Intrinsic Value or Market Value? A Perspective from the Forest 

Carbon offsetting has opened a wide range of possibilities that allow individuals and organizations to compensate for their emissions. The types of projects used to carry out the offsets by reducing, avoiding, or removing greenhouse gas emissions, either through natural or technological processes, are very varied. In fact, a study identified more than 170 types of projects, which can be grouped into 8 major categories, such as renewable energy, household and community, industrial/chemical, waste disposal, forestry and land use, etc¹.  

All these types of measures have their unique pros and cons, and every actor can choose how to make a real contribution to climate change mitigation. However, this is not the focus of this text, although we recognize the importance of implementing methodologies, standards, and best practices for project development to ensure a real climate impact. The aspect we wish to address on this occasion is the co-benefits offered by the implementation of Nature-Based offsets, with particular emphasis on their importance for forests. The question we want to analyze is: what implications do Nature-Based offsets have for forests or natural ecosystems beyond their global climate contribution? 

What does the data say? 

Although the implementation of Nature-Based offsets (a type of carbon offset project generated by projects that protect, restore, or manage natural ecosystems) brings environmental benefits in itself, beyond its contribution to CO2 reduction, carbon projects can certify and demonstrate additional contributions to the environment or communities through programs or labels like SD Vista, Climate, Community and Biodiversity Standard focused on AFOLU projects, or ABACUS for ARR projects. 

According to the Ecosystem Marketplace’s State of the Forest Carbon Markets 2024 report, by 2023, the proportion of voluntary carbon market transactions from projects with collateral benefits certifications grew to 28%, up from 22% in 2022. However, the price of credits from such projects decreased by 23% from their average price, resulting in a reduction of 37% in their preferential price in 2023, compared to 63% in 2022, even though credits associated with projects with co-benefits continue to receive a preferential price. According to the report, this reduction could be due to an increased supply of such credits, particularly driven by the growth of transactions in the Cooking Stove Distribution projects within the Household/Community Devices category. 

These data illustrate the significant variation in the voluntary carbon market, which, as its name suggests, responds to market dynamics, with highs and lows in supply and demand. However, these variations do not necessarily capture the real effect of the co-benefits offered by a specific type of project, which is why it is crucial to demonstrate the co-benefits of your project from the very beginning and to promote and develop more specific labels or standards that highlight the best projects within their class. Likewise, if project owners, developers, and investors fully understood and could demonstrate the true magnitude of the co-benefits their projects offer, this understanding could more easily translate into market acceptance and a market premium. 

Nature-Based projects can be carried out in a wide range of ecosystems. However, forests are one of the ecosystems where these types of projects are most commonly found, whether for conservation or restoration. Therefore, we take a deeper look at some co-benefits that are sometimes overlooked: 

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Examples of Co-Benefits

I didn’t know you were there! 

To a large extent, this phrase summarizes one of the greatest co-benefits obtained through forest conservation: habitat preservation. It is simply incredible—not only for urban dwellers but also for rural inhabitants—to discover the vast variety of animals or plants that a forest can house. A carbon project designed with the goal of preserving and increasing this biodiversity can not only contribute to protecting the habitat itself but also bring resources for research and knowledge to areas where sampling or specific studies of that biodiversity have not been possible or need to be sustained over time. 

“A tree can be only as strong as the forest that surrounds it” 

This quote by Peter Wohlleben emphasizes the importance of connectivity and size in forest ecosystems, which not only allows for genetic exchange between plants and animals but also enables the ecosystem to reach a state of balance, health, and regenerative capacity that ensures its long-term survival. Due to the large scale at which carbon projects are typically implemented, covering vast areas of protected or restored forests, this type of co-benefit is commonly seen. It can be further enhanced if these areas are carefully selected in regions where connectivity needs to be restored or where current areas are so fragmented that their viability is low. 

“You don’t know what you have until it’s gone.” 

This famous saying also applies to humans and their relationship with forests. Often, we fail to recognize their influence on other environments. For example, in the case of the Amazon rainforest, it’s easy to forget that beneath it lie mostly nutrient-poor soils², or that the evapotranspiration from trees in tropical forests is a major driver of regional precipitation, contributing up to 41% of precipitation in the Amazon basin and up to 50% in the Congo³. These examples, and many others backed by science, demonstrate the profound impact forests have on life on Earth, extending far beyond what we currently understand. This is where the importance of carbon projects, particularly REDD projects focused on conserving mature forests, stands out above many other options for mitigating climate change. While we clearly understand the process of CO2 absorption from which we benefit, do we truly grasp all the other processes and interactions trees have within forests?   

Conclusion

In conclusion, moving beyond merely appreciating the beauty of forests and their contribution to the environment, as discussed in the previous paragraphs, I invite all stakeholders—developers, investors, and EP Carbon partners—to include solid and well-designed co-benefits that contribute, even in unexpected ways, to the well-being of natural ecosystems. As my economics professor once said, let’s not forget that markets are unpredictable and driven by people’s preferences. Therefore, if we focus our attention on projects with real environmental co-benefits, we will not only achieve our global warming mitigation goals, but we may also create a wave of widespread benefits.