Integrating Ecosystem Service Values into Carbon Pricing

In partnership with the World Resources Institute (WRI), CSF provided technical and political guidance on how to integrate ecosystem service values into carbon pricing. This guidance is part of the USAID project implemented by Pronatura CO2munitario: Improving livelihoods through the recognition of the value of standing forests using market mechanisms.

CSF’s study determined potential buyers' willingness to pay (WTP) for offset credits for the co-benefits of forest carbon projects. In most cases, existing carbon market prices do not reflect the value of carbon sequestration to communities, nor the value of ecosystem services that standing forests provide. The results show that potential buyers, which included those in the voluntary and future compliance carbon markets, are willing to pay an additional USD 7 to 9.4 if a project is developed in a forest or tropical forest, USD 2.3 for projects developed in impoverished or marginalized areas and USD 5.1 for projects developed in intact ecological regions. These results will provide project owners (e.g. local communities) and project developers (e.g. NGOs) tools to negotiate a higher price for carbon offsets developed in forest areas.

Additionally, CSF developed a quantitative and qualitative analysis of the costs that local communities must incur to reach a minimum level of governance needed to develop complex carbon forestry projects. WRI will use this information to guide decision making at the federal level, and to design policies and programs that promote governance in local communities.

This project was conducted in partnership with the World Resources Institute, as part of the USAID project implemented by ProNatura

Photo: Oaxaca, Mexico
Photo Credit: Cecilia Simon