{ "source_pdf": "2023-ncc-permanence.pdf", "model": "nvidia/NVIDIA-Nemotron-Parse-2.0 (vLLM)", "prompt": "", "num_pages": 7, "page_sizes": [ { "width_pt": 595.28, "height_pt": 790.87, "width_px": 1542, "height_px": 2048 }, { "width_pt": 595.28, "height_pt": 790.87, "width_px": 1542, "height_px": 2048 }, { "width_pt": 595.28, "height_pt": 790.87, "width_px": 1542, "height_px": 2048 }, { "width_pt": 595.28, "height_pt": 790.87, "width_px": 1542, "height_px": 2048 }, { "width_pt": 595.28, "height_pt": 790.87, "width_px": 1542, "height_px": 2048 }, { "width_pt": 595.28, "height_pt": 790.87, "width_px": 1542, "height_px": 2048 }, { "width_pt": 595.28, "height_pt": 790.87, "width_px": 1542, "height_px": 2048 } ], "pages": [ [ { "page": 1, "order": 0, "class": "Page-header", "bbox_normalized": [ 0.0977, 0.0508, 0.3545, 0.075 ], "bbox_pixels": [ 101.6, 104.0, 528.9, 153.6 ], "text": "nature climate change" }, { "page": 1, "order": 1, "class": "Caption", "bbox_normalized": [ 0.0977, 0.1195, 0.1855, 0.132 ], "bbox_pixels": [ 101.6, 244.7, 247.7, 270.3 ], "text": "Perspective" }, { "page": 1, "order": 2, "class": "Caption", "bbox_normalized": [ 0.6484, 0.1211, 0.9092, 0.1313 ], "bbox_pixels": [ 1017.9, 248.0, 1451.9, 268.9 ], "text": "https://doi.org/10.1038/s41558-023-01815-0" }, { "page": 1, "order": 3, "class": "Title", "bbox_normalized": [ 0.0986, 0.143, 0.8477, 0.2055 ], "bbox_pixels": [ 103.1, 292.9, 1349.6, 420.9 ], "text": "# Realizing the social value of impermanent\ncarbon credits" }, { "page": 1, "order": 4, "class": "Caption", "bbox_normalized": [ 0.374, 0.2625, 0.8291, 0.3063 ], "bbox_pixels": [ 561.3, 537.6, 1318.6, 627.3 ], "text": "Andrew Balmford 1,2 , Srinivasan Keshav 2,3, Frank Venmans 4, David Coomes 2,5, Ben Groom 4,6, Anil Madhavapeddy 2,3 & Tom Swinfield 1,2" }, { "page": 1, "order": 5, "class": "Caption", "bbox_normalized": [ 0.0977, 0.2648, 0.2363, 0.2758 ], "bbox_pixels": [ 101.6, 542.3, 332.2, 564.8 ], "text": "Received: 3 April 2023" }, { "page": 1, "order": 6, "class": "Caption", "bbox_normalized": [ 0.0977, 0.2898, 0.2607, 0.3008 ], "bbox_pixels": [ 101.6, 593.5, 372.8, 616.0 ], "text": "Accepted: 22 August 2023" }, { "page": 1, "order": 7, "class": "Caption", "bbox_normalized": [ 0.0977, 0.3141, 0.2832, 0.3242 ], "bbox_pixels": [ 101.6, 643.3, 410.2, 664.0 ], "text": "Published online: 30 October 2023" }, { "page": 1, "order": 8, "class": "Caption", "bbox_normalized": [ 0.1172, 0.3398, 0.2295, 0.3508 ], "bbox_pixels": [ 134.0, 695.9, 320.9, 718.4 ], "text": "Check for updates" }, { "page": 1, "order": 9, "class": "Picture", "bbox_normalized": [ 0.0977, 0.3383, 0.1143, 0.3516 ], "bbox_pixels": [ 101.6, 692.8, 129.2, 720.1 ], "text": "", "image_file": "page001_el09_Picture.png" }, { "page": 1, "order": 10, "class": "Text", "bbox_normalized": [ 0.374, 0.3414, 0.9092, 0.568 ], "bbox_pixels": [ 561.3, 699.2, 1451.9, 1163.3 ], "text": "Efforts to avert dangerous climate change by conserving and restoring\nnatural habitats are hampered by concerns over the credibility of\nmethods used to quantify their long-term impacts. Here we develop a\nflexible framework for estimating the net social benefit of impermanent\nnature-based interventions that integrates three substantial advances: (1)\nconceptualizing the permanence of a project’s impact as its additionality\nover time; (2) risk-averse estimation of the social cost of future reversals of\ncarbon gains; and (3) post-credit monitoring to correct errors in deliberately\npessimistic release forecasts. Our framework generates incentives for\nsafeguarding already credited carbon while enabling would-be investors\nto make like-for-like comparisons of diverse carbon projects. Preliminary\nanalyses suggest nature-derived credits may be competitively priced even\nafter adjusting for impermanence." }, { "page": 1, "order": 11, "class": "Text", "bbox_normalized": [ 0.0977, 0.5914, 0.4951, 0.7367 ], "bbox_pixels": [ 101.6, 1211.2, 762.8, 1508.8 ], "text": "Ambitious net-zero commitments made at and since the 26th United\nNations Climate Change Conference of the Parties highlight the impera-\ntive of slashing GHG emissions as swiftly as possible, but also under-\nscore the growing need for credible carbon offsets1. In parallel there\nis an urgent need for scaling-up nature-based solutions (NBS), such\nas slowing deforestation or restoring forests or wetlands2–5. These are\nwidely recognized as essential to avoiding dangerous climate change,\nespecially over the next two or three decades while more technologi-\ncal approaches such as various forms of direct air capture and storage\nbecome affordable. NBS are also critically important for averting the\nextinction crisis and can benefit rural communities3,5." }, { "page": 1, "order": 12, "class": "Text", "bbox_normalized": [ 0.5127, 0.5906, 0.9102, 0.7789 ], "bbox_pixels": [ 792.1, 1209.5, 1453.6, 1595.2 ], "text": "To assess additionality, changes in carbon storage in a project are\ntypically compared to historical trends in reference areas identified by\nthe project proponents themselves8. However, researchers in other\nsectors such as public health and international development have\nfound these approaches result in biased estimates of project perfor-\nmance and so have instead developed quasi-experimental methods\nto generate more reliable estimates of counterfactual outcomes9,10.\nRecent results from applying these techniques to estimate the addi-\ntionality of deforestation-reduction schemes consistently suggest that\nthe effects of such projects are more mixed and typically far smaller\nthan estimates from comparisons with historical trends or reference\nareas11–13. Although more work is needed to improve the robustness\nof econometric counterfactual estimation, there is now a strong case\nfor its widespread adoption across the NBS carbon-crediting sector14." }, { "page": 1, "order": 13, "class": "Text", "bbox_normalized": [ 0.0977, 0.7406, 0.4951, 0.8602 ], "bbox_pixels": [ 101.6, 1516.7, 762.8, 1761.7 ], "text": "Despite these factors, project developers cannot get the financing\nthey need to develop initiatives because investors see NBS as being\ntoo risky6. We believe this is in large measure because many would-be\nbuyers of credits are not convinced that NBS projects are additional\n(that is, deliver climate benefits that would not have arisen in their\nabsence) or that credit issuances fully correct for impermanence.\nConsequently, purchasers struggle to make like-for-like comparisons\nof diverse offsetting products7 and NBS credits attract discouragingly\nlow prices." }, { "page": 1, "order": 14, "class": "Text", "bbox_normalized": [ 0.5127, 0.7805, 0.9102, 0.8609 ], "bbox_pixels": [ 792.1, 1598.5, 1453.6, 1763.1 ], "text": "Addressing the impermanence of nature-based carbon storage\nthrough the release of carbon to the atmosphere via fires, deforesta-\ntion, disease or severe weather events15,16 presents a further challenge.\nThe approach most widely used in the offsetting industry is to allocate a\nfraction of the additional carbon sequestered (or not emitted) because\nof a project to a not-for-sale buffer pool. In the event of reversal, credits" }, { "page": 1, "order": 15, "class": "Footnote", "bbox_normalized": [ 0.0977, 0.8898, 0.8486, 0.9008 ], "bbox_pixels": [ 101.6, 1822.3, 1351.1, 1844.8 ], "text": "1Department of Zoology, University of Cambridge, Cambridge, UK. 2Conservation Research Institute, University of Cambridge, Cambridge, UK." }, { "page": 1, "order": 16, "class": "Footnote", "bbox_normalized": [ 0.0977, 0.9031, 0.8896, 0.9414 ], "bbox_pixels": [ 101.6, 1849.5, 1419.3, 1928.0 ], "text": "3Department of Computer Science and Technology, University of Cambridge, Cambridge, UK. 4Grantham Research Institute on Climate Change and\nthe Environment, London School of Economics, London, UK. 5Department of Plant Sciences, University of Cambridge, Cambridge, UK. 6LEEP Institute,\nDepartment of Economics, University of Exeter Business School, Exeter, UK. \\(\\)e-mail: a.balmford@zoo.cam.ac.uk" }, { "page": 1, "order": 17, "class": "Page-footer", "bbox_normalized": [ 0.0977, 0.9648, 0.2334, 0.975 ], "bbox_pixels": [ 101.6, 1975.9, 327.4, 1996.8 ], "text": "**Nature Climate Change**" } ], [ { "page": 2, "order": 0, "class": "Page-header", "bbox_normalized": [ 0.0977, 0.0297, 0.9092, 0.0422 ], "bbox_pixels": [ 101.6, 60.8, 1451.9, 86.4 ], "text": "Perspective\nhttps://doi.org/10.1038/s41558-023-01815-0" }, { "page": 2, "order": 1, "class": "Text", "bbox_normalized": [ 0.0977, 0.0602, 0.4951, 0.2492 ], "bbox_pixels": [ 101.6, 123.3, 762.8, 510.4 ], "text": "are drawn from this pool8. However, we consider this procedure to be\nintrinsically flawed because it assumes that future stakeholders will\nnot allow releases from past credits in excess of the pool yet provides\nthem with no incentive to do so. Other approaches also have notable\nlimitations. Tonne-year accounting17,18, for instance, deals with only\nvery short-term releases and does not correctly model climate change\nphysics, assuming, for example, that the climate impact of one tonne\nof sequestration for five years is the same as that of five tonnes of\nsequestration for one year. Likewise, the sequestration-effectiveness\napproach19 and equivalence trading ratios20 are not easily integrated\nwith considerations of additionality, have not been generalized for a\ndiversity of project types, and–most importantly–do not allow for ex\npost corrections of ex ante forecasts of the release of credited carbon\n(for further discussion see the Supplementary Information)." }, { "page": 2, "order": 2, "class": "Chart", "bbox_normalized": [ 0.5117, 0.0672, 0.7559, 0.4406 ], "bbox_pixels": [ 790.5, 137.6, 1196.8, 902.3 ], "text": "| Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition | Condition ", "image_file": "page002_el02_Chart.png", "figure_text": "| Condition | Interval | Value |\n| --- | --- | --- |\n| P | 0.0 | 1.0 |\n| C | 0.5 | 2.0 |\n| Addtionality a_1 = difference in change in C stock | 0.0 | 3.0 |\n| Additionality a_2 = 0 | 0.0 | 2.0 |", "figure_data_tables": [ [ [ "Condition", "Interval", "Value" ], [ "P", "0.0", "1.0" ], [ "C", "0.5", "2.0" ], [ "Addtionality a_1 = difference in change in C stock", "0.0", "3.0" ], [ "Additionality a_2 = 0", "0.0", "2.0" ] ] ] }, { "page": 2, "order": 3, "class": "Text", "bbox_normalized": [ 0.0977, 0.2508, 0.4951, 0.3445 ], "bbox_pixels": [ 101.6, 513.6, 762.8, 705.5 ], "text": "Here we attempt to address these substantial limitations by pre-\nsenting a new dynamic accounting method for quantifying the long-run\nsocial benefits of impermanent NBS-derived carbon credits. Our Per-\nmanent Additional Carbon Tonne (PACT) framework allows credits\nto be issued and sold at the end of each time period, based on ex post\ndetermination of additionality and ex ante forecasting of reversals,\nand comprises three interlinked advances:" }, { "page": 2, "order": 4, "class": "List-item", "bbox_normalized": [ 0.1064, 0.3461, 0.4941, 0.3852 ], "bbox_pixels": [ 116.0, 708.8, 761.2, 788.9 ], "text": "(1) Understanding the permanence of a project’s impacts as its ad-\nditionality–relative to a statistically derived counterfactual–\nthrough time." }, { "page": 2, "order": 5, "class": "List-item", "bbox_normalized": [ 0.1064, 0.3867, 0.4951, 0.4531 ], "bbox_pixels": [ 116.0, 792.0, 762.8, 927.9 ], "text": "(2) Risk-averse forecasting of the expected social cost of the im-\npermanence of carbon gains, so that purchasers can make\nlike-for-like comparisons across diverse offset products while\nhaving confidence that NBS credits have been fully adjusted for\nimpermanence." }, { "page": 2, "order": 6, "class": "List-item", "bbox_normalized": [ 0.1064, 0.4547, 0.4951, 0.5078 ], "bbox_pixels": [ 116.0, 931.2, 762.8, 1040.0 ], "text": "(3) Using long-term monitoring for the ongoing correction of er-\nrors in deliberately pessimistic forecasts of post-credit releases,\nso that project providers can be compensated if forecasts are\noverly conservative." }, { "page": 2, "order": 7, "class": "Caption", "bbox_normalized": [ 0.5107, 0.4492, 0.9043, 0.5609 ], "bbox_pixels": [ 788.8, 920.0, 1443.8, 1148.7 ], "text": "**Fig. 1 | Permanence as additionality through time, illustrated for a stylized\ndeforestation-reduction programme. a,b**. The carbon stock in project area\n_P_ (**a**) and in a counterfactual set of areas C (**b**) is assessed after three successive\ntime intervals. c, The additionality α of the project over each interval is\nmeasured as the difference in change in carbon stock between the project and\ncounterfactual areas, and so is positive after interval 1, zero over interval 2 and\nnegative over interval 3. d, Cumulative additionality of the project over the three\nintervals, showing that the additionality generated over interval 1 becomes\nimpermanent and is completely dissipated over interval 3." }, { "page": 2, "order": 8, "class": "Text", "bbox_normalized": [ 0.0977, 0.5086, 0.4951, 0.5617 ], "bbox_pixels": [ 101.6, 1041.6, 762.8, 1150.4 ], "text": "Our method is intended to be transparent, capable of readily\naccommodating future advances in methods for estimating addition-\nality and the social costs of climatic change, and applicable to a wide\nvariety of NBS and indeed other credit-generating projects." }, { "page": 2, "order": 9, "class": "Section-header", "bbox_normalized": [ 0.0986, 0.575, 0.4365, 0.5898 ], "bbox_pixels": [ 103.1, 1177.6, 665.3, 1207.9 ], "text": "## Permanence as additionality through time" }, { "page": 2, "order": 10, "class": "Text", "bbox_normalized": [ 0.0977, 0.5906, 0.4951, 0.6977 ], "bbox_pixels": [ 101.6, 1209.5, 762.8, 1428.9 ], "text": "Our starting point is to adopt the conservative view that all NBS-derived\ncredits are likely to be impermanent. We distinguish short-term fluctua-\ntions in carbon stock, such as through deciduous leaf fall or the death\nof individual trees, from the directional release of additional carbon\ngenerated by a project, such as through the resumption of deforesta-\ntion, a major disease outbreak or a change in the fire or climate regime.\nImpermanence is due to directional loss and can helpfully be concep-\ntualized as the loss of additionality over time." }, { "page": 2, "order": 11, "class": "Text", "bbox_normalized": [ 0.5127, 0.6039, 0.9102, 0.725 ], "bbox_pixels": [ 792.1, 1236.8, 1453.6, 1484.8 ], "text": "interval, when the counterfactual pixels lose no carbon (as by now they\nhave none to lose), while the project loses its remaining stock. Hence\nproject addibility over this interval (α3; again, simply the difference\nin the change of the project and the counterfactual carbon stock) is\n−α1. This is how much previously accrued addibility is lost–and\nmeans that in this example all addibility is released over this third\ninterval. The relative permanence of any credit can thus be assessed\nby considering whether the addibility it was based on is reversed,\nand when any such release occurs." }, { "page": 2, "order": 12, "class": "Text", "bbox_normalized": [ 0.0977, 0.6992, 0.4951, 0.8203 ], "bbox_pixels": [ 101.6, 1432.0, 762.8, 1680.0 ], "text": "To illustrate this point, consider a stylized deforestation-reduction\nproject (Fig. 1; note that the approach is generalizable to other NBS\ninterventions and to different methods for constructing counterfactual-\nals). The project’s addibility is assessed at the end of each of three\ntime intervals by comparing the change in its stock of carbon with the\nchange in stock of a counterfactual set of areas not involved in the\nintervention but matched to the project site in terms of initial carbon\nstock, exposure to drivers of deforestation and variables (such as gov-\nernance) that are likely to predict adoption of conservation actions." }, { "page": 2, "order": 13, "class": "Section-header", "bbox_normalized": [ 0.5127, 0.7383, 0.834, 0.7531 ], "bbox_pixels": [ 792.1, 1512.0, 1326.8, 1542.3 ], "text": "### Social value and equivalent permanence" }, { "page": 2, "order": 14, "class": "Text", "bbox_normalized": [ 0.5127, 0.7539, 0.9111, 0.9422 ], "bbox_pixels": [ 792.1, 1544.0, 1455.1, 1929.6 ], "text": "The next stage of the PACT framework links this addibility-based\nunderstanding of when impermanence arises with an assessment of\nthe value of impermanent reductions in atmospheric GHG. One view\nis that if the policy goal is to achieve a time-bound target for limiting\ntemperature increases, any drawdowns of carbon which reverse com-\npletely before that target date will not affect temperature at that point\nand so have limited value (except perhaps in helping the development\nof more permanent storage technologies)21. We take a different posi-\ntion and consider temporary drawdowns as valuable22. To see this,\nimagine a health policy motivated by people’s desire to live longer,\nand with a specific target of increasing the life expectancy of people\nborn after 2050 to 100 years. Interventions that extend the life span of\npeople alive today will not directly help to meet the target. But most\nof us alive now would benefit from even one extra year of life, so those" }, { "page": 2, "order": 15, "class": "Text", "bbox_normalized": [ 0.0977, 0.8219, 0.4951, 0.943 ], "bbox_pixels": [ 101.6, 1683.3, 762.8, 1931.3 ], "text": "Over the first time interval the counterfactual pixels lose half their\ncarbon while the project area loses none. Difference-in-difference\nanalysis thus indicates that the project has generated addibility\nα1. Over the second interval the counterfactual pixels lose all their\nremaining carbon while the project ceases to be effective at slowing\ndeforestation and so loses carbon at the same rate. Because changes\nin carbon stock are the same in the counterfactual and project pixels,\nno further addibility is generated (α2 = 0) and the overall additional-\nity of the project is unchanged. Impermanence emerges over the final" }, { "page": 2, "order": 16, "class": "Page-footer", "bbox_normalized": [ 0.0977, 0.9648, 0.2334, 0.975 ], "bbox_pixels": [ 101.6, 1975.9, 327.4, 1996.8 ], "text": "Nature Climate Change" } ], [ { "page": 3, "order": 0, "class": "Page-header", "bbox_normalized": [ 0.0986, 0.0297, 0.9102, 0.0422 ], "bbox_pixels": [ 103.1, 60.8, 1453.6, 86.4 ], "text": "Perspective\nhttps://doi.org/10.1038/s41558-023-01815-0" }, { "page": 3, "order": 1, "class": "Chart", "bbox_normalized": [ 0.5117, 0.0578, 0.9121, 0.4273 ], "bbox_pixels": [ 790.5, 118.4, 1456.7, 875.1 ], "text": "| Category | Value |\n| --- | --- |\n| Drawdown | 1 |\n| Release | 1 |\n| Change in stock | 2 |\n| Social value of drawdown | 3 |\n| V_imp | 1 |\n| Discounting | 1 |\n| D_tot | 1 |", "image_file": "page003_el01_Chart.png", "tables_json": [ [ [ "Category", "Value" ], [ "Drawdown", "1" ], [ "Release", "1" ], [ "Change in stock", "2" ], [ "Social value of drawdown", "3" ], [ "V_imp", "1" ], [ "Discounting", "1" ], [ "D_tot", "1" ] ] ], "figure_text": "| Category | Value |\n| --- | --- |\n| Drawdown | 1 |\n| Change in stock | 2 |\n| Release | 3 |\n| Interval | 1 |\n| Interval | 2 |\n| Interval | 3 |\n\n**Fig. 2 | Derivation of EP for a stylized deforestation-reduction programme. a,** Comparison of changes in carbon stock in the project and counterfactual areas shows the project depicted in Fig. 1 results in the net drawdown of carbon over interval 1 (_a_1) and its complete release (_a_3) over interval 3. b, The social value of the project at the end of interval 1 (_V_imp) can then be estimated as the social value of a permanent drawdown of the same size as that achieved over interval 1 (_V_perm) minus the cost of its future release over interval 3 discounted to its value at the end of interval 1 (_D_tot). Note that because the SCC is likely to increase over time, the cost of the damage when it occurs exceeds the value of the drawdown when it occurs. However, because the growth rate of the SCC is always less than the discount rate, _V_imp is always positive (for proof see the Supplementary Information). EP is then estimated as the ratio of the impermanence-adjusted value of the drawdown to that of a fully permanent drawdown of the same size.", "figure_data_tables": [ [ [ "Category", "Value" ], [ "Drawdown", "1" ], [ "Change in stock", "2" ], [ "Release", "3" ], [ "Interval", "1" ], [ "Interval", "2" ], [ "Interval", "3" ] ] ] }, { "page": 3, "order": 2, "class": "Text", "bbox_normalized": [ 0.0977, 0.0617, 0.4951, 0.0992 ], "bbox_pixels": [ 101.6, 126.4, 762.8, 203.2 ], "text": "interventions have social value. Our focus here is on the analogous\nsocial value of impermanent reductions in the damages incurred by\nclimate change17,19,20,22,23." }, { "page": 3, "order": 3, "class": "Text", "bbox_normalized": [ 0.0977, 0.1016, 0.4961, 0.3289 ], "bbox_pixels": [ 101.6, 208.1, 764.5, 673.6 ], "text": "The economic device we use for characterizing that value is the\nsocial cost of carbon24 (SCC)–the cumulative long-run cost of the\ndamage caused by releasing one additional tonne of CO2e into the\natmosphere, discounted into present-day terms. There are several\nwell-known uncertainties associated with estimating the SCC25 but we\nuse it here as the best-known way of translating future global warm-\ning into present-day utility. If the release of one tonne of CO2e has a\nvalue equal to the SCC, it follows that one tonne of CO2e permanently\nwithdrawn from (or not emitted to) the atmosphere as a result of an\noffsetting intervention has an equal but opposite effect, and hence a\npresent value (Vperm) that is identical to the SCC. For an impermanent\noffset, by comparison, the value of a one tonne drawdown is the SCC\nof a permanent drawdown minus the present-day cost of the damage\ncaused by the subsequent release of that carbon, estimated from the\nSCC at the time of the release20. This logic assumes that the project has\na small effect on temperature compared to the magnitude of warming\nfrom the industrial revolution." }, { "page": 3, "order": 4, "class": "Text", "bbox_normalized": [ 0.0977, 0.3336, 0.4951, 0.5203 ], "bbox_pixels": [ 101.6, 683.2, 762.8, 1065.6 ], "text": "In today’s terms, the damage cost from a release will always be less\nthan the value of the initial drawdown because the rate of increase of\nthe SCC is always less than the discount rate. Formal proof of this is\nprovided in the Supplementary Information, but the intuition is as\nfollows. An emission today results in a relatively constant and eternal\nsmall increase in temperature and an associated stream of marginal\ndamages. The SCC is the sum of the discounted value of these marginal\ndamages. An emission next year has an identical stream of marginal\ndamages except that they are discounted by one year less (so the mar-\nginal damages have grown in value by the discount rate) and begin one\nyear later (so do not include the cost of damages in the current year).\nHence, while it might appear that the SCC increases by the discount\nrate, because the damages of the current year are now behind us and no\nlonger included, the SCC in fact increases by less than the discount rate." }, { "page": 3, "order": 5, "class": "Text", "bbox_normalized": [ 0.5127, 0.4555, 0.9102, 0.643 ], "bbox_pixels": [ 792.1, 932.9, 1453.6, 1316.9 ], "text": "impermanent credits−so, for illustration, this particular schedule\npessimistically forecasts that over its second decade the project will\nlose carbon stock 1.5 times as fast as the counterfactual sites. Because\nadditionality is released at a rate equal to the difference in change in\ncarbon stock in the project and counterfactual sites (demonstrated in\nFig. 1), half of the additionality is forecast to be released over this second\ninterval (ˆt1,2, the additionality generated in period 1 which is estimated\nwill be released in period 2; change in project stock −change in coun-\nterfactual stock = 1.5 −1.0 = 0.5). During the third interval the project\nis no longer operational, so the pessimistic forecast is that the project\narea will now lose carbon twice as fast as the counterfactual sites. Hence\nthe loss of additionality over this interval (ˆt1,3) occurs twice as quickly\nas before and so, according to this pessimistic schedule, the first dec-\nade’s additionality is dissipated entirely by year 25." }, { "page": 3, "order": 6, "class": "Text", "bbox_normalized": [ 0.0977, 0.5227, 0.4951, 0.657 ], "bbox_pixels": [ 101.6, 1070.5, 762.8, 1345.5 ], "text": "Building from the framework of the SCC, if a release schedule\nof additionality can be estimated, the damage cost (Dtot) from these\nreleases can be subtracted from the value of the initial drawdown to\nderive the present value of the impermanent offset (Vimp = Vperm −Dtot).\nWe can then calculate the ratio of this value to that of the permanent\ndrawdown of one tonne of CO2e (Vimp/Vperm) to derive the equivalent\npermanence (EP) of the offset. The inverse of EP (that is 1/EP) can then\nbe used as a multiplier to decide how many present-day impermanent\ncredits need to be purchased to be comparable in welfare terms to\ngeological sequestration." }, { "page": 3, "order": 7, "class": "Text", "bbox_normalized": [ 0.5107, 0.6453, 0.9102, 0.8742 ], "bbox_pixels": [ 788.8, 1321.6, 1453.6, 1790.4 ], "text": "The ability to set realistic but conservative ex ante release sched-\nules is central to the operation of the PACT framework. If they are\ntoo pessimistic, project providers will be deterred, but if they are too\noptimistic, purchasers will be deterred. In real-world applications,\nthe forecasting of release schedules should be informed by empirical\nestimates of carbon fluxes over and beyond the lifetimes of comparable\nprojects. Two further considerations are important at this point. First,\nthe derivation of EP should in principle also include the value of the\ndrawdown realized over the assessment interval (the triangle to the left\nof _ai_ in Fig. 3a); to aid interpretation we have omitted this complexity.\nSecond, one can also make conservative corrections for leakage−the\nincrease in emissions as a result of forgone food, timber or mineral\nproduction being displaced to non-project areas26,27. Combining any\nleakage correction with EP, one can then inform prospective offset\nbuyers of how many impermanent credits constitute a PACT: a bundle\nof credits which is estimated to have at least the same present value\nclimate benefit as a fully additional, permanent credit." }, { "page": 3, "order": 8, "class": "Text", "bbox_normalized": [ 0.0977, 0.6594, 0.4951, 0.807 ], "bbox_pixels": [ 101.6, 1350.5, 762.8, 1652.7 ], "text": "These ideas can be summarized diagrammatically (Fig. 2, for the\nsame stylized project as Fig. 1). In terms of changes in carbon stock\n(Fig. 2a), the project successfully stops deforestation over the first\ntime interval so there is net drawdown of carbon, _ai_. However, this\nadditionality is fully released over the third interval (_aj_). In terms of\nsocial value (Fig. 2b), the present value of the project (Vimp) is the value\nof the initial drawdown (Vperm) minus the cost of the damage caused by\nthe release of additionality over interval 3 discounted to its value at\nthe end of interval 1 (Dtot). The EP of the additionality achieved by the\nproject is then the ratio of this impermanent value (Vimp) to that of an\nequally additional but fully permanent drawdown (Vperm)." }, { "page": 3, "order": 9, "class": "Text", "bbox_normalized": [ 0.0977, 0.8086, 0.4951, 0.9422 ], "bbox_pixels": [ 101.6, 1656.0, 762.8, 1929.6 ], "text": "Setting out in greater depth how this approach can be operational-\nized, imagine a simplified, 20-year deforestation-reduction scheme\n(Fig. 3a; in practice release schedules would be described probabilisti-\ncally and assessed over shorter time intervals; for a complementary\nmathematical account see the Supplementary Information). After a\ndecade, ex post comparison of trends in carbon stock in the project\nand in a set of statistically derived counterfactual sites confirms that\nthe project has generated additionality _ai_. A corresponding carbon\ncredit c1 is issued, with an EP (EP1) based on an ex ante release schedule\n(Fig. 3b). It is important that this does not overestimate the value of" }, { "page": 3, "order": 10, "class": "Section-header", "bbox_normalized": [ 0.5137, 0.8883, 0.7754, 0.9016 ], "bbox_pixels": [ 793.8, 1819.2, 1229.3, 1846.5 ], "text": "## Correction for forecasting errors" }, { "page": 3, "order": 11, "class": "Text", "bbox_normalized": [ 0.5127, 0.9039, 0.9102, 0.9422 ], "bbox_pixels": [ 792.1, 1851.2, 1453.6, 1929.6 ], "text": "A third key element in the PACT framework is continued monitoring\nafter a credit has been issued, to allow for ex post correction for the\ninevitable uncertainty and conservative bias in predicting reversals." }, { "page": 3, "order": 12, "class": "Page-footer", "bbox_normalized": [ 0.0986, 0.9648, 0.2334, 0.975 ], "bbox_pixels": [ 103.1, 1975.9, 327.4, 1996.8 ], "text": "Nature Climate Change" } ], [ { "page": 4, "order": 0, "class": "Page-header", "bbox_normalized": [ 0.0986, 0.0297, 0.9092, 0.0422 ], "bbox_pixels": [ 103.1, 60.8, 1451.9, 86.4 ], "text": "Perspective\nhttps://doi.org/10.1038/s41558-023-01815-0", "reparsed_from_region": true }, { "page": 4, "order": 1, "class": "Chart", "bbox_normalized": [ 0.0947, 0.0609, 0.9102, 0.6625 ], "bbox_pixels": [ 96.6, 124.7, 1453.6, 1356.8 ], "text": "", "reparsed_from_region": true, "image_file": "page004_reg01_Chart.png", "figure_text": "| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 | Chart 8 | Chart 9 |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Observed stock, measured ex post | a1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 | Chart 8 | Chart 9 |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Current assessment | a1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 | Chart 8 | Chart 9 |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 | Chart 8 | Chart 9 |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 | Chart 8 | Chart 9 |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 | Chart 8 | Chart 9 |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 | Chart 8 |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 | Chart 8 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c1 | c1 |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c1 | c1 |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c1 | c1 |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c1 | c1 |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c1 | c1 |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c1 | c1 |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c1 | c1 |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c1 | c1 |\n| a1 | a1 | c1 | c1 | c1 | c1 | c1 | c1 |\n| Project ends | a1 | a1 | c1 | c1 | c1 | c1 | c1 \n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Project ends | a1 | a1 | a1 | a1 | a\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| Project ends | a1 | a1 | a1 | a1 | a1 | a1 |\n| Project ends | a1 | a1 | a1 | a1 | a1 | a1 | a1 |\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| Project ends | a1 | a1 | a1 | a1 | a1 |\n| Project ends | a1 | a1 | a1 | a1 | a1 | a1 |\n| a1 | a1 | a1 | a1 | a1 | a1 | a1 |\n| Project ends\n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| Project ends | a1 | a1 | a1 | a1 |\n| Project ends | a1 | a1 | a1 | a1 | a1 |\n| a1 | a1 | a1 | a1 | a1 | a1 |\n| a1 | a1 | a1 | a1 | a1 | a1 |\n| a1 | a1 \n\n| Category | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| Project ends | a1 | a1 | a1 |\n| Project ends | a1 | a1 | a1 | a1 | a1 |\n| Target | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 |\n| Project ends | a1 | a1 | a1 |\n| Target | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| Target | Chart 1 | Chart 2 | Chart 3 | Chart 4 | Chart 5 | Chart 6 |\n| Target | Chart 1 | Chart 3 | Chart 4 | Chart 5 | Chart 6 | Chart 7 |\n| Target | Chart 1 | Chart 3 | Chart 4 | Chart 6 | Chart 7 |\n| Target 1 | Chart 2 | Chart 3 | Chart 4 | Chart 6 | Chart 7 |\n| Target 1 | Chart 2 | Chart 5 | Chart 6 | Chart 7 | Chart 7 |\n| Target 1 | Chart 2 | Chart 5 | Chart 7 | Chart 7 | Chart 7 7 |\n| Target 1 | Chart 2 | Chart 7 | Chart 7 | Chart 7 | Chart 7 |\n| Target 1 | Chart 2 | Chart 7 | Chart 7 | Chart 7 | Chart 7 | Chart 7 |\n| Target 1 | Chart 2 | Chart 7 | Chart 7 | Chart 7 | Chart 7 | Chart 7 |\n| Target 1 | Chart 2 | Chart 7 | Chart 7 | Chart 7 | Chart 7 | Chart 7 | Chart 7 |\n| Target 1 | Chart 2 | Chart 7 | Chart 7 | Chart 7 | Chart\n\nthe interval). Because the release of the previous credit (_ci_) which was anticipated for this decade (\\(\\hat{r}_{1,2}\\)) did not happen, the credit issued after decade 2 (_c_2) is the sum of the new additionality _a_2 generated plus \\(\\hat{r}_{1,2}\\) (so _c_2=_a_2+\\(\\hat{r}_{1,2}\\)). d, _c_2 is estimated ex ante to be released at a slightly lower rate than was forecast for _ci, given the project’s better than anticipated performance. Again, all of _c_2 is expected to be released, with the costs of the release accounted for via EP2, the EP value derived from this schedule. e, An alternative outcome over decade 2 is that carbon is lost from the project area but at a slower rate than pessimistically anticipated in the release schedule for credit _ci_. Additionally _a_2 is less than _ai_, but because additionality is still positive (that is, release has not occurred), this second decade’s credit _c_2 is again calculated as the sum of the additionality over the period plus the release of the previous credit that was predicted for this interval (_c_2=_a_2+\\(\\hat{r}_{1,2}\\)). f, This new credit is assigned its own EP assuming the same forecast post-project rate of release schedule as b.", "figure_data_tables": [ [ [ "Category", "Chart 1", "Chart 2", "Chart 3", "Chart 4", "Chart 5", "Chart 6", "Chart 7" ], [ "Project ends", "a1", "a1", "c1", "c1", "c1", "c1", "c1" ], [ "a1", "a1", "c1", "c1", "c1", "c1", "c1", "c1" ] ], [ [ "Category", "Chart 1", "Chart 2", "Chart 3", "Chart 4", "Chart 5", "Chart 6", "Chart 7" ], [ "Project ends", "a1", "a1", "a1", "a1", "a1", "a1" ], [ "Project ends", "a1", "a1", "a1", "a1", "a1", "a1", "a1" ] ], [ [ "Category", "Chart 1", "Chart 2", "Chart 3", "Chart 4", "Chart 5", "Chart 6", "Chart 7" ], [ "Project ends", "a1", "a1", "a1", "a1", "a1" ], [ "Project ends", "a1", "a1", "a1", "a1", "a1", "a1" ], [ "a1", "a1", "a1", "a1", "a1", "a1", "a1" ] ], [ [ "Category", "Chart 1", "Chart 2", "Chart 3", "Chart 4", "Chart 5", "Chart 6", "Chart 7" ], [ "Project ends", "a1", "a1", "a1", "a1" ], [ "Project ends", "a1", "a1", "a1", "a1", "a1" ], [ "a1", "a1", "a1", "a1", "a1", "a1" ] ], [ [ "Category", "Chart 1", "Chart 2", "Chart 3", "Chart 4", "Chart 5", "Chart 6", "Chart 7" ], [ "Project ends", "a1", "a1", "a1" ], [ "Project ends", "a1", "a1", "a1", "a1", "a1" ], [ "Target", "Chart 1", "Chart 2", "Chart 3", "Chart 4", "Chart 5", "Chart 6" ], [ "Target", "Chart 2", "Chart 3", "Chart 4", "Chart 5", "Chart 6", "Chart 7" ], [ "Target", "Chart 1", "Chart 3", "Chart 4", "Chart 5", "Chart 6", "Chart 7" ], [ "Target", "Chart 1", "Chart 3", "Chart 4", "Chart 6", "Chart 7" ], [ "Target 1", "Chart 2", "Chart 3", "Chart 4", "Chart 6", "Chart 7" ], [ "Target 1", "Chart 2", "Chart 5", "Chart 6", "Chart 7", "Chart 7" ], [ "Target 1", "Chart 2", "Chart 5", "Chart 7", "Chart 7", "Chart 7 7" ], [ "Target 1", "Chart 2", "Chart 7", "Chart 7", "Chart 7", "Chart 7" ], [ "Target 1", "Chart 2", "Chart 7", "Chart 7", "Chart 7", "Chart 7", "Chart 7" ], [ "Target 1", "Chart 2", "Chart 7", "Chart 7", "Chart 7", "Chart 7", "Chart 7", "Chart 7" ] ] ], "figure_data_suspect": true }, { "page": 4, "order": 2, "class": "Text", "bbox_normalized": [ 0.0986, 0.7, 0.4951, 0.8875 ], "bbox_pixels": [ 103.1, 1433.6, 762.8, 1817.6 ], "text": "Returning to our example, suppose the project is reassessed ten years\nafter the first credit issuance, as it draws to a close (Fig. 3c). Imagine\nthat while deforestation in the counterfactual sites has continued, the\nproject has done far better over its second decade than our pessimistic\nforecast and none of the anticipated deforestation has occurred. In\nthis case, the project will have generated further additionality, denoted\na2. However, the new credit issued for this interval, c2, should also\ninclude an amount equal to the release previously expected to occur\nduring this interval (ˆ1,2), because its social cost has already been\naccounted for in the EP value assigned to the first credit (EP1). An antic-\nipated release schedule and new EP value are then developed for this\nsecond credit (EP2; Fig. 3d), which might reasonably reflect a slightly\nmore optimistic view of likely post-project releases, given the project’s\nbetter than expected performance over the last ten years.", "reparsed_from_region": true }, { "page": 4, "order": 3, "class": "Text", "bbox_normalized": [ 0.5127, 0.7008, 0.9102, 0.7656 ], "bbox_pixels": [ 792.1, 1435.2, 1453.6, 1567.9 ], "text": "second decade’s credit c2 is therefore again calculated as the sum of\nits observed additionality over that period plus the amount of release\nof the previous credit that was predicted for this interval. This new\ncredit is assigned its own EP (EP2; Fig. 3f), based on the same anticipated\npost-project release rate as that in Fig. 3b.", "reparsed_from_region": true }, { "page": 4, "order": 4, "class": "Text", "bbox_normalized": [ 0.5117, 0.768, 0.9102, 0.9422 ], "bbox_pixels": [ 790.5, 1572.9, 1453.6, 1929.6 ], "text": "In contrast to the widely used buffer pool approach, this iterative system of tracking and accounting for releases creates an incentive to safeguard already credited carbon, because good post-credit performance increases both the magnitude of future credit issuances and their associated EP values (Supplementary Information). Importantly, however, if already credited carbon is released more rapidly than expected, this too can be corrected through deductions from future credits, and in extremis by withdrawal from a portfolio-wide insurance pool of credits (even after the project ends; Supplementary Fig. 1). However, adopting deliberately conservative release schedules should mean such situations will be uncommon. Conservatism also acts to reduce expectations of non-release placed on future custodians of already credited carbon, helping", "reparsed_from_region": true }, { "page": 4, "order": 5, "class": "Text", "bbox_normalized": [ 0.0977, 0.8906, 0.4951, 0.943 ], "bbox_pixels": [ 101.6, 1823.9, 762.8, 1931.3 ], "text": "An alternative and perhaps more likely outcome over years 10–20\nis that carbon stocks do fall in the project area, but at a lower rate\nthan anticipated (Fig. 3e). Additionality over this second interval α2\nis less than α1, but because net release has still not happened, this", "reparsed_from_region": true }, { "page": 4, "order": 6, "class": "Page-footer", "bbox_normalized": [ 0.0986, 0.9648, 0.2334, 0.975 ], "bbox_pixels": [ 103.1, 1975.9, 327.4, 1996.8 ], "text": "Nature Climate Change", "reparsed_from_region": true } ], [ { "page": 5, "order": 0, "class": "Page-header", "bbox_normalized": [ 0.0977, 0.0289, 0.9092, 0.0422 ], "bbox_pixels": [ 101.6, 59.2, 1451.9, 86.4 ], "text": "Perspective\nhttps://doi.org/10.1038/s41558-023-01815-0" }, { "page": 5, "order": 1, "class": "Chart", "bbox_normalized": [ 0.0967, 0.0656, 0.9111, 0.4539 ], "bbox_pixels": [ 99.9, 134.3, 1455.1, 929.6 ], "text": "| Category | Number of Points |\n| --- | --- |\n| Observed stock, measured ex post | 10 |\n| Current assessment | 10 |\n| Project ends | 10 |\n| Deforestation increases | 10 |\n| Temporarily reduced deforestation | 10 |\n| Contractor to timber plantation harvested after 40 years | 10 |\n| Restoration to fire-prone woodland | 10 |\n| Regrowth | 10 |\n| Headline price per tonne CO2e (adjusted for additionality) | 0.31 |\n| PACT cost | US$80 |\n| Other | 0.39 |\n| Cost of estimated ex ante | 0.26 |\n| Cost of estimated ex ante | US$40 |\n| Cost of estimated ex ante | US$154 |", "image_file": "page005_el01_Chart.png", "tables_json": [ [ [ "Category", "Number of Points" ], [ "Observed stock, measured ex post", "10" ], [ "Current assessment", "10" ], [ "Project ends", "10" ], [ "Deforestation increases", "10" ], [ "Temporarily reduced deforestation", "10" ], [ "Contractor to timber plantation harvested after 40 years", "10" ], [ "Restoration to fire-prone woodland", "10" ], [ "Regrowth", "10" ], [ "Headline price per tonne CO2e (adjusted for additionality)", "0.31" ], [ "PACT cost", "US$80" ], [ "Other", "0.39" ], [ "Cost of estimated ex ante", "0.26" ], [ "Cost of estimated ex ante", "US$40" ], [ "Cost of estimated ex ante", "US$154" ] ] ], "figure_text": "| Stage | Observed stock, measured ex post (Estimated) | Current assessment (Estimated) | Project ends (Estimated) | Deforestation increases (Estimated) | Restoration to fire-prone woodland (Estimated) |\n| --- | --- | --- | --- | --- | --- |\n| EP Headline price per tonne CO2e (adjusted for additionality) | 0.31 | 0.31 |\n\n**Fig. 4 | Application of the PACT framework to three archetypal 40-year NBS projects. a–c**, The upper plots show carbon stock in the project and counterfactual sites (thick and thin lines, respectively) and the lower plots show release schedules for additionality of the current credit _ci_, issued ten years into the project; note that steady-state turnover of carbon through respiration, photosynthesis and decomposition is not considered relevant. EP values for _ci_ issuances based on these release schedules; plausible headline prices for impermanent credits of this type, adjusted for additionality and leakage; and the resulting cost of a PACT for each hypothetical project are given below the plots. The three scenarios show a hypothetical deforestation-reduction scheme that reduces deforestation to 10% of the counterfactual rate, where the release schedule anticipates that additionality of _ci_ is also lost at 10% of the\n\ncounterfactual rate, rising to 100% when the project ends (a); a hypothetical reforestation project involving a fast-growing plantation, cleared for timber (as scheduled) after 40 years, where anticipated release of the additionality of _ci_ involves 1% loss of additionality each decade prior to harvesting to allow for possible disease outbreak, 50% loss of the remainder through wastage at harvesting and then release of half of the additionality in harvested timber each decade, starting ten years after harvest, with complete loss 40 years later (b); and a hypothetical woodland restoration project in a fire-prone biome which is severely impacted by a fire releasing 25% of its additional carbon stock in the decade after the project ends--a fire was predicted, however, with a conservative release schedule assuming a 2% chance of the additionality of _ci_ being lost entirely each year (c).", "figure_data_tables": [ [ [ "Stage", "Observed stock, measured ex post (Estimated)", "Current assessment (Estimated)", "Project ends (Estimated)", "Deforestation increases (Estimated)", "Restoration to fire-prone woodland (Estimated)" ], [ "EP Headline price per tonne CO2e (adjusted for additionality)", "0.31", "0.31" ] ] ] }, { "page": 5, "order": 2, "class": "Text", "bbox_normalized": [ 0.0986, 0.4961, 0.4951, 0.5211 ], "bbox_pixels": [ 103.1, 1016.0, 762.8, 1067.2 ], "text": "to alleviate intergenerational equity concerns about dealing with\nimpermanence." }, { "page": 5, "order": 3, "class": "Text", "bbox_normalized": [ 0.5127, 0.4961, 0.9102, 0.6156 ], "bbox_pixels": [ 792.1, 1016.0, 1453.6, 1260.7 ], "text": "schedule derived from an analysis embedded in a representative\nintegrated assessment model28 (Supplementary Fig. 3). Under these\nassumptions, EP values for these projects’ first round of credits, if\nissued ex post today, would range from 0.26 to 0.39 (Fig. 4). Combin-\ning these EP estimates with headline prices for similar NBS offsets,\nthemselves adjusted for probable overestimation of additionality and\nunderestimation of leakage11–13,27, in turn suggests that PACTs derived\nfrom our archetypal projects would cost in the order of US$80–160\n(Fig. 4)." }, { "page": 5, "order": 4, "class": "Section-header", "bbox_normalized": [ 0.0986, 0.5336, 0.4385, 0.5484 ], "bbox_pixels": [ 103.1, 1092.8, 668.7, 1123.1 ], "text": "## Broad applicability of the PACT framework" }, { "page": 5, "order": 5, "class": "Text", "bbox_normalized": [ 0.0977, 0.55, 0.4961, 0.725 ], "bbox_pixels": [ 101.6, 1126.4, 764.5, 1484.8 ], "text": "Buyers clearly need to make direct comparisons across a diverse array\nof NBS and other offset classes7. The three-pronged PACT framework\nenables this by explicitly and transparently expressing the performance\nof diverse types of projects in a common currency that captures dif-\nferences in the durability and hence social benefit of the net draw-\ndowns they generate. To illustrate our scheme’s flexibility, consider\nthree archetypal NBS projects (Fig. 4), this time lasting for 40 years\nand with more plausible—yet still purposely pessimistic—schedules\nof additionality generation and reversal. To ensure timely corrections\nfor post-credit performance, we suggest the PACT framework would\nbest be deployed over short, iterated assessment intervals (under five\nyears), but for graphical clarity we focus here on a single assessment\nmade a decade into each project." }, { "page": 5, "order": 6, "class": "Text", "bbox_normalized": [ 0.5117, 0.618, 0.9102, 0.8203 ], "bbox_pixels": [ 790.5, 1265.7, 1453.6, 1680.0 ], "text": "Significantly, while these calculations indicate that fully offset-\nting emissions through NBS is substantially more expensive than cur-\nrent market prices suggest, such schemes still appear competitively\npriced when compared with wholly additional, permanent, geologically\nsequestered offsets. These reportedly average7 US$140 per tCO2e,\nbut vary widely, with some currently selling at around US$1,000 per\ntCO2e (https://climeworks.com/subscriptions). This conclusion is\ninsensitive to plausible changes in SCC schedule, release schedule and\ntime horizon, although the cost of NBS-derived PACTs would increase\nsubstantially at very low discount rates (<2% per year; see the sensitivity\ntests in the Supplementary Information and Supplementary Figs. 2 and\n4–8). Hence, despite the impermanence of their effects, nature-based\ninterventions, which can also provide important biodiversity and rural\nlivelihood co-benefits, may offer less costly ways of reducing climate\ndamages than some well-known technological solutions." }, { "page": 5, "order": 7, "class": "Text", "bbox_normalized": [ 0.0977, 0.7266, 0.4951, 0.9016 ], "bbox_pixels": [ 101.6, 1488.1, 762.8, 1846.5 ], "text": "Estimating the EP values of the credits issued after this first assess-\nment again requires developing conservative release schedules. The\nfirst project (Fig. 4a) involves reduced deforestation and, for illustra-\ntion, a plausible but pessimistic release forecast that previously cred-\nited carbon is lost at 10% of the counterfactual rate until the project\nends, and at the counterfactual rate after that. Our second project\n(Fig. 4b) is a fast-growing timber plantation. In this case the release\nschedule anticipates that 1% of credited carbon is lost each year because\nof disease, that half of the remainder is lost as a result of wastage at\nharvesting, and that the wood products generated then last a further\n40 years. The final example (Fig. 4c) describes a restored native wood-\nland in a fire-prone biome, where a conservative release schedule\nreflects a 2% chance of it being lost entirely each year." }, { "page": 5, "order": 8, "class": "Section-header", "bbox_normalized": [ 0.5127, 0.8328, 0.752, 0.8477 ], "bbox_pixels": [ 792.1, 1705.6, 1190.3, 1736.1 ], "text": "### Engaging with impermanence" }, { "page": 5, "order": 9, "class": "Text", "bbox_normalized": [ 0.5127, 0.8492, 0.9102, 0.9422 ], "bbox_pixels": [ 792.1, 1739.2, 1453.6, 1929.6 ], "text": "We suggest that more important than the direction of these preliminary\nfindings, though, is the ability of the PACT framing to integrate real\nconcerns about credit reversals into assessments of NBS (and indeed\nthose of technology-based offsets at risk of reversal29). This facilitates\nproject comparability and, by increasing accountability, has the poten-\ntial to promote buyer confidence. This may in turn boost sales of NBS\noffsets to existing and new customers, although the higher cost of" }, { "page": 5, "order": 10, "class": "Text", "bbox_normalized": [ 0.0977, 0.9039, 0.4951, 0.9422 ], "bbox_pixels": [ 101.6, 1851.2, 762.8, 1929.6 ], "text": "Each of these schedules describes the anticipated complete release\nof the carbon credited after the first decade and is used to derive an\nassociated EP value assuming a 3% per year discount rate and an SCC" }, { "page": 5, "order": 11, "class": "Page-footer", "bbox_normalized": [ 0.0977, 0.9648, 0.2334, 0.975 ], "bbox_pixels": [ 101.6, 1975.9, 327.4, 1996.8 ], "text": "Nature Climate Change" } ], [ { "page": 6, "order": 0, "class": "Page-header", "bbox_normalized": [ 0.0977, 0.0297, 0.9102, 0.0422 ], "bbox_pixels": [ 101.6, 60.8, 1453.6, 86.4 ], "text": "Perspective https://doi.org/10.1038/s41558-023-01815-0" }, { "page": 6, "order": 1, "class": "Text", "bbox_normalized": [ 0.0977, 0.0617, 0.4951, 0.1266 ], "bbox_pixels": [ 101.6, 126.4, 762.8, 259.3 ], "text": "PACTs compared with unadjusted NBS credits may discourage those\nbuyers who are satisfied with low-integrity offsets. If demand for robust\ncredits does grow, this should help lift the price paid for them, thereby\nencouraging more NBS projects to enter the carbon offset market—a\ncritical policy goal." }, { "page": 6, "order": 2, "class": "Text", "bbox_normalized": [ 0.0977, 0.1289, 0.4961, 0.3844 ], "bbox_pixels": [ 101.6, 264.0, 764.5, 787.3 ], "text": "In addition, tailoring and revising the estimation of EP according to\nthe recent performance of a project (and others like it) should incentiv-\nize project providers to adopt actions likely to increase permanence—\nsuch as improving land tenure and reducing opportunity costs borne\nby local communities, for instance by boosting farm yields on already\ncleared land. If successful, these actions could generate additional\nbenefits by enhancing project additionality, reducing risks of leakage\nof forgone production and hence emissions elsewhere27, and improving\nlocal livelihoods. Moreover, by being explicitly geared towards fre-\nquent low-cost analysis of remotely derived data, the PACT framework\noffers the twin prospects of greater accountability for offset buyers and\nreduced transaction costs of project proponents, as well as aligning\ndirectly with calls for digital monitoring, reporting and verification in\ncarbon markets30. Continued monitoring would also enable separate\nongoing accounting of the physical climate impacts of projects (essen-\ntial for tracking progress towards temperature-based goals21). Crucially,\nsuch monitoring–if linked, as we propose, with ex post repayment for\nlower-than-anticipated releases–incentivizes project stakeholders to\ncontinue to safeguard already credited carbon into the future." }, { "page": 6, "order": 3, "class": "Text", "bbox_normalized": [ 0.0977, 0.3875, 0.4951, 0.6156 ], "bbox_pixels": [ 101.6, 793.6, 762.8, 1260.7 ], "text": "The increasing availability of near-time remote-sensing data will\nbe key in continuously updating the information provided to offset\npurchasers about what they are buying. Procedures for estimating NBS\nadditionality will need regular revision as counterfactual estimation\ntechniques improve, socioeconomic drivers change and new national\nand sectoral commitments to stopping deforestation are made. Some\nNBS (and, indeed, technology-based schemes) will also become less\nadditional if their costs fall so that they become financially viable\nwithout offset payments31. Methods for estimating permanence will\nneed updating as our ability to forecast release schedules improves\nand as threats to emissions drawdowns change15. Techniques for esti-\nmating leakage will require further work, especially as trade expands\nsuch that carbon-emitting production, forgone as a result of project\nactivities, becomes increasingly likely to be displaced far away from\nintervention sites26,27. The dynamic accounting central to the PACT\nframework means that it is readily capable of accommodating such\nnew procedures and information." }, { "page": 6, "order": 4, "class": "Text", "bbox_normalized": [ 0.0977, 0.618, 0.4951, 0.7359 ], "bbox_pixels": [ 101.6, 1265.7, 762.8, 1507.1 ], "text": "Investors face trade-offs in deciding which offsets to buy.\nWell-designed NBS projects present singular opportunities for benefit-\nting biodiversity and rural livelihoods5. Moreover, while NBS schemes\nmay be more vulnerable to impermanence than some other offset\nclasses, they can and do mitigate the social costs of climate change\nconsiderably. Our new generalizable and scalable formulation suggests\nhow this contribution can be valued, enabling the direct comparison of\nnature-based and technological offset options for progressing towards\nnet zero." }, { "page": 6, "order": 5, "class": "Section-header", "bbox_normalized": [ 0.0986, 0.7516, 0.2305, 0.7656 ], "bbox_pixels": [ 103.1, 1539.3, 322.6, 1567.9 ], "text": "## Data availability" }, { "page": 6, "order": 6, "class": "Text", "bbox_normalized": [ 0.0977, 0.768, 0.4941, 0.7922 ], "bbox_pixels": [ 101.6, 1572.9, 761.2, 1622.4 ], "text": "All data are available in the main text or the supplementary materials.\nFor more information on PACT see www.cambridgepact.org." }, { "page": 6, "order": 7, "class": "Section-header", "bbox_normalized": [ 0.0977, 0.8063, 0.2334, 0.8203 ], "bbox_pixels": [ 101.6, 1651.3, 327.4, 1680.0 ], "text": "### Code availability" }, { "page": 6, "order": 8, "class": "Text", "bbox_normalized": [ 0.0977, 0.8227, 0.4951, 0.8477 ], "bbox_pixels": [ 101.6, 1684.9, 762.8, 1736.1 ], "text": "The code for producing carbon release schedules and calculating EP\nis available on request." }, { "page": 6, "order": 9, "class": "Section-header", "bbox_normalized": [ 0.0986, 0.8609, 0.1875, 0.8719 ], "bbox_pixels": [ 103.1, 1763.1, 251.0, 1785.7 ], "text": "## References" }, { "page": 6, "order": 10, "class": "Bibliography", "bbox_normalized": [ 0.0986, 0.8773, 0.4756, 0.9008 ], "bbox_pixels": [ 103.1, 1796.7, 730.4, 1844.8 ], "text": "1. 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Comparing the environmental integrity of emission reductions from REDD programs with renewable energy projects. _Forests_ **11**, 1360 (2020)." }, { "page": 7, "order": 8, "class": "Section-header", "bbox_normalized": [ 0.0986, 0.3312, 0.2578, 0.3445 ], "bbox_pixels": [ 103.1, 678.3, 368.0, 705.5 ], "text": "## Acknowledgements" }, { "page": 7, "order": 9, "class": "Text", "bbox_normalized": [ 0.0977, 0.3469, 0.4814, 0.4117 ], "bbox_pixels": [ 101.6, 710.5, 740.0, 843.2 ], "text": "This work was developed with support from the Royal Society, ESRC, NERC, Grantham Research Institute on Climate Change and the Environment, Frank Jackson Trust, Dragon Capital and the Tezos Foundation. We thank B. Balmford, G. Cerullo, A. Eyres, H. Hannable, S. Jaffer, E. Quigley, E.-P. Rau and C. Wheeler for their help and ideas." }, { "page": 7, "order": 10, "class": "Section-header", "bbox_normalized": [ 0.0986, 0.4258, 0.2715, 0.4375 ], "bbox_pixels": [ 103.1, 872.0, 390.8, 896.0 ], "text": "### Author contributions" }, { "page": 7, "order": 11, "class": "Text", "bbox_normalized": [ 0.0977, 0.4422, 0.4766, 0.4797 ], "bbox_pixels": [ 101.6, 905.6, 732.1, 982.4 ], "text": "All the authors conceived the initial idea. A.B., S.K., F.V., B.G. and T.S. developed the method. T.S. created the figures. A.B., S.K. and T.S. wrote the manuscript and all co-authors revised it." }, { "page": 7, "order": 12, "class": "Section-header", "bbox_normalized": [ 0.5137, 0.0594, 0.6777, 0.0727 ], "bbox_pixels": [ 793.8, 121.7, 1066.7, 148.9 ], "text": "## Competing interests" }, { "page": 7, "order": 13, "class": "Text", "bbox_normalized": [ 0.5127, 0.0758, 0.9072, 0.1242 ], "bbox_pixels": [ 792.1, 155.2, 1448.6, 254.4 ], "text": "A.B. is a trustee of the World Land Trust, a non-governmental organization that supports forest-based carbon projects. The Cambridge Centre for Carbon Credits (4C) has no commercial interest in carbon credits." }, { "page": 7, "order": 14, "class": "Section-header", "bbox_normalized": [ 0.5127, 0.1406, 0.7002, 0.1516 ], "bbox_pixels": [ 792.1, 287.9, 1104.1, 310.5 ], "text": "## Additional information" }, { "page": 7, "order": 15, "class": "Text", "bbox_normalized": [ 0.5127, 0.1578, 0.8301, 0.1945 ], "bbox_pixels": [ 792.1, 323.2, 1320.3, 398.3 ], "text": "Supplementary information The online version contains supplementary material available at https://doi.org/10.1038/s41558-023-01815-0." }, { "page": 7, "order": 16, "class": "Text", "bbox_normalized": [ 0.5127, 0.2109, 0.8496, 0.2211 ], "bbox_pixels": [ 792.1, 431.9, 1352.7, 452.8 ], "text": "Correspondence should be addressed to Andrew Balmford." }, { "page": 7, "order": 17, "class": "Text", "bbox_normalized": [ 0.5127, 0.2391, 0.8867, 0.2758 ], "bbox_pixels": [ 792.1, 489.7, 1414.5, 564.8 ], "text": "Peer review information Nature Climate Change thanks Per Kristian Rørstad, Susan Cook-Patton and Lucas Joppa for their contribution to the peer review of this work." }, { "page": 7, "order": 18, "class": "Text", "bbox_normalized": [ 0.5127, 0.293, 0.8066, 0.3172 ], "bbox_pixels": [ 792.1, 600.1, 1281.2, 649.6 ], "text": "Reprints and permissions information is available at www.nature.com/reprints." }, { "page": 7, "order": 19, "class": "Text", "bbox_normalized": [ 0.5127, 0.3336, 0.8887, 0.3578 ], "bbox_pixels": [ 792.1, 683.2, 1417.8, 732.8 ], "text": "Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations." }, { "page": 7, "order": 20, "class": "Text", "bbox_normalized": [ 0.5127, 0.3742, 0.8994, 0.4523 ], "bbox_pixels": [ 792.1, 766.4, 1435.6, 926.3 ], "text": "Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law." }, { "page": 7, "order": 21, "class": "Caption", "bbox_normalized": [ 0.5127, 0.4703, 0.6924, 0.4805 ], "bbox_pixels": [ 792.1, 963.2, 1091.2, 984.1 ], "text": "© Springer Nature Limited 2023" }, { "page": 7, "order": 22, "class": "Page-footer", "bbox_normalized": [ 0.0986, 0.9648, 0.2334, 0.975 ], "bbox_pixels": [ 103.1, 1975.9, 327.4, 1996.8 ], "text": "Nature Climate Change" } ] ] }