Building on previous work on the biodiversity impacts of the Voluntary Carbon Market, we are currently assessing more dimensions of the wide range of nature-based projects. One aspect we are investigating is the overlap of carbon projects with areas that are already being protected for nature, for example as national parks or by having an equivalent designation. This overlap could pose issues for the additionality of both the carbon and biodiversity angles of these projects, as protected areas already have structures in place to protect and restore the ecosystems within their boundaries. 

Using the large number of shapefiles that we have for nature-based projects around the world and across registries, we can investigate their location. In this blog, we show that a significant number of carbon credits are generated within the boundaries of protected areas, which poses questions as to their additionality for biodiversity as a co-benefit. These insights will be part of a new biodiversity score, which we are launching on our platform.

Different types of protected areas

Broadly defined, protected areas represent a “clearly defined geographical space, recognized, dedicated and managed through legal or other effective means, to achieve the long-term conservation of nature with associated ecosystem services and cultural values.” (CBD). The layer of protection that is attached to the landscape varies: it can range from a very strict national park (with the complete minimisation of human activity), to cultural landscapes with a focus on sustainable use of the landscape and planning restrictions. 

These many different types of protected areas have been classified by the IUCN (International Union for the Conservation of Nature) in their World Database of Protected Areas (WDPA). Showing that protected areas currently cover over 16% of the world’s terrestrial surface and inland waters, the WDPA places the protected areas into seven categories (Ia, Ib, II, III, IV, V, and VI), ranging from the ‘strictest’ to the least restrictive. 

To simplify these categories for our analysis, we divided them into two types: protected areas where human activity is minimised and protected areas in which it is allowed but restricted. This distinction is important to see whether carbon projects have an additional impact – which is much less likely in strict protected areas (with species and ecosystem protection measures in place) than in areas where, for example, many types of agricultural activity are still allowed and carbon markets can play a clear role in ecosystem protection and restoration.

Nearly 15% of nature-based projects overlap protected areas

From our representative sample of nature-based carbon projects (1826 in total, representing the most active projects across registries), 266 projects overlap protected areas, amounting to 14.6% of the nature-based projects. At the same time, many of these projects only have a small portion of their area inside a protected area. If defined more strictly with a threshold of 50% overlap, 105 projects are found to have high overlap (5.7% of the total sample). 

Cumulatively, the ‘high overlap’ projects have issued ~217 million carbon credits. 

The vast majority of these are avoidance-based (~200 million). They mostly originate from a handful of large-scale projects, and even though they only cover a small portion of the total number of projects in the carbon market, the carbon credits generated in these projects amount to just under 20% of all nature-based carbon credits that have been issued over time.

In the table below, an overview can be seen of the 10 projects that have the greatest number of carbon credits for sale, which have a high percentage of overlap with protected areas (>50%). Representing the current state of the market offering, this number reflects the total number of issuances minus the retired issuances after being sold. 

* Verra has suspended the issuance of credits for this project because of stakeholder and human rights concerns.
** Verra has suspended the issuance of credits for this project over quality concerns.

Examples of nature-based carbon projects that take place in protected areas. On the left VCS985 (Cordillera Azul) and on the right VCS1622 (Carribean Guatemala), which have different degrees of overlap shown by the project boundaries (yellow and purple)compared to the protected area boundaries (green).

Complete overlap and additionality

The table highlights a complication of intersecting project boundaries with protected areas: some of the ‘complete’ overlaps take place in protected areas with a low intensity management regime. For example, one of the biggest 100% overlap projects, which is part of the Verra registry, is located in a very large protected area in the Democratic Republic of Congo (The Tumba-Ngiri-Maindombe Wetland or ‘Ngiri’). However, even though the area is included in the WDPA, it does not have any official classification and there is a lack of information as to whether it is actually being managed.

Therefore, it is important to look at the degree of protection ecosystems enjoy within these protected areas, which can be approximated by taking the IUCN management category. When we take only those in the higher management category, it can be observed that the majority of the issuances originate from protected areas that have a high degree of strictness (~157 million). This prompts the question - how is the biodiversity additionality of these projects assessed if there are already governance structures in place?

The case of the Cordillera Azul project in Peru sheds more light on these considerations, with ongoing debates about proving its additionality in a broader sense, mostly relating to carbon. Verra holds that without the carbon funding, the park managers would not have been able to effectively manage the park, because they would have depended on ‘unreliable funders’. Yet, concerns have been raised on the effect of this stability of money supply, on top of more general issues surrounding the inflation of benefits.

Registries

It is important to note that Verra is present in this top 10 of PA-located projects mainly because of its prominence in the market, the large size of its projects, and to some degree also the widespread availability of their shapefiles in our database. Many other registries also host projects in protected areas, like Woodland Carbon Code, which operates numerous projects in the Lake District National Park in the United Kingdom (which is part of one of the ‘less strict’ IUCN management categories (V)). 

Still, our data suggests that Verra leads in the proportion of cumulative credits that have been generated in projects with a high protected area overlap (>50%), amounting to over 200 million credits, or 38% of their total cumulative issuances. This is in stark contrast to values we found for other registries: 0.59% for American Carbon Registry, 1.14% for Plan Vivo, 1.53% for Woodland Carbon Code, 6.09% for Cecarbono, and 6.12% for Climate Action Reserve.

Pricing

Using the estimated prices on a project level, which is part of the comprehensive AlliedOffsets database on the voluntary carbon market, we can also look at the pricing dynamics of these projects. The 10 largest issuing projects in protected areas (see the table above) have substantial price variation, which can be attributed to public perception of these large projects. The two discontinued or paused projects (Kariba and Cardamom) can be seen to have a significant mark-down, as well as the project in the DRC over governance concerns. 

Because of the variation in project types, there are also more expensive projects in this group, like the Woodland Carbon Code projects, for which we estimate average carbon credits prices over USD 30. Therefore, there is no clear difference between the prices of credits issued in projects with high protected area overlap and those issued in projects without overlap. 

Find these insights on our platform

If these insights on the spatial dimensions of nature-based carbon projects interest you, we are showcasing them on our platform as well! We will soon refine our biodiversity assessment for nature-based projects, by introducing ‘penalties’ in addition to our existing Biodiversity Attention Score for projects that have high overlap (>50%) with protected areas that are also recognised to be in a strict management category. 

Together with other inputs, this will form a new Biodiversity Score that goes beyond the attention to biodiversity in project design. Furthermore, we have a vast collection of project shapefiles, which cover the market’s most active projects. With our geospatial tool, you can see these projects on the map for yourself. Check out more about our data offering here.