Complementing Carbon Credits from Forest-Related Activities with Biodiversity Insurance and Resilience Value

TL;DR

This paper explores how integrating biodiversity insurance and resilience valuation can enhance the effectiveness of forest-related carbon credits by addressing environmental and physical risks more comprehensively.

Contribution

It introduces a novel approach of combining carbon credits with biodiversity insurance and resilience valuation to improve risk mitigation in forest carbon projects.

Findings

Ecosystem capacities can be leveraged for risk mitigation.

Complementing carbon credits with biodiversity insurance enhances project resilience.

Environmental safeguards are underdeveloped in current carbon credit frameworks.

Abstract

Carbon credits are a key component of most national and organizational climate strategies. Financing and delivering carbon credits from forest-related activities faces multiple risks at the project and asset levels. Financial mechanisms are employed to mitigate risks for investors and project developers, complemented by non-financial measures such as environmental and social safeguards and physical risk mitigation. Despite these efforts, academic research highlights that safeguards and climate risk mitigation measures are not efficiently implemented in some carbon projects and that specification of environmental safeguards remains underdeveloped. Further, environmental and social risk mitigation capacities may not be integrated into financial mechanisms. This text examines how ecosystem capacities can be leveraged and valued for mitigation of and adaptation to physical risks by complementing carbon credits with biodiversity insurance and resilience value.