How carbon markets systematically undervalue tropical forests’ climate benefits

Nick Nugent and Frances Seymour | WRI | 2023 | Communication |


In light of the critical role of tropical forests in stabilizing the global climate system through both carbon and noncarbon pathways, maintaining and increasing incentives for large-scale forest conservation is an essential component of climate action. Demand for carbon credits, one of the most promising mechanisms for funding large-scale forest conservation, has grown rapidly in recent years, with the voluntary carbon market seeing transactions worth almost US$2 billion in 2021. In 2022, however, the volume of transactions leveled off, at least in part due to concerns about reputational risk from corporate buyers afraid of greenwashing accusations.