council for the Voluntary Carbon Market (ICVCM), a multistakeholder initiative with expert members from all corners of the carbon and climate sphere, is currently developing a global quality standard for carbon credits: the “Core Carbon Principles.” These should help businesses set and, perhaps most important, understand common minimum requirements for the integrity of purchased credits. Third-party organisations like Sylvera, BeZero Carbon, and Calyx Global have also emerged to issue carbon-reduction project ratings. These can provide additional confidence to corporate buyers and serve as an important source for cross-referencing quality, similar to credit rating agencies in traditional markets.
We expect these initiatives to foster more nuanced perspectives and increasingly drive the mainstream market toward consensus on what constitutes a high-quality carbon credit.
2. Use of carbon credits. To increase the mainstream public’s trust, companies have to do a better job communicating their use of credits in a clear, transparent, and standardised way. Differing conventions on the inclusion of various emissions scopes and types of credits – plus a plethora of standards, certifications, and logos -often make it difficult for consumers to look behind the marketing message. Consistent, repeated messaging and gradual convergence on unified language across carbon projects will help everyone make more informed decisions.
Several recent publications from the World Resources Institute, the Voluntary Carbon Markets Integrity Initiative (VCMI), and the Nordic Dialogue add to a growing body of guidance on how to use carbon credits in a standardised way, as one element of a consistent corporate net-zero strategy. Leading companies increasingly have an opportunity to develop clear, science-backed narratives on the topic that they can use to their competitive advantage, while also encouraging continued growth of the market.
3. Trading of carbon credits. There’s also work to do to increase trust in the carbon market’s connective tissue. In mature commodities markets, the trading of spot, futures, and derivative contracts provide efficient liquidity and transparency in price discovery. The carbon market is still developing similar functions, with trading often historically constrained to bilateral agreements between the producer (project developer) and end customer (corporate offsetter). Not only does that setup inhibit liquidity and price discovery, but its highly manual nature increases transaction costs and limits the share of total market spending that actually reaches physical projects on the ground.
Recent market infrastructure developments give room for optimism and are helping carbon mature as a commodity. Exchanges such as those operated by CME Group, AirCarbon Exchange (ACX), and Intercontinental Exchange (ICE) are standardising carbon credit trading and price discovery by offering well-defined, tradeable spot and futures contracts. Increased trading activity and liquidity in the market will allow for more flexible buying and financing structures, such as linking carbon credit prices to an index. This ensures fair value goes back to local communities and reduces delivery risk for buyers.
The road ahead
Corporate sustainability teams and other carbon buyers might wonder where to look for better ways to support pragmatic scaling of the carbon market and facilitate investments in projects that reduce global emissions. In our work in this area, we’ve seen several emerging best practices.
First, leading companies are making carbon offsetting part of a holistic climate change strategy. The most effective ones follow a mitigation hierarchy, which starts with avoiding and reducing the use of fossil fuels, replacing polluting technologies, and only then offsetting the remaining emissions. Leading companies define a plan for decarbonising their own operations, such as an SBTi commitment with clear intermediate targets, and spell out the initiatives that will reduce their emissions over time. Once carbon reduction initiatives are implemented, the company’s remaining unavoidable emissions should be offset. The recently published Provisional Claims Code of Practice by VCMI provides a detailed guide for how to implement this hierarchy.
Next, recognising that achieving net-zero emissions is a marathon, not a sprint, the most effective companies are building a balanced portfolio of carbon credits. Decision makers should acknowledge that procuring credits has a critical function in the market; not to purchase removal credits as fast as possible, but rather to finance the comprehensive net-zero transition, starting with avoiding further emissions today. By procuring credits from different regions, methodologies, standards, and project types, businesses can not only reduce their risk through diversification, but also address climate change with an “all of the above” approach instead of a singular solution. The illustrative portfolio below demonstrates the mix of carbon removal and avoidance credits, as well as the shift over time as supply and emissions footprints change (see Figure 2).
A pragmatic climate strategy complements decarbonisation with a carbon-credits mix that gradually shifts toward removal credits
Buying methods are important, too. In lieu of repeated one-off purchases from the spot market, signing longer-term offtake agreements from carbon projects ensures that finance continues flowing to critical conservation and removal activities, as well as the ongoing community benefits. The security of longer-term commitments from buyers can further develop the market by sending strong signals for project development (supply) and therefore diversify high-quality options available to fill demand over time.
Lastly, leading companies monitor the market closely and watch for critical signposts. Participants that keep an eye on emerging conventions, new standards, and public perceptions can not only get ahead of greenwashing accusations but also encourage healthier, more realistic, and financially sound narratives around carbon.
The carbon market offers an elegant tool to finance climate change solutions. As it rapidly evolves, businesses and other stakeholders would be wise not to lose sight of the ultimate objective: to reduce the concentration of carbon dioxide in the atmosphere through any means necessary. A more positive framing and willingness to participate in this growing market in more diversified, dynamic ways over time—akin to the complexity of the overarching climate challenge itself—will benefit us all.
Muireann Mageras, Torsten Lichtenau, Dale Hardcastle and Henning Huenteler.
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Carbon offsets – avoidance and removals
‘Stop the tap before mopping up’ Vertree is focused on nature-based solutions (NBS) as a key part of the fight…
‘Stop the tap before mopping up’
Vertree is focused on nature-based solutions (NBS) as a key part of the fight against catastrophic climate change. Carbon offsetting schemes provide critical finance to NBS projects. Among these, carbon offset projects that reduce emissions from deforestation and forest degradation in developing countries (REDD) provide the most immediate, tangible and sustainable climate impact available. Emission reductions from offset projects must be measurable, additional, and be as permanent as human intervention can guarantee. The focus of this note is to explore the increasing bias of carbon offset buyers for carbon removals over avoidance credits.
Avoidance credits are defined as certified emissions reductions from projects that reduce emissions compared with the most likely course of action – the baseline scenario. REDD+ projects reduce forestry loss and preserve the existing biomass and embedded carbon beyond historical trends. Other avoidance projects include renewable energy and carbon-capture from flue gases. In each, current emissions are reduced by improved alternatives, but existing CO2 is left untouched.
Removal credits are defined as emissions offset projects that adsorb additional CO2 back from the atmosphere in order to remove the greenhouse gas potential. This includes photosynthesis of all kinds, into timber, peat, seagrasses as well as engineered methods such as direct air capture and accelerated mineral weathering.
Global deforestation, at around 13 million hectares per year, makes up 8-12% of net emissions. As such it ranks 3rd after the USA in the country league tables. Preventing mature forestry loss, along with wider ecosystem destruction is therefore a priority for any climate strategy.
A tree stores very little carbon in the first 10 years of its life (figure 1). In any afforestation project, the bulk of the carbon captured is during the middle phase, from 15-40 years after planting to maturity, with early growth rates at a third of peak potential.
Cutting down a hectare of mature tropical forest releases an average of 629 tonnes of CO2 which will take more than a lifetime to regrow. Over the first 10 years of new planting the recapture is less than 80 tonnes CO2 per hectare.
The carbon budget (figure 2) shows that emissions must halve by 2026 to stay within 1.5 degrees of warming. This means that we do not have the time to continue emitting whilst we wait for new trees to grow and store carbon later. The atmospheric ‘pot’ will boil over in the interim.
The Oxford Principles for Net Zero Aligned Offsetting illustrate this point well (figure 3). Removals will be required, but avoidance is urgent today.
Trees grown for carbon capture – often fast growing, densely packed Sitka (spruce) or Eucalyptus (gum) trees are less favourable for wider forest benefits (apart from timber production). The recently released IPBES report argues strongly for tackling climate change and biodiversity loss together, and to this end REDD+ projects are increasingly focused on species conservation and habitat improvement. The CCB Gold framework provides certification of biodiversity co-benefits in voluntary offsets.
Vertree works with high-quality REDD+ projects with verified baselines and genuine emissions reductions. Our work helps preserve tropical rainforests alongside the wildlife and communities that live within them. These actions are critical to combat climate change today and over the next 10 years.
A premature focus just on removals, whilst well intentioned, means that immediate action to reduce forest emissions could be neglected at huge risk to the overall climate change pathway.
Sources: European Commission, REDD+ initiative 2018 World Resources Institute, By the Numbers: The Value of Tropical Forests in the Climate Change Equation Vertree, based on Journal of Environmental Management, Carbon in the Vegetation and Soils of Great Britain 1995 2020 figures, World Resources Institute Global Forest Watch. Fored Pulse: The Latest on the World's Forests IPCC quoted Brown et al. How Much Carbon Can Be Sequestered by Global Afforestation and Reforestation? The Oxford Principles for Net Zero Aligned Carbon Offsetting 2021 The IPBES IPCC Co-Sponsored Workshop on Biodiversity and Climate Change The Climate, Community and Biodiversity Alliance
How to protect and restore natural capital assets through nature based solutions
Despite our dependence on healthy land, and on coastal and marine ecosystems, we are depleting them at an alarming rate,…
Despite our dependence on healthy land, and on coastal and marine ecosystems, we are depleting them at an alarming rate, which undermines the resilience of our economies and exposes humanity to natural liabilities, including the increased risk of zoonotic disease spillover or simultaneous breadbasket failure. Protection and restoration of natural assets is therefore an essential foundation for a resilient economic system, in both urban and rural areas. The World Economic Forum, in collaboration to SYSTEMIQ, reports below.
Nature-positive policy opportunities:
Invest in Green urban infrastructure: use public and private investments to transform cities into engines of innovation, resilience and prosperity by integrating nature into their design.
Cities today face huge challenges: ambient air pollution claims more than 4 million lives annually, and there is overcrowding, congestion and enormous resource pressure with reliance on extracting “surplus” natural capital from the countryside. By 2050, 68% of the world’s population is expected to live in cities, but 60% of urban areas are yet to be built, which presents a huge opportunity for directing investments into nature-positive infrastructure, such as:
– Expanding public green spaces through large-scale planting, conversion of brown sites into ecological conservation areas and the creation of green corridors alongside existing infrastructure. Increased green space has a host of benefits, from creating jobs, to reducing urban temperatures and crime, to improving citizen health and well-being, to driving productivity and innovation. There are many micro-examples of cities investing in nature to enhance resilience, improve liveability and create jobs that could be replicated many times over. For example, in Medellín, Colombia, the local government has planted 30 green corridors around the city, helping to reduce average city temperatures by 2°C. Similarly, the local government in Durban, South Africa, developed a landfill site into an ecological conservation area and employment programme. Each of these opportunities will create localized jobs, strengthening the interest of local constituencies in supporting ecological outcomes. To seize this opportunity, governments need to invest in smart urban planning and central government should work with municipalities to help them put the right financing structures and public-private models in place, with local value-capture mechanisms (from rates to property development equity models) used to share the economics equitably.
– Using nature-positive infrastructure design to enhance the resilience of urban environments. Constructed ecosystems, including green roofs, bioretention systems and constructed wetlands are artificial, custom-built components of green infrastructure that are becoming more common in cities. The government of the city of Salford, UK, invested more than $12 billion in a constructed flood storage wetland (of more than 5 hectares) to protect almost 2,000 homes from flood risk, boost access to green space and increase biodiversity.
On a smaller scale, green roofs can reduce energy costs, capture storm water to reduce flood risk, create habitats for urban wildlife, reduce air pollution and urban heat, and even produce food. The market for green roofs is currently worth $9 billion and is set to grow by 12% annually through to 2030. Costs are falling, due to a combination of innovation and
government support; in Singapore, for example, costs fell from around $105 to $70 per square metre between 2016 and 2018, and the city’s 72 hectares of rooftop gardens and green walls are expected to triple by 2030.
Other opportunities include installing permeable pavements and cycle lanes that allow rainwater to pass into the underlying soil to reduce flood risk, support urban tree health (reducing air pollution) and provide natural water treatment.
Local governments can send a clear market signal for such green urban infrastructure by including requirements in planning permission for new buildings, and by rolling out installations across publicly owned assets.
Mobilize for large-scale Ecosystems Protection and Restoration, to mitigate growing risks from nature loss and climate breakdown, create jobs and boost rural livelihoods.
There is no pathway to achieving the goals of the Paris Agreement, nor to the Sustainable Development Goals (SDGs), without immediate protection and restoration of important ecosystems, particularly forests and wetlands mangroves, peatlands and marshes).
– Natural forests store 40 times more carbon than plantation equivalents and are hotspots of biodiversity, yet the rate of tropical forest loss (one football pitch every six seconds in 2019) has remained high for the past two decades. Mangrove forests provide more than $80 billion per year in avoided losses from coastal flooding and directly protect 18 million people in coastal areas. They also contribute $40–50 billion annually through fisheries, forestry and recreation benefits. Every $1 invested in mangrove conservation and restoration generates a benefit of $3, with conservation of existing mangroves yielding significantly higher benefits (88:1) than restoring degraded ones (2:1). Peatlands cover just 3% of the world’s land but store up to 25% of all soil carbon. Currently between 1 and 2 billion tonnes of carbon dioxide are lost from peat soils a year, despite limited benefits from the economic activities that disturb them.
Restoring degraded forests generates between $7 and $30 in economic benefits for every $1 invested. It is also a relatively low-skilled and labour-intensive exercise – an attractive proposition today with global employment forecast to decrease by up to 240 million jobs as a result of COVID-19, with Asia potentially worst hit.35 Similarly, there is a 10:1 return from mangrove conservation and restoration. Overall, new research suggests that expanding protected and conserved areas to at least 30% of our planet will result in financial and economic benefits exceeding the costs by a factor of at least 5:1 – 30% protection of our planet leads to increased economic output averaging $250 billion annually and generates additional non-monetized economic benefits from ecosystem services averaging $350 billion annually by 2050.
Some countries are already seizing these opportunities as part of their stimulus measures: Germany allocated $700 million for forest conservation and management; New Zealand aims to create 11,000 jobs in restoring wetlands and riverbanks, removing invasive species and improving tourism and recreation services on public lands; and the World Bank is providing $188 million and technical assistance to promote ecosystem restoration and disaster resilience in Pakistan, with the potential to mobilize 65,000 youths and labourers to
establish 12 new national parks. For conservation and restoration schemes to reach speed and scale – moving from individual, often subsidized, projects to systemic change that can mobilize private-sector ingenuity – both sticks (taxing pollution, closing off free access to natural resources and eliminating perverse incentives for land conversion, regulation and enforcement) and carrots (spatial planning, payments for ecosystem services designed to optimize environmental benefits, reforming agricultural subsidies, access to relevant public goods such as satellite monitoring data) are needed.
Protect and scale Ecotourism infrastructure to preserve the sector’s jobs and economic value and pave the way for further growth.
Prior to the COVID-19 pandemic, ecotourism was one of the fastest-growing subsectors of the travel and tourism industry, which was growing at a rate 40% faster than the overall global economy in 2019. Most ecotourism occurs in or around protected areas, which are estimated to receive 8 billion visits a year, generating revenue and supporting local livelihoods. The economic prize from supporting and scaling the nature-based tourism economy is evidenced by the case of Costa Rica, where the sector was growing by
more than 6% per year pre-COVID-19, contributing more than 13% of GDP and generating around 28% of direct and indirect employment. This has been supported by a raft of progressive policies – including the elimination of cattle subsidies (reducing pressure on forests) and the introduction of payments for ecosystem services.
But this source of economic value is now at risk. The global tourism industry is forecast to contract by up to 25% in 2020, with annual costs to the (largely wildlife-based) African tourism sector projected at $50 billion and 2 million job losses. Urgent action is required to support this sector in the short term. Governments should provide emergency funding and grants to private-sector enterprises, community-based organizations and conservation NGOs to maintain the integrity and functioning of the assets (aesthetic landscapes, iconic megafauna and biodiversity-rich ecosystems) upon which the industry relies. But for the sector to flourish in the longer term, it will require diversification of income streams for natural assets, most importantly through payments for ecosystem services as well as enforced protected areas. In the absence of a concerted effort to rescue this sector, an increase in land-grabbing, deforestation, illegal mining and wildlife poaching can be expected, further fuelling the vicious cycle of nature loss and economic risks.
Understanding regenerative business models
Identifying the most effective area for intervention is only the first step. Creating the mechanisms and incentives to keep forest…
Identifying the most effective area for intervention is only the first step. Creating the mechanisms and incentives to keep forest standing, and to encourage forest restoration, is what can transform today’s largely degenerating forest frontier into a productive, resilient and globally valuable forest economy. Creating such an economy requires a combination of well-enforced regulatory and fiscal policies and socio-economic incentives that reward sustainable management and protection of forest more highly than single-use extraction.
In the tropical forest context, regenerative models generate value from the protection and restoration of forests. In doing so, they provide tangible incentives to keep forests standing,
or even to regrow them over time. Accoring to a research commissioned by the Food and Land Use Coalition, the varied models which exist can be grouped into three key categories:
• Models which create value from standing forest
• Models that incorporate forest protection into agricultural production
• Models which create value from re-growing degraded forest
Therefore, for each of the land categories described in our “Sealing the forest edge where it is currently exposed” article, – standing forest, the agricultural zone and the degraded zone – a corresponding category of regenerative business model exists.
Category 1: Creating value from standing forest
WHAT ARE “VALUE FROM STANDING FOREST” MODELS?
These models depend upon harnessing the high variety, value and productivity of naturally growing forest products and environmental services in standing primary forest. They do not include timber plantations or other forms of man-made, plantation forests. When implemented, high-value, low-intensity value chains are created. They are high-value because the products and services which are produced by intact forests generate high market value per unit, and low-intensity because the impact on forest is minimal or almost non-existent.
WHY ARE THEY SO IMPORTANT?
The ecosystem value of primary forest is higher than any man-made attempt at recreating or mimicking it. Preserving standing forest has a twofold, additive impact: not only does it maintain the extraordinary array of products and services provided by forests, it also prevents the negative impacts of their disappearance (which produce some of the most harmful environmental impacts on the planet). Furthermore, standing tropical forest provides the home, livelihoods and cultural heritage of millions of indigenous community members.
Category 2: Agricultural intensification with a mandate to protect and preserve
WHAT ARE “AGRICULTURAL PRODUCTIONPROTECTION” MODELS?
These models involve improving production efficiency, and therefore reducing the environmental impact, of agricultural activities in proximity to forest landscapes. To do so, improved agricultural practices (particularly sustainable intensification) are combined with effective land use planning, robust local governance and incentive and reward mechanisms for forest protection. The result is increased productivity per hectare, the protection of forest with highest conservation value and in some cases the restoration of previously degraded land. As sustainable intensification is implemented, a gradual shift towards regenerative agriculture is required. This has the potential to maintain yields, while at the same time promoting soil health, reducing use of chemical inputs, and increasing the diversity of healthy, planetfriendly foods produced and consumed. Productive regenerative practices combine traditional techniques, such as crop rotation, controlled livestock grazing systems, low-till agriculture and cover crops, with advanced precision farming technologies and new bio-based fertilisers and pesticides. New technologies that drive productive regenerative agriculture are continually emerging.
WHY ARE THEY IMPORTANT?
Agricultural expansion, both by smallholders and larger organisations, is the dominant driver behind more than half of all tropical forest loss. Finding business models that can both deliver enhanced agricultural output and mitigate forest loss can deliver “triple wins”: rural development; domestic economic growth; and protection and restoration of forests on a large scale (and all their associated benefits, including those directly necessary for agricultural production such as water cycles, pollination, etc.)
Category 3: Creating value from forest regrowth on degraded land
WHAT ARE “VALUE FROM FOREST REGROWTH” MODELS?
These models centre on restoring previously degraded land and returning that land to a state that is as close as possible to natural forest. They use a diverse mixture of regrowth vegetation that increases both above- and below-ground biodiversity and biomass. They do not include monocultural plantations. By mimicking natural ecosystems, and by working with species that are particularly well suited to specific environmental conditions, forest regrowth models can restore increased environmental and economic productivity.
WHY ARE THEY SO IMPORTANT?
There is an estimated 100 million hectares of degraded land within the forest frontier alone. The natural productivity and value of this land has been severely impacted, reducing its economic, social and environmental value. Restoring degraded land can support livelihoods and increase economic productivity by restoring soils and water, deliver climate change mitigation by sequestering carbon and enhance biodiversity and other key ecosystem services outcomes (clean water, reduced erosion, enhanced soil fertility, etc.).