Can Carbon Offsets Save the Rainforest?

With more than a fifth of the Amazon already deforested, a devastating and potentially irreversible feedback loop has been created.  Cattle ranchers continue to clear even more acreage as they face severe drought caused by climate change and the very deforestation they have engaged in.  As cattle literally starve from lack of grass, more acreage is needed per cow, and more land is being cleared.  Scientist have warned that unless deforestation is halted, and reforestation occurs at a massive scale, the entire rainforest ecosystem could collapse, losing not just biodiversity, but also an important systemic regulator of climate.

A new economic opportunity has arrived in the Amazon that has the potential to disrupt this cycle: Carbon Offset Credits.  If a viable carbon trading market can be developed, there is an opportunity to loosen the grip the cattle industry holds over vast stretches of the rainforest.   Many ranchers are starting to question the viability of their economic future due to the severe environmental disruptions they have experienced recently.  With no feed, many cannot keep their stock alive long enough to get to market.

A recent report by BloombergNEF projected that carbon markets could be valued at $1 trillion by 2037.  With the global beef market projected at $500 billion, the economic incentives could be there to stop grazing cattle and engage in reforestation efforts. Could selling carbon credits deliver a better return than raising cattle?

Several new companies, including are betting that is the case.  By restoring native trees in areas that have been deforested, will protect those trees from logging and sell credits based upon the amount of carbon that they are projected to store.

Financial success depends upon the viability of carbon trading systems that don’t yet have a market or agreed upon metrics for quantifying the volume and value of the carbon offset.  Just measuring the carbon in trees and soil is technically challenging and critics worry about abuse and greenwashing by companies that want the appearance of environmental consciousness while making no real changes to improve their own carbon footprints.

Local efforts are challenging with everything from a lack of native tree seeds and archaic land tenure rules requiring intensive research making it more time consuming to find appropriate acreage to buy.   

The bigger obstacle is the slow pace of the development of viable carbon trading markets when no one can agree what factors are required for a high-quality long-term carbon credit.  Dozens of projects had been exposed recently for exaggerating emissions impact by “protecting” forests that had no development pressure and would likely never be cut down.

Reforestation projects provide a more straightforward calculus, as new trees come into the equation.  Some experts caution that the cattle will just be moved from a reforestation project area to somewhere else, causing deforestation with no positive impact. More severe wildfires could also release all the carbon the trees were storing in projects that took decades to grow.  However, that has not stopped and other companies to try to make it work. Carbon finance can be a real solution as long as buying credits isn’t just an excuse, or a cheaper solution than real change and transition away from the dirtiest forms of energy and industrial processes.