From Carbon Credits to Fire Risks: The Vulnerability of Forest Offset Projects

Forest carbon offset projects work by planting trees or by preventing deforestation within designated areas. As these forests grow, they sequester and store CO2, with each tonne of CO2 removed from the atmosphere equating into one carbon credit. Purchasing carbon credits allows businesses and governments to offset their emissions, and to contribute towards the goal of keeping global warming under 2°C. This market for traded carbon credits has grown swiftly, surpassing $2 billion in 2021.

However, despite their environmental benefits, forest carbon offset projects have become increasingly vulnerable to climate-related disasters in recent years. In the United States, wildfires have burned vast areas of these projects. In 2021, the Bootleg Fire in Southern Oregon burned through 20% of Green Diamond’s Klamath East Project Area, killing trees that stored up to 3.3 million metric tons of carbon dioxide. Similarly, in 2020, the Lionshead Fire almost completely destroyed the Warm Springs project in the same state. Additionally, the Rimba Raya project in Indonesia was severely impacted by wildfires in 2016 and 2019.

Projects that are registered under the California Air Resources Board, are required to contribute 2 - 4% of their credits to a buffer pool. If a forest offset project emits carbon, for example due to a wildfire, the losses are evaluated, and a corresponding number of credits are withdrawn from the buffer pool. According to Badgley et al., approximately 95% of the credits in this buffer pool have been depleted in less than ten years, despite being intended to last a century.

Forest fires have nearly doubled in frequency over the past twenty years, with the UN Environment Programme (2022) projecting a 30% rise in extreme wildfires globally by 2050, increasing to 50% by the century's end. Climate change is increasingly endangering forest offset projects as wildfires escalate in size, intensity, and frequency.

We analysed the vulnerability of Avoided Deforestation (AD) and Improved Forest Management (IFM) projects to wildfire risk by cross-referencing the global database of nature-based carbon offset project boundaries (Karnik et al., 2024) with the fire risk map developed by Rivera et al. (2022). The database included a total of 385 AD and IFM projects. Table 1 provides a detailed breakdown of how these projects are distributed across different fire risk categories: 'High' risk for areas experiencing more than 7 fire-prone years per decade, 'Medium' risk for 3 to 7 fire-prone years, and 'Low' risk for 0 to 3 fire-prone years per decade.

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Table 1. Distribution of Avoided Deforestation (AD) and Improved Forest Management (IFM) Projects by Fire Risk Category

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Approximately 27% of projects (both AD and IFM) fell in the non fire-prone areas (Figure 1). Thirty percent of projects fell in the high fire risk category, while 16% in the medium risk, and 27% in the low risk category.

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We also assessed the total area across projects at risk by ecosystem type (Figure 2). Our findings reveal that the tropics account for 178,573 Km² classified under the high fire risk category, with an additional 18,584 Km² in the Arid ecosystem falling into this classification. Overall, total area across projects in the tropics face the highest fire risk compared to other ecosystems. Conversely, projects in the boreal ecosystem face the least fire risk, totalling only 670 Km² across medium and low fire risk categories, with no area categorized as high fire risk. In projects located in the temperate region, the area, totalling 27,307 Km², is classified under the medium fire risk category.

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We also evaluated the distribution of projects across fire risk categories by country (Table 2). Out of the 178 projects in the United States, 53 were classified in the high-risk category, slightly outnumbered by the non-fire-prone category at 58 projects. In the United States, majority of projects on the west coast fell into the high-risk category, while those in the northeast were predominantly in non-fire-prone areas, and projects in the southeast were mainly in low-risk areas. Mexico ranked second with 52 AD and IFM projects, out of which 22 were categorized as high-fire risk. Out of the 35 projects in Colombia, 60% were in the non fire-prone category.

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Table 2. Distribution of projects under 'High', 'Medium', and 'Low' fire risk categories by country

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This analysis highlights the importance of improving wildfire risk management and adaptation strategies to safeguard forest carbon offset projects. With wildfires becoming more frequent, intense, and widespread due to climate change, these projects must incorporate robust fire prevention and response measures to ensure their effectiveness and permanence. Handling these challenges is vital for maintaining the credibility and impact of forest carbon offset projects in the global effort to combat climate change.

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View our interactive map below displaying relative fire risk:

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References

1. Badgley, G., Chay, F., Chegwidden, O. S., Hamman, J. J., Freeman, J., & Cullenward, D. (2022). California’s forest carbon offsets buffer pool is severely undercapitalized. Frontiers in Forests and Global Change, 5, 930426.
2. Senande-Rivera, M., Insua-Costa, D. & Miguez-Macho, G. (2022). Spatial and temporal expansion of global wildland fire activity in response to climate change. Nat Commun 13, 1208. https://doi.org/10.1038/s41467-022-28835-2
3. Karnik, A., Kilbride, J., Goodbody, T., Rachel, R., & Ayrey, E. (2024). A global database of nature-based carbon offset project boundaries [Data set]. Zenodo. https://doi.org/10.5281/zenodo.11459391

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