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Avoiding leakage from nature-based offsets by design

Author

Listed:
  • Filewod, Ben
  • McCarney, Geoff
Abstract
Leaky offsets are old news. As the world embraces nature-based solutions as a core strategy for critical near-term climate change mitigation, transactions of nature-based offsets in both compliance and voluntary markets reflect an underlying assumption that current approaches to managing leakage at the project level are working. We argue that this is not the case: leading third-party certification standards appear to vastly understate leakage compared to the research literature, and the tools available for project-level crediting cannot deliver the accuracy needed in practice. We propose an alternative, conservative, approach for avoiding leakage by design, based on understanding the ‘duality’ between additionality and leakage in a system at equilibrium. We then identify three principles that offset developers, certifiers, and consumers should implement at the project level now to improve the credibility of nature-based offset markets, while also allowing for increasing ambition and investment in nature-based solutions.

Suggested Citation

  • Filewod, Ben & McCarney, Geoff, 2023. "Avoiding leakage from nature-based offsets by design," LSE Research Online Documents on Economics 117928, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:117928
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    File URL: http://eprints.lse.ac.uk/117928/
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    References listed on IDEAS

    as
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    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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