If nature-based offsets are to play a role in critical near-term climate change mitigation efforts, they must provide a credible alternative to emissions reductions. Scaling up nature-based solutions is often challenged by the continued lack of an accurate and cost-effective method for measuring market leakage at the project level.
This report shows that leading third-party certification standards appear to vastly understate leakage compared with the research literature, and argues that the tools available for project-level crediting cannot deliver the accuracy needed in practice. To help nature-based offsets reach their potential, it proposes an alternative, conservative, approach for avoiding leakage ‘by design’.
The developed framework identifies and avoids market leakage, based on understanding the relationship between additionality and leakage in an economic equilibrium. Three principles that offset developers and certifiers should be implemented to improve the credibility of nature-based offset markets, while also allowing for increasing ambition and investment in nature-based solutions.