Choosing Forest Carbon Projects: Why Biodiversity Matters Most
Nature-positive companies have long invested in tree-planting programs that aim to regreen large areas as quickly as possible. These simple and relatively inexpensive projects can seem like an efficient way to restore tree cover and draw down carbon, sometimes while doubling as engagement programs for employees or customers.
In recent years, however, research has revealed deep problems with these low-biodiversity projects, ranging from poor carbon sequestration to increased wildfire risk and vulnerability to pests and pathogens. Accordingly, the voluntary carbon market is seeing increased demand for projects with higher species diversity. But these projects are more expensive, complex, and challenging to vet, leaving some carbon investors to wonder: how biodiverse is biodiverse enough?
The answer is not straightforward, because biodiversity is more than a simple counting of the variety and number of local species. Biodiversity encourages healthy ecosystems that are more resilient to changing conditions and more resistant to disease. Biodiversity stabilizes our climate, air, water, and soil. It is the natural condition of nature, and as biodiversity decreases, our ability to thrive declines as well.
Yet this natural diversity is under siege. Since 1970, wildlife populations have decreased by an average of 68% across mammals, birds, reptiles, amphibians, and fish, with tropical regions like Latin America seeing losses as high as 94%. Because these species play key roles in helping ecosystems maintain their balance, the impacts of these declines are far-reaching.
Growing awareness, strengthening commitments
To stem the pace of these losses, conservation organizations have proposed a system of biodiversity credits, similar to carbon credits, as an incentive for companies to invest in nature-based projects. This market is still in the planning stages, with no clear leader among the many proposed standards and methodologies.
But for companies with strong sustainability goals, the growing momentum of global commitments to biodiversity is an opportunity to show leadership within the private sector. These large-scale efforts began in earnest in 2022, when the Kunming-Montreal Global Biodiversity Framework (GBF) was adopted at COP15 by more than 100 countries. The framework includes 23 biodiversity targets for 2030 and an additional four for 2050.
To help meet these targets and promote transparency in reporting, the Taskforce on Nature-related Financial Disclosures (TNFD) incorporated the goals of the GBF into their framework. This initiative is helping businesses set measurable biodiversity goals, choose nature-based solutions with greater confidence, and align their corporate sustainability goals with national and global targets.
Among nature-based solutions for carbon reduction, native forest restoration has emerged as an approach that can not only draw down carbon but also create social, environmental, and biodiversity co-benefits. Although the goal is to restore the ecosystem to its natural state, well-designed native restoration projects require a great deal of resources and expertise to overcome the factors that caused the forest to become degraded in the first place.
Restoration is critical, but not all projects are created equal
Biodiversity is an inherent part of a natural forest ecosystem, but its benefits go far beyond the ecosystem itself. Diverse ecosystems provide a range of critical services, including water purification, nutrient cycling and carbon sequestration, which contribute to healthy soils and overall ecosystem resilience, ultimately capturing more carbon over time. Mixed-species forests store over 70% more carbon than monocultures, making them far more powerful in mitigating climate change.
This species diversity also reduces the risk of fire, improving the likelihood that the forest will remain standing. The greater resilience of these natural ecosystems makes them better able to withstand pests, disease, and climate impacts such as heat, droughts, floods, and erosion.
Restoring native forests also has significant benefits for wildlife. In the Colombian Andes, our partner project, Sembrando Futuro 2.0, is expanding and reconnecting several Key Biodiversity Areas (KBAs) that are home to many threatened and endangered species, including jaguars, birds, and manatees.
By contrast, monoculture tree-planting projects not only store less carbon but can create conditions for invasive species to dominate and outcompete the species that are naturally at home in those ecosystems. These local impacts can disrupt erosion control, storm protection, and food and water security for those who live in and near the forest, making the area vulnerable to even greater ecological damage.
Supporting global reforestation and restoration: Taking action to capture potential
Despite the superior carbon capture ability of biodiverse forests, only a few such projects become available on the voluntary carbon market each year. Forestry teams face significant obstacles in implementing these projects, from sourcing native seeds and training staff to designing community benefits-sharing plans and obtaining carbon certification. However, the greatest obstacle by far is securing funding.
Terraformation’s Seed to Carbon Forest Accelerator was created to help forestry teams overcome these issues and bring biodiverse carbon projects to market quickly. Our extensive vetting process looks at all aspects of project feasibility, from the projected climate impact to the legal, financial, technical, and social elements that can make or break even the most ecologically sound project.
For companies with biodiversity goals that follow the TNFD framework, Accelerator projects help manage biodiversity risks around critical supply chains. Tools such as the Terraware software platform, developed by Terraformation, enable a data-driven approach to restoration and project management. Each Accelerator project aligns with multiple Sustainable Development Goals (SDGs) and is certified by Verra, helping investors simplify reporting about Environmental, Social, and Governance goals.
Investing in nature to secure our climate future
For carbon buyers, it is important to be aware that biodiversity can be a strong indicator of both project quality and carbon sequestration potential. When looking at nature-based solutions that will maximize climate impact and stand the test of time, sustainability teams should prioritize native restoration and local species diversity as a first step.
To learn more about biodiverse forest carbon projects that bring benefits to our climate and local communities, reach out to our Climate Impact team today.
