Large and persistent social risks to forest carbon projects

Abstract

Despite the popularity of carbon credits as a tool to offset greenhouse gas emissions, there are growing concerns over whether their climate mitigation claims are robust. Most attention has focused on natural risks to forest carbon projects, such as wildfire, while social risks (e.g., those driven by fraud, mismanagement, and land conflicts) remain largely unquantified. Here we analyze 244 forest-based carbon projects to assess the vulnerability of the voluntary carbon market to social risks and find that projects systematically underestimate their risk of failure. Even under optimistic assumptions, projects are roughly twice as likely to fail within 25 years as their self-assessed risk implies over a 100-year horizon. Projecting these trends forward, we show that credits issued to failed projects could exceed the reserves registries hold to mitigate these risks within 1-2 decades. Overall, our results suggest stronger mechanisms and reserves are needed to ensure carbon credits deliver the promised climate benefits.