The Nature-based Solution Ecosystem

Photo courtesy of Nature Conservation Research Center

The nature-based solution ecosystem for generating carbon credits is currently unbalanced and needs fixing. Investments to align various parts of the ecosystem, such as donor support for registries like Verra and addressing supply issues through the Core Carbon Principles developed by the ICVCM, follow a theory of change that assumes the market will self-correct to address issues like additionality and permanence. We believe this approach is flawed and underestimates the challenges faced by local organizations and their communities.

We predict that the next wave of issues to gather attention will be the inability of carbon projects to ensure permanence, as these projects are often poorly designed and lack critical safeguards, such as fair benefit-sharing agreements, income and food security, and biodiversity conservation. The lack of transparency is especially concerning. While investors are eager for ‘shovel-ready projects’ (see “What’s Needed for More Shovel Ready Projects“), it is crucial that these project designs go beyond carbon and prioritize climate justice additionality.

6 Interrelated pieces of the ecosystem:

  • The Demand Side: This includes two primary types of demand—entities looking to trade carbon credits and those aiming to retire credits to meet their net-zero commitments.

  • The Supply Side:  This includes the many types of possible projects (e.g. REDD+. ARR, IFM, Blue Carbon etc.), their design, and the safeguards that have been put in place across stakeholders. Supply is driven by carbon project developers and local implementing partners.

  • Registries:  These are the organizations that lead in developing the standards (e.g, Verra, Gold Standard) and represent themselves as the assurance agents for the overall system.

  • Governments: Set the policy, legislative and regulatory guidelines, and rules that impact all elements of how, when, and where NbS projects are created, drive local market demand for and sometimes the price of carbon credits, and set out benefit sharing requirements.

  • UNFCCC: Influences how governments react and engage especially in relation to cross-border trade in carbon credits.

  • Cross-boundary players:  These are the businesses and organizations that work across various elements of the ecosystem as consultants, rating agencies, advocacy organizations, or experts of many types.

We believe that weaknesses and imbalances in the ecosystem are hindering the true potential of nature-based solutions (NbS). 

Three examples:

  1. Demand:  Investors are deeply concerned about integrity, as it significantly impacts the market price of carbon credits. However, they often demand an impossible level of integrity relative to the price they are willing to pay. This creates a situation where many investors claim, “There is nothing bankable to invest in!” Contrary to the perception of a supply shortage, the real issue is a lack of demand for projects that deliver quality carbon credits at a fair price. The low market price affects both additionality and project permanence.

  2. Supply:

    As I mentioned above, the lack of resources from project initiation to bankability leads to lousy project design and inadequate attention to safeguards. In many instances, projects are not being designed to align incentives that keep locals interested for the 20-40 year span of projects. (More on this below). Permanence is the ultimate issue as local people lose interest given poor design and attention to safeguards.

  3. Registries: The nascency of the carbon market means the standards for a carbon project are still evolving, which creates significant uncertainty and adds to the costs of developing projects.  As a consequence, the various registries, most notably Verra, have been attacked through articles like those published in The Guardian that question additionality. 

Photo courtesy of Nature Conservation Research Center

Efforts to Fix the Issues:

The Integrity Council for Voluntary Carbon Markets (ICVCM) has just unveiled its Core Carbon Principles, marking a crucial advancement in the field. Leading registries like Verra are already updating their methodologies to enhance rigor and assurance. However, these initiatives, among others, rest on the belief that the carbon market will gradually reward top performers, pushing others to follow suit and ultimately raising the quality of carbon credits. Ok. How long is that going to take?  What about those projects being designed today that lack adequate safeguards and will lose the support of the people in the places where the projects are taking place?  Our theory of change emphasizes the need for rigorous safeguards and well-designed projects from the outset (T=0) to ensure additionality and permanence.

Carbon Projects that account for livelihoods:

While we cannot solve all the issues, we do have a competitive advantage on the supply side, especially as it relates to project design and safeguards.  On the project design, we are increasingly designing projects to account for livelihoods –  jobs, ecosystem services, food security etc.  Safeguard issues are more labor-intensive to address and include:

  • Access to justice;

  • Biodiversity conservation and sustainable use of local resources;

  • Community health safety and security;

  • Cultural heritage;

  • Gender equity;

  • Human rights and indigenous peoples;

  • Labor rights and working conditions;

  • Land rights and involuntary resettlement;

  • Resource efficiency; and,

  • Transparency, participation, and benefit sharing.

In closing, As a social justice organization with expertise in these areas, we are strategically pivoting to focus on design and safeguard issues, offering these as separate services. We will be involved in designing projects from inception through credit issuance and beyond and will also provide advisory services for the initial phase. Projects that start with a solid base will realize higher prices.

Authors

  • Nicci Mander

    Nicci Mander is N4J's Director, Africa Nature-based Solutions Program. She is an environmental scientist with over 25 years of experience working at the nexus of nature, climate change, and social justice across sub-Saharan Africa. She’s provided strategic-level advisory services and planning support to several African governments, as well as designed, developed, and managed the delivery of large-scale community and climate change-focused programs in both urban and rural settings.

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  • Hank Cauley

    An engineer who later got a business degree to achieve social and environmental justice through existing economic structures. He’s started or built many organizations and projects. Hank lives in Falls Church, VA, with his wife and is an avid bee-keeper.

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