Potential for Return on Investment in Rehabilitation-Oriented Blue Carbon Projects: Accounting Methodologies and Project Strategies

Clare Duncan,Nicholas A O Hill,Jurgenne H Primavera,Dominic C J Wodehouse,Heather J Koldewey

doi:10.3389/ffgc.2021.775341

Abstract

Opportunities to boost climate change mitigation and adaptation (CCMA) and sustainable conservation financing may lie in enhancing blue carbon sequestration, particularly in developing nations where coastal ecosystems are extensive and international carbon markets offer comparatively attractive payments for environmental stewardship. While blue carbon is receiving increased global attention, few credit-generating projects are operational, due to low credit-buyer incentives with uncertainty in creditable emissions reductions and high project costs. Little empirical guidance exists for practitioners to quantify return-on-investment (ROI) and viability of potential projects, particularly for rehabilitation where multiple implementation options exist with diverse associated costs. We map and model drivers of mangrove natural regeneration (NR) using remote sensing (high-resolution satellite imagery segmentation and time-series modeling), and subsequent carbon sequestration using field- and literature-derived data, across abandoned aquaculture ponds in the Philippines. Using project-specific cost data, we then assess ROI for a hypothetical rehabilitation-focused mangrove blue carbon project at a 9.68 ha abandoned pond over a 10-year timeframe, under varied rehabilitation scenarios [NR vs. assisted natural regeneration (ANR) with planting], potential emissions reduction accreditation methodologies, carbon prices and discount rates. NR was faster in lower-lying ponds with lower tidal exposure (greater pond dike retention). Forecasted carbon sequestration was 3.7- to 5.2-fold and areal “greenbelt” regeneration 2.5- to 3.4-fold greater in our case study under ANR than NR. Variability in modeled sequestration rates drove high uncertainty and credit deductions in NR strategies. ROI with biomass-only accreditation was low and negative under NR and ANR, respectively. ROI was greater under ANR with inclusion of biomass and autochthonous soil carbon; however, neither strategy was highly profitable at current voluntary market carbon prices. ANR was the only scenario that fulfilled coastal protection greenbelt potential, with full mangrove cover within 10 years. Our findings highlight the benefits of ANR and soils inclusion in rehabilitation-oriented blue carbon projects, to maximize carbon sequestration and greenbelt enhancement (thus enhance pricing with potential bundled credits), and minimize forecasting uncertainty and credit-buyers’ perceived risk. An ANR rehabilitation strategy in low-lying, sea-facing abandoned ponds with low biophysical intervention costs may represent large blue carbon CCMA opportunities in regions with high aquaculture abandonment.

Highlights

Coastal ecosystems, such as mangrove forests, are among the world’s most productive ecosystems, maintaining high levels of biodiversity (Thompson and Rog, 2019) and delivering substantial ecosystem services to support local- to global-scale human well-being relative to their spatial coverage (Donato et al, 2011; McLeod et al, 2011; Curnick et al, 2019)
Mean model-predicted “rate of areal increase” under natural regeneration” (NR) at the Leganes Katunggan abandoned pond (0.247 ha year−1) was lower than that observed at the site under early NR (0.352 ha year−1: 2005– 2009), and substantially lower than that observed at the site under assisted NR (ANR) (1.327 ha year−1; 2009–2013) (Figures 2, 3 and Table 2)
Our study provides the first to these authors’ knowledge that explores drivers and variation in mangrove regeneration rates in converted coastal areas at multi-site scales, and to quantify relative ROI in potential rehabilitation-oriented blue carbon project scenario options

Summary

Introduction

Coastal ecosystems, such as mangrove forests, are among the world’s most productive ecosystems, maintaining high levels of biodiversity (Thompson and Rog, 2019) and delivering substantial ecosystem services to support local- to global-scale human well-being relative to their spatial coverage (Donato et al, 2011; McLeod et al, 2011; Curnick et al, 2019). Pertinent in the current global climate emergency is their ability to support climate change mitigation and adaptation (CCMA) across the world’s coasts, due to high relative sequestration and storage of “blue carbon,” and protecting coastal communities and infrastructure from increasingly frequent storm conditions (Donato et al, 2011; Lee et al, 2014; Duncan et al, 2016; Hochard et al, 2019) Despite their importance, mangroves remain in global decline due to high coastal land-use demand and extractive dependency (Richards and Friess, 2016; Thomas et al, 2017; Bunting et al, 2018; Friess et al, 2019), facing substantial future challenges from abiotic climate change processes (Lovelock et al, 2015; Ward et al, 2016). High perceived risk in blue carbon permanence, uncertainty in creditable emissions forecasting in the absence of blue carbon-specific quantification methodologies, large project costs and political risk have meant that mangroves’ high CCMA potential has historically been largely unrealized in terms of operational blue carbon projects (Locatelli et al, 2014; Wylie et al, 2016; Herr et al, 2017)

Methods

Results

Conclusion