Avoiding leakage from nature-based offsets by design

Ben Filewod and Geoff McCarney

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

JEL-codes: Q50 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2023-01-12
New Economics Papers: this item is included in nep-env, nep-hme and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:117928

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