Forestbase position on Offset markets
The offset market today is still a 1.0 version of something we urgently need a 2.0 of. One problem is the narrow focus on carbon. The other is the strong incentive to replant instead of conserve, whereas the planetary win is by far in conservation first. A third issue is the premature offset market dynamics that lead to easy abuse of the system to run away with the ‘net zero’ flag without having an actual impact.
Carbon tunnel vision
First a brief word about the narrow focus on carbon, also called ‘carbon tunnel vision’. The cartoon below went viral in 2020–21 and shows us several threatening waves, all of which are important and need attention. The risk with carbon as the one-size-fits-all solution is that the reduction or removal of emissions of carbon dioxide only covers a small portion of the green wave below and hardly anything of the purple wave. It goes even further since a resolute carbon-only approach sometimes creates perverse effects like favoring planting over conservation or ignoring the importance of local social stability.
At Forestbase we are happy that an offset market exists, but we are no big fan of the current carbon-only 1.0 version. The most urgent problems the planet is facing are first biodiversity loss, then the nitrogen cycle, then the climate crisis (Rockström).
In the conservation community more and more experts expect the carbon credits to be pushed aside in 5–10yrs from now by broader and more accurate ‘biodiversity credits’ or ‘ecosystem services’. Several experiments are happening on a small scale today, like f.e. in Australia. The obstacle that needs to be taken first is the one of measuring. There are startups, ngos and governments currently competing for the right method of measuring. Whereas carbon is easy to measure as just one chemical component, the debate for biodiversity and ecosystem is complex and divides into the ‘species approach’ versus the ‘ecosystem approach’. We do not believe in methods to calculate the value of just one species. We also don’t believe that the right method exists. Putting a number, is putting a ceiling. We believe that the market itself needs to be considered as a strong contender for setting that pricepoint.
Human confidence makes us think that we can just rebuild anything, but we are by far not developed enough to create new biodiverse ecosystems just because we want to. Once gone, an ecosystem does not come back. That makes them extra vulnerable and valuable. Conservation of what the planet still has, is therefore more urgent. When it comes to replanting, the only efforts we consider equally urgent are the ones that build a natural buffer around primary forests that are threatened with desertification, so called ‘frontier forests’. Aside from those, not all solutions need to be engineered. Nature is at work everyday like a natural machine park, fulfilling tasks on planetary infrastructure level. The current offset markets only cover a small part of that value and we expect that to change. Therefore, Forestbase makes a 10yr provision for conservation and social costs on the ground. That gives us a broad timeframe to be self-reliant and have our forests protected while we ride the wave of the quickly evolving offset markets.
We intend to heavily support and spread the philosophy of biodiversity and ecosystem focus above the carbon focus. As a forest, we can apply for carbon credits as well, and we will most likely set up those procedures, but more importantly we want to be a pioneer by already setting up voluntary offset agreements based upon biodiversity and ecosystem services. The sooner we can afford to ignore carbon offsets, the better.
Market Dynamics
Second, we need to talk about market dynamics. Given that a massive planetary asset with offset capabilities (nature itself) is only slowly entering the capitalistic system now, we can expect a generation of ‘onboarding’. The asset is so cheap today, that 1 carbon credit is priced higher than many of the forest hectares on which they originate. Yet a hectare can produce several carbon credits per year. This absurd anomaly happens because the market is young, governments protect traditional and strategic industries, transparency is low with a lot of backdoor lobbying and forest hectares are packed in the wrong legal-financial wrapper. You cannot build a healthy and balanced system around nature in this way. First the asset itself has to come to market. Otherwise the golden eggs are sold for more than the chicken that lays them. A select few insiders are today the happy few to run away with that asymmetry. It is not sustainable.
Offset is the right path
Last, offset is the right way. The world will always be physical. You may have a farm that produces organic food and uses organic packaging in a transparent supply chain, etc.. That farm is still standing on a piece of land that used to be wild nature. You cannot get to absolute zero and that is fine, as long as this approach is sustainable in a bigger whole. That means you need to offset part of your activity. Even the most ecological way of extracting iron ore, can never be zero footprint. Just like with new paper vs recycled paper, the key win is actually in the weight or density of the paper. In ending recycling flows, the total use of raw materials is priority. As long as we extract resources or transform resources with a process, there is pollution and harm. That means we will always need offset. At least with offset you can harm land A (which you were already doing anyway) and contribute to the protection of land B. For everything harmed, something else is secured. This is called land sparing. There is a whole land sharing vs land sparing debate going on, on which we have written another article.
‘We’re not green enough yet. How the f*** do we buy carbon?!’ an executive from a financial institution asked. When challenged if carbon is really what they need to be greener, they didn’t know. It shows how many parties are rushing to solutions without understanding what is really going on.
