UNLOCKING BLUE CARBON DEVELOPMENT INVESTMENT READINESS FRAMEWORK FOR GOVERNMENTS © 2023 The World Bank Group 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000 | Internet: www.worldbank.org This work is a product of the staff of The World Bank Group, with external contributions. “The World Bank Group” refers to the legally separate organizations of the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). The World Bank Group does not guarantee the accuracy, reliability or completeness of the content included in this work, or the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever, or for reliance thereon. 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Acknowledgements This report, Unlocking Blue Carbon The following peer reviewers provided valuable advice: Development– Investment Readiness Framework Peter Kristensen, Pablo Cesar Benitez, Julian Gonzalo for Governments, was produced by a core team of Jimenez, Loren Atkins, Isabelle Blouin, Fabiano de The World Bank Group (WBG) and external partners Andrade Correa, Markus Pohlmann, Neeta Hooda, led by Sylvia Michele Diez, Senior Environmental Erik Winter Reed, Rodrigo Martinez Fernandez, Specialist, and Juliana Castano-Isaza, Natural Brenden Jongman, Andre Rodrigues Aquino, Resources Management Specialist. The report was Ellysar Baroudy, and Rahat Jabeen. written by Moritz von Unger, Mackenzie Taggart, Regina Sánchez Sasso, Raquel Bustamante, and Guidance and strategic direction were provided by Steve Crooks from Silvestrum Climate Associates; Juergen Voegele, Valerie Hickey, and Christian Peter. and oriented and edited by Sylvia Michele Diez, Juliana Castaño-Isaza, Andres Espejo, and The team is thankful for the funding support Irina Likhachova. from PROBLUE. The team is grateful for the valuable insights The finding, interpretations, and conclusions expressed and technical contributions of Jacqueline in this document are those of the authors and do not Alder, Mercy Amai Emojong, Josina Germaine necessarily reflect the view of the Executive Director of Eleonora Mellink, Stefanie Onder and Morgan Graham. the World Bank, the governments they represent, or the The team recognizes the operational assistance counterparts consulted during the study process. Any provided by Shane Ferdinandus, and the copy-editing factual errors are the responsibility of the team. support provided by Jennifer Stastny. The team also acknowledges valuable inputs of background research from Cerasela Magdalena Stancu and Nigel Bradly. The visuals and layout of this report were developed by Pablo Porta, Laura Hidalgo, and Natalia Fernandez from Estudio Relativo. Unlocking Blue Carbon Development Table of Contents Abbreviations..................................................................................................................... VIII Preface: Blue Carbon as an Opportunity............................................................................IX Executive Summary.............................................................................................................XI 1. The Scientific Basis for Action on Blue Carbon Ecosystems (Pillar 1)................................................................ 1 1.1 Established Blue Carbon Ecosystems....................................................................5 1.2 Emerging Blue Carbon Ecosystems.....................................................................13 1.3 Drivers of Degradation..........................................................................................16 1.4 Associated Costs of Addressing Degradation......................................................21 1.5 Opportunities from Blue Carbon Protection and Restoration.............................23 1.6 Knowledge Gaps...................................................................................................27 2. Building a Policy and Institutional Environment for Blue Carbon (Pillar 2)............................................................ 32 2.1 United Nations Framework Convention on Climate ............................................33 2.2 Commitments under the Paris Agreement..........................................................34 2.3 Convention on Biological Diversity’s COP15 and UNFCCC’s COP27 ..................39 2.4 Stacking the Platforms: Synergies of Climate Action, GBF, and the Sendai Framework .........................................................................................41 3. Mobilizing Finance for Blue Carbon (Pillar 3)..................... 47 3.1 Multilateral Funding..............................................................................................48 3.2 Results-Based Carbon Finance............................................................................50 3.3 Carbon Markets.....................................................................................................52 3.4 Emerging Financing Approaches..........................................................................61 Unlocking Blue Carbon Development 4. Scaling Blue Carbon Opportunities: Creating a Blue Carbon Readiness Framework.................................... 68 4.1 Blue Carbon Data Requirements for Nationally Determined Contributions.......75 4.2 Institutional and Legal Framework for Blue Carbon............................................80 4.3 Blue Carbon and REDD+.......................................................................................86 4.4 Financing Approaches..........................................................................................89 5. Recommendations for Action............................................... 96 Pillar One: Data and Analytics .......................................................................................97 Pillar Two: Policies and Institutions...............................................................................98 Pillar Three: Finance.......................................................................................................99 Appendix 1: Checklist (Blue Carbon Readiness Framework)..................................... 101 Appendix 2: Blue Carbon Habitats.............................................................................. 112 Appendix 3: Examples of Multilateral Funding for Oceans........................................ 118 Appendix 4: Blue Carbon Projects (Global)................................................................ 120 Appendix 5: Methodological Details (Blue Carbon).................................................... 126 References and Bibliography..................................................... 131 Unlocking Blue Carbon Development List of Boxes BOX 1 Commodity-driven mangrove losses in Southeast Asia .......................................................................17 BOX 2 Defining restoration and conservation...................................................................................................18 BOX 3 Successes in reversing degradation.......................................................................................................20 BOX 4 CASE STUDY | Jamaica’s Forces of Nature report: An integral assessment of the contributions of mangroves to coastal disaster risk reduction, adaptation, and climate mitigation.....................................................26 BOX 5 Addressing gaps examples: Mapping seagrass to support climate action...........................................28 BOX 6 Key priorities to address knowledge gaps.............................................................................................31 BOX 7 Blue carbon ecosystems and adaptation measures: Global NDC practice...........................................35 BOX 8 NDC implementation: Costa Rica’s 2023 Blue Carbon Strategy...........................................................36 BOX 9 Reducing emissions from deforestation and forest degradation (REDD+)...........................................37 BOX 10 Improving blue carbon accounting through REDD+, Indonesia............................................................38 BOX 11 Jurisdictional reach: Delta Blue (Mangrove) Project, Pakistan.............................................................39 BOX 12 Nature-based solutions..........................................................................................................................42 BOX 13 Payment for ecosystem services schemes on mangroves....................................................................45 BOX 14 CASE STUDY | Mikoko Pamoja, Kenya...................................................................................................46 BOX 15 Scaling climate action by lowering emissions partnership crediting framework.................................51 BOX 16 Stacking co-benefits...............................................................................................................................57 BOX 17 Crediting approaches under Article 6 of the Paris Agreement..............................................................58 BOX 18 Examples of payments for ecosystem services schemes on mangroves ............................................65 BOX 19 Emerging blue financing tools: Bonds and debt-for-nature swaps.......................................................67 BOX 20 Valuating blue ecosystem services........................................................................................................76 BOX 21 Planning for the 2013 Wetlands Supplement........................................................................................78 BOX 22 Action-specific blue carbon targets.......................................................................................................78 BOX 23 Marine spatial planning and blue carbon: Examples from Indonesia and Mozambique......................84 BOX 24 Designing and managing marine protected areas.................................................................................85 BOX 25 Mangroves REDD+ frameworks..............................................................................................................87 BOX 26 Community participation, and land and marine tenure.........................................................................88 BOX 27 Strategic deployment of concessional resources: PROBLUE................................................................91 BOX 28 Blue carbon opportunities for financial institutions: International Finance Corporation....................92 BOX 29 Concept of additionality....................................................................................................................... 127 BOX 30 Concept of leakage ............................................................................................................................. 128 BOX 31 Ensuring permanence.......................................................................................................................... 129 Unlocking Blue Carbon Development List of Figures Figure 1 The Blue Carbon Readiness Framework consists of three pillars........................................................XII Figure 2 Summary of Blue Carbon Readiness Framework pillars and recommendations............................... XVI Figure 3 Global distribution of established blue carbon ecosystems...................................................................2 Figure 4 Comparison of the potential for sequestering carbon, between coastal and terrestrial forests...........3 Figure 5 Blue carbon wealth redistribution (in US$ billion per year)....................................................................4 Figure 6 Actionable Blue Carbon Ecosystems (Climate Change Mitigation Policy)..............................................6 Figure 7 Abatement cost curve, nature-based solutions, US$ per metric ton of CO2e......................................22 Figure 8 Average GHG mitigation density of blue carbon interventions, compared with average figures for terrestrial forests...........................................................................24 Figure 9 Voluntary Carbon Market credits issued by activity type (2022)..........................................................54 Figure 10 Blue Carbon Readiness Framework.......................................................................................................70 Figure 11 MSP and ICZM informing new policies and regulations for the sustainable use of marine resources, and job generation..............................................................82 Figure 12 Figure representing budgetary allocations for the Blue Economy development.................................90 List of Tables Table 1 Primary drivers of degradation for blue carbon ecosystems.................................................................16 Table 2 Non-exhaustive list of actions to restore blue carbon ecosystems......................................................19 Table 3 Total carbon stock and change in stock (value, percent) in MMT for the top 20 countries, 1996–2020....................................................................................................30 Table 4 Comparison of the size of compliance and voluntary carbon markets.................................................53 Table 5 Carbon standards and methodologies for blue carbon credits in the voluntary market......................56 Table 6 REDD+ building blocks and reference resources..................................................................................93 Table 7 Examples of blue/coastal projects from international funding agencies (top five in each case).......................................................................................................................... 118 Table 8 Existing wetland carbon projects (Verified Carbon Standard)........................................................... 120 Table 9 Existing wetland carbon projects (Plan Vivo)...................................................................................... 123 Table 10 Existing wetland carbon projects (American Carbon Registry).......................................................... 124 Table 11 Existing wetland carbon projects (Climate Action Reserve).............................................................. 125 Table 12 Existing wetland carbon projects (Japan)........................................................................................... 125 Unlocking Blue Carbon Development VIII Abbreviations ACMI Africa Carbon Markets Initiative ICZM integrated coastal zone management ACR American Carbon Registry IPCC Intergovernmental Panel on Climate Change AFOLU agriculture, forestry, and land use IPLC indigenous peoples and local communities ARR afforestation, reforestation, and revegetation IUCN International Union for Conservation of Nature BCAF Blue Carbon Accelerator Fund LEAF Lowering Emissions by Accelerating Forest BC Blue Carbon Finance BCE Blue Carbon ecosystem LOI letters of intent BNCFF Blue Natural Capital Financing Facility LULUCF land use, land-use change, and forestry CAR Climate Action Reserve ha-1 per hectare CBD Convention on Biological Diversity km2 square kilometers CCB Climate, Community, and Biodiversity MOA memorandum of agreement Standard MPA marine protected area CDM Clean Development Mechanism MRV measuring, reporting and verification CO2 carbon dioxide NBSAP National Biodiversity Strategy and Action Plan COP Conference of the Parties NDC Nationally Determined Contribution CORSIA Carbon Offsetting and Reduction Scheme for NGO non-governmental organization International Aviation ODA official development assistance CPF Country Partnership Framework OECD Organization for Economic Co-operation and CPI Climate Policy Institute Development CSA climate smart agriculture Pg petagram (1015g) CVF Climate Vulnerable Forum PES payment for ecosystem services CWON Changing Wealth of Nations PFP project finance for permanence CZMAI Coastal Zone Management Authority and RBCF results-based carbon finance Institute REDD+ Reducing Emissions from Deforestation and DOE designated operational entity Forest Degradation EAFM ecosystems approach to fisheries SBTi Science-Based Target Initiative management SCALE Scaling Climate Action by Lowering Emissions EEZ exclusive economic zone SD VISta Sustainable Development Verified Impact EIA environmental impact assessment Standard EnABLE Enhancing Access to Benefits while Lowering SDG Sustainable Development Goals Emissions SIDS small island developing states ENACT Enhancing Nature-based Solutions for Climate TASA Turneffe Atoll Sustainability Association Transformation Initiative tCO2e/tCO2eq tons of carbon dioxide equivalent ERPA emissions reduction purchase agreement Tg teragrams (1012g) ESL extreme sea-level UN REDD United Nations Collaborative Initiative on EU ETS European Emissions Trading Scheme Reducing Emissions from Deforestation and FAO Food and Agriculture Organization Forest Degradation FCLP Forest and Climate Leaders’ Partnership UNEA United Nations Environment Assembly FCPF Forest Carbon Partnership Facility UNDP United Nations Development Programme FREL forest reference emissions levels UNEP United Nations Environment Programme G7 International Group of Seven UNESCO United Nations Educational, Scientific and GBF Kunming-Montreal Global Biodiversity Cultural Organization Framework UNFCCC United Nations Framework Convention on GCF Green Climate Fund Climate Change GEF Global Environment Facility USAID United States Agency for International GHG greenhouse gas Development GIZ German Agency for International Cooperation VCMI Voluntary Carbon Market Integrity Initiative GMA Global Mangrove Alliance VCS Verified Carbon Standard GMW Global Mangrove Watch VM0007 REDD+ Methodology Framework GS4GG Gold Standard for the Global Goals VM0033 Methodology for Tidal Wetland and Seagrass IBRD International Bank for Reconstruction and Restoration Development WMB We Mean Business Coalition ICAO International Civil Aviation Organization WWF World Wildlife Fund Unlocking Blue Carbon Development IX Preface: Blue Carbon as an Opportunity The role of coastal ecosystems in climate change mitigation has inspired the concept of Blue Carbon markets, where projects restoring or conserving these ecosystems generate “credits” based on the tonnes of carbon captured and stored. The credits are then sold to global buyers such as businesses that want to offset their own carbon emissions or, alternatively, seek a contribution to climate mitigation beyond a claim of climate neutrality, resulting in a variation of the carbon credit framework - Blue Carbon finance. It establishes markets to buy and sell emission credits, generating financial incentives for preserving and restoring the underlying coastal natural assets. These projects are helping countries and companies meet climate change commitments, by reducing greenhouse gas emissions while safeguarding the marine environment. Propelling Blue Carbon to its full potential in support of countries’ blue economy efforts, however, will require further steps to foster investment readiness recent complementary IFC report “Deep Blue”, which and attract the public and private capital that focuses on the role that private investment plays in the projects need. These require a comprehensive facilitating mitigation efforts. framework of conditions that enable successful carbon investing, including more precise and reliable Through the Blue Carbon Readiness report, the measuring, as well as reporting and verifying of WBG is supporting the development of a practical carbon dioxide equivalents and better accounting. framework to guide Bank client countries and their Recent climate COPs have highlighted the urgency of governments in catalyzing and scaling up public and accelerating climate change mitigation efforts which private sector investment in coastal Blue Carbon. includes expanding climate credit finance. This urgency The WBG in supporting client readiness to catalyze has been recognized by the WBG through various and bring coastal Blue Carbon to the scale needed upstream analytics and capacity building, including the recognizes many challenges still exist. Many of the Unlocking Blue Carbon Development X world’s natural coastal assets, especially mangrove, enhance global public goods related to climate, and seagrasses, and salt and tidal marshes are very biodiversity benefits. efficient at sequestering carbon in the biomass and in the soil and have a vital role in mitigating climate The report is intended for government services change. Yet there are many areas where these critical and for cross-sectoral attention within government ecosystems are being degraded or destroyed by structures. While its focus is on promoting Blue Carbon development, logging, and pollution, globally average readiness and identifying pathways for action and coverage is declining 1 to 3 percent annually. These funding from all sources, especially the private sector, losses also result in more carbon released into the it is not an investment guide for the private sector, atmosphere, driving temperature rise and climate or an assessment of the exact place Blue Carbon change. The degradation and loss of mangroves, interventions hold within the field of private investment seagrasses, and tidal marshes is also preventing for nature. Instead, the authors hope that this report these ecosystems from continuing to absorb and encourages governments to identify with the Blue store carbon. Carbon cause and promote it in key areas of knowledge, policy, and finance. Enhancing these coastal ecosystems has benefits beyond the sequestering of carbon, including This report was commissioned by the World Bank with reduction in flooding and erosion, storm protection, financial support from PROBLUE, an umbrella multi- increased food security, improved livelihoods for donor trust fund administered by the World Bank that women and indigenous groups, and biodiversity supports the sustainable and integrated development maintenance and improvement. The many co- of marine and coastal resources in healthy oceans. benefits mean that Blue Carbon financing initiatives can bolster multiple sectors, including tourism, fisheries, and energy, and therefore reduce poverty in emerging economies. The WBG’s experience in developing innovative and emerging finance instruments, makes it the ideal institution to describe the conditions needed to catalyze and scale up Blue Carbon. The WBG’s experience in deploying concessional and non-concessional finance and structuring blended mechanisms for nature and climate change, provides many lessons learned for client countries wanting to generate finance for the Blue Economy. The parametric insurance scheme to protect small-scale fishers from climate events in the Caribbean can be a model for developing novel insurance models that benefit from the natural coastal protection provided by BCEs. The WBG anticipates through this report to generate greater uptake of Blue Carbon investments, which will Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP EXECUTIVE SUMMARY XI Executive Summary Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP EXECUTIVE SUMMARY XII The purpose of this It does this by describing in detail a Blue Carbon Readiness Framework, a paper is to provide a step-by-step, well-illustrated guide with simple checklists. Client countries practical framework to can use the illustrations and checklists to determine their readiness to guide governments in catalyze and scale up investment in blue carbon credit finance. The Blue catalyzing and scaling Carbon Readiness Framework consists of three pillars: up public and private investment in Blue Carbon Pillar 1 : Pillar 2 : Pillar 3 : as part of their blue Data and Analytics Policy and Institutions Finance economy development. Figure 1 The Blue Carbon Readiness Framework consists of three pillars Blue Carbon Readiness Framework PILLAR PILLAR PILLAR 1 2 3 DATA & ANALYTICS POLICY & INSTITUTIONS FINANCE NDC COMMITMENTS LEVERAGE BLUE A B & IMPLEMENTATION CARBON FINANCE EVALUATE ASSESS GHG BLUE CARBON INVENTORIES ACTIONS CO₂ BLUE ECONOMY Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP EXECUTIVE SUMMARY XIII “The first chapter, Scientific Basis for Action on CO₂ Blue Carbon Ecosystems (Pillar 1)” focuses on the latest scientific knowledge providing the impetus for action. It includes a comprehensive description of the highlights the threats and drivers of degradation ecosystem services provided by BCEs and the and discusses recent trends to address degradation rationale for the actionable status of established BCEs and restore these ecosystems. This section also (mangroves, seagrass beds, and wetlands) as well provides the basis for evaluating blue carbon as emerging BCEs. The first section describes the actions and for assessing GHG inventories within the ecological, economic, and social importance of BCE readiness framework. services, especially for sequestering carbon. It also Mangroves, seagrass beds, and coastal wetlands mitigation output more than five times higher than that are part of the established wetlands inventory of a similar area of restored terrestrial forest. Seagrass category for reporting requirements to the United restoration compares to terrestrial restoration at a Nations Framework Convention on Climate factor of 3:1, and seagrass conservation at a factor of Change (UNFCCC) and are eligible for blue carbon almost 2:1. For saltmarsh interventions (restoration credit schemes. Some marine ecosystems, such as and conservation), the ratio is almost 2:1. kelp beds and mudflats, are progressing towards becoming actionable for reporting to the UNFCCC, Restoration and conservation are two widely ultimately within a carbon credit scheme. Others, such used practices to capitalize on the potential as coral reefs, oyster of blue carbon as a means of addressing and reefs, and marine fauna are currently considered preventing degradation. The established and emerging non-actionable. A lack of scientific information on these BCEs provide a multitude of ecosystem services, from BCEs is limiting and constraining their actionability flood protection to fish nurseries, which add to the and inclusion. carbon sequestration value. Expressed in monetary terms, carbon sequestration and storage by mangrove, Blue carbon investments are among the most salt marsh, and seagrass ecosystems has been valued effective climate solutions available. Restoring at roughly US$ 190 billion per year (about $ 580 per one hectare of mangrove forest has, on average, a person in the US) in terms of global blue carbon wealth. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP EXECUTIVE SUMMARY XIV Coastal ecosystem degradation threatens the Efforts over recent decades demonstrate that prospects of realizing the significant potential of the degradation can be addressed and prevented through three key BCEs. Over 50 percent of the world’s original restoration and conservation efforts in emerging salt marshes were lost during the twentieth century. and industrialized countries. These efforts require As much as 35 percent of mangroves were lost due substantial financial resources that depend on the scale, deforestation in the 1980s and 1990s, and researchers scope, and nature of the needed efforts. In many cases, estimate that 25 percent of total global seagrass beds however, BCE restoration is relatively less expensive have been lost. Often upland and seaward drivers of than engineering works. Funding these efforts requires degradation are linked, compounding the intensity and public and private sector financing, with blue carbon effects of BCEs losses. credit markets as one source of finance. The second chapter, “Building a Policy and Institutional Environment for Blue Carbon (Pillar 2),” provides policy anchor points for client countries to set objectives and pathways to catalyze and scale up blue carbon investments. Each country’s commitments to mitigate climate change The Paris Agreement commitments capitalize on are different. This chapter can inform decision makers potential opportunities to generate co-benefits, such on the best international policy commitments, especially as meeting Sustainable Development Goals (SDGs) the Nationally Determined Contributions (NDCs) that from blue carbon actions. Co-benefits-generation ground many blue carbon investments. A number of is an additional incentive to invest in blue carbon. international instruments, such as the UNFCCC and Currently, many of the co-benefits generated are from Paris Agreement, include NDCs as core commitments to BCE projects or projects that reduce fuel use. Emerging addressing climate change. BCEs, as well as carbon fluxes between components of marine ecosystems, are currently not eligible for Many international commitments have resulted in such benefits. greater inclusion of BCEs in GHG accounting. The IPCC “2013 Wetland Supplement” and its updates Governments are increasingly designing REDD+ is an example. The supplement provides guidance to (Reducing Emissions from Deforestation and Forest account for GHG emissions and removal of established Degradation) projects and toolkits to include BCEs. Conversely, it also informs or guides client mangroves. However, by restricting their REDD+ countries on the GHG mitigation actions that can be accounting to above-ground biomass only, the included in GHG accounting. This chapter and the enormous below-ground carbon sink underlying Readiness Framework help to show client countries mangroves is missed. Including mangroves in forestry how they can ensure their BCEs are included in GHG agencies can contribute to this missed opportunity. inventories and are part of the accounting process. Nevertheless, the global REDD+ infrastructure provides rich models and templates for intervention that are helpful for the planning and design of blue carbon interventions. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP EXECUTIVE SUMMARY XV The Convention on Biological Diversity (CBD) achieving their conservation targets is an additional COP15’s Kunming-Montreal Global Biodiversity anchor point for client countries to invest in blue Framework (GBF) vastly increased conservation and carbon. Together with other climate-change-related restoration targets, including for coastal and marine policy commitments and disaster-related policies such ecosystems, and notably for BCEs. The Framework’s as the Sendai Framework, synergies are possible. Special Trust Fund to support developing countries in The third chapter, “Mobilizing Finance for Blue Carbon (Pillar 3),” provides the entry points for client countries to pursue the public and private financing needed for blue carbon investments. This chapter reviews the different forms of investment parameters for the private sector, including financing:multilateral funding, results-based carbon with respect to carbon finance such as defining and finance, private philanthropy, and private finance allocating carbon rights, creating mandates for carbon (project development, and carbon markets). trading, and presenting models for community involvement and benefit sharing. The chapter ends It describes the different forms of funds within each with an interesting discussion on trends in blue carbon of these finance types, the conditions to access such pricing, opportunities for emissions trading under the funds, broad eligible activities, and monitoring and Paris Agreement, and emerging financing approaches. reporting obligations. This Pillar describes stable Chapter 4, “The Blue Carbon Readiness Framework,” provides a harmonized response for governments to tap their full blue carbon potential by combining technical, institutional, regulatory, and financial aspects. Adopting such a comprehensive response will help a pillar-by-pillar approach, with a series of questions countries shift to a more productive and resilient that guide governments on next steps or areas on Blue Economy that gives stability to natural habitats which to focus actions and investments. Practical and and predictability to the private sector. This chapter actionable recommendations for governments are consists of effective illustrations, supplemented by proposed to improve readiness and to help accelerate checklists, to guide the reader through the process of blue carbon investments. assessing blue carbon readiness. The process follows Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP EXECUTIVE SUMMARY XVI Figure 2 Summary of Blue Carbon Readiness Framework pillars and recommendations PILLAR Recommendation 1: Strengthen country capacity CO₂ 1 to develop GHG inventories for above and below- ground carbon. Data and Recommendation 2: Promote the use of ecosystem Analytics valuation in decision making. PILLAR Recommendation 3: Strengthen existing national 2 institutional structures, and design specific policies that facilitate the implementation of blue carbon commitments. Policies and Recommendation 4: Adopt integrated planning and a blue Institutions carbon strategy to enhance local benefits. Recommendation 5: Leverage partnerships between governments, the private sector, international financing institutions, and philanthropic organizations to help address the systemic risks stemming from BCE loss and influence global agendas. PILLAR Recommendation 6: Adopt a holistic approach to 3 mobilizing finance. Recommendation 7: Access international grant funding for Finance blue carbon readiness. Recommendation 8: Promote public-private partnerships (PPPs) for blue carbon market development. THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 1 CHAPTER 1 The Scientific Basis for Action on Blue Carbon Ecosystems (Pillar 1) Though their geographic extent does not rival was to raise awareness about limiting and reversing terrestrial counterparts, coastal ecosystems store ongoing degradation of BCEs—primarily mangroves, salt carbon at the highest rates per unit area (McLeod marshes, and seagrass beds. Today, the term is widely et al. 2011; Pendleton et al. 2012). They are capable used in management, scientific, and policy settings of capturing and burying carbon at a faster pace alike, to reference ecosystem services and SDGs than tropical forests (Duarte et al. 2021; Donato et such as climate mitigation and resilient communities al. 2011). Coined “blue” due to the ocean’s proximity, (Laffoley and Grimsditch 2009; Murdiyarso et al. Blue Carbon refers to the atmospheric carbon dioxide 2009). Blue Carbon is a global phenomenon, with all (CO2) captured by coastal ecosystems during growth continents and climate regions boasting Blue Carbon and stored in deep soils and living plant material. When habitats (see Figure 3). the term was introduced some 15 years ago, the aim THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 2 Figure 3 Global distribution of established Blue Carbon ecosystems Saltmarsh Seagrass Mangroves Source: UNEP World Conservation Monitoring Center (UNEP-WCMC13) (2021) The bulk of BCE carbon (50 percent to 99 percent) 1,030 megagrams (Mg) of CO2 equivalent per hectare is stored in the soils. These carbon stores can be (Mg CO2eq ha−1) for estuarine mangroves, 920 Mg up to 6 meters deep and hundreds to thousands CO2eq ha−1 for tidal marshes, and 520 Mg CO2eq ha−1 of years old. If undisturbed, they are considered for seagrass meadows. Adding the carbon in the plants, long-term carbon sinks (McLeod et al. 2011). the mean carbon storage is in the range of 1,500; 950; According to estimates (Pendleton et al. 2012), and 600 Mg CO2eq ha−1 for mangroves, tidal marshes, carbon storage in the top meter of soil is equivalent to and seagrass meadows, respectively (see Figure 4). THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 3 Comparison of the potential for sequestering carbon, between coastal and Figure 4 terrestrial forests Soil Organic Carbon Living Biomass Boral Forest Terrestrial Tropical Forest Mangroves Coastal Tidal Marsh Seagrass Meadows 0 200 400 600 800 1000 1200 1400 1600 Mg CO2 ha-1 Source: Blue Carbon Initiative On a local and global scale, BCEs are of critical Expressed in monetary terms, carbon sequestration importance for biodiversity and humanity, and and storage by mangrove, salt marsh, and seagrass the management and protection of BCEs has a ecosystems has been valued at roughly US$ 190 disproportionately large impact on vulnerable billion per year (about US$ 580 per person in the US) communities, as well as on climate change mitigation in terms of global Blue Carbon wealth. This is based on and adaptation measures (McLeod et al. 2011; Leal and a global mean social cost of carbon of US$ 640.30 per Spalding 2022; Lovelock and Duarte 2019; Goldberg et ton of CO2 emitted (Bertram et al. 2021). In an analysis al. 2020). of the economic damage caused by each additional ton of CO2 emissions released into the atmosphere, and the economic benefit of removing a ton of CO2, Australia (US$ 22 billion), Indonesia (US$ 12 billion), THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 4 and Cuba (US$ 6 billion) emerged as the three Philippines, Mexico, Papua New Guinea, Guinea Bissau, countries that generate the largest positive net blue and Russia follow, with each contributing about US$ 4 wealth contribution for other countries. Myanmar, the billion to US$ 6 billion net (see Figure 5).1 Figure 5 Blue Carbon wealth redistribution (in US$ billion per year). Positive and negative net wealth redistributions (in US$ bn yr–1) –27 to –10 –10 to –0.5 –0.5 to 0 0–0.5 –0.5–10 10–23 No data available Source: Blue Carbon Initiative 1 The valuation focuses on carbon and does not account for additional ecosystem services provided by Blue Carbon habitats. The analysis is also limited to the established Blue Carbon habitats (that is, mangroves, salt marshes, and seagrass beds) leaving emerging Blue Carbon habitats for future study. THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 5 1.1 Established Blue Carbon Ecosystems When the term “Blue Carbon” was first introduced, it adaptation has improved considerably in recent years, was intended to include all carbon-rich coastal and and some of these ecosystems may be on their way marine ecosystem types, not just established BCEs to actionability and inclusion as BCEs (see Figure 6). (Nelleman et al. 2009; Laffoley and Grimsditch 2009). Actionability is widely understood to involve the The science around other coastal and ocean systems following (Pidgeon et al. 2021): and their relevance for climate change mitigation and SCALE: LONGEVITY: THREAT: The scale of GHG removals The ecosystems can store Anthropogenic impacts on or emissions is significant; the CO2 sequestered the ecosystems are leading long-term; to CO2 emissions; VIABILITY: KNOWLEDGE: Sustainable management of The science behind these the ecosystems to reduce findings is sufficiently CO2 emissions or enhance robust. existing carbon stocks is viable and practical; and The actionability conditions make various coastal benthic sediments, and mud flats are on the path to ecosystems—coral reefs, oyster reefs, and marine actionability as emerging BCEs. fauna—non-actionable. It is noted that “actionability” in this context refers to climate mitigation interventions Mangroves, salt marshes, and seagrass beds are and does not extend to what are primarily climate considered established or “actionable” BCEs, adaptation, biodiversity, or other interventions. For meaning that they fall into an established inventory several ecosystems, science is not established enough category of wetlands under the reporting requirements to decide on actionability. This is particularly true of the UNFCCC. Established Blue Carbon ecosystems are for benthic sediments, but also for mud flats and also eligible for Blue Carbon crediting instruments (see phytoplankton. Nonetheless, experts are increasingly Figure 6). optimistic that macroalgae (notably kelp and seaweed), THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 6 Figure 6 Actionable Blue Carbon Ecosystems (Climate Change Mitigation Policy). Significant Long-term Gains / Manageability Actionability Annual GHG scale CO2 storage losses from (loss control, Mitigation anthropogenic enhancement) Potential impacts (in GtCO2) Mangroves Yes 0.06-0.73 Salt Yes 0.0–0.1 marshes Established Blue Carbon ecosystems Seagrass Yes 0.28–0.37 (IPCC recognized) Macroalgae (Kelp forests Likely 0.34 & seaweeds) Benthic Emerging Likely 0.4–1.1 sediments Blue Carbon ecosystems (not yet Mud flats Likely 0.02 recognized by IPCC) Coral reefs No N.A. Oyster reefs No N.A. Other Phyto- No N.A. systems (no plankton mitigation potential) Marine No N.A. fauna Source: Adapted from Lovelock and Duarte (2010) and Pidgeon et al. (2021). Figures on annual GHG mitigation potential from Claes et al. (2022) THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 7 This guidance is not compulsory for parties to the at COP25 (Madrid, Spain), and COP26 (Glasgow, UK).2 UNFCCC, but its use is encouraged by the Paris The established BCEs have also been found eligible for Rulebook. This is the set of implementing provisions Blue Carbon crediting instruments, and they are central for the Paris Agreement, adopted as part of the 24 th to various initiatives that kicked off at the most recent session of the UNFCCC Conference of the Parties UNFCCC and CBD negotiation sessions—COP27 and (COP24) held in Katowice, Poland, and re-endorsed COP15, respectively (see below, Chapter 2). Mangroves Seagrasses Salt marshes 1.1.1 Mangroves Mangroves are among the most carbon-rich tropical forests. Some estimates suggest mangroves and salt marshes can store on average between 6 to 8 megagrams (about the weight of a school bus) CO2 equivalent per hectare (Mg CO2e ha-1) annually— roughly two to four times as much as mature tropical forests. Often occurring at the boundary between land and sea, mangroves are salt-tolerant trees which thrive worldwide in coastal zones within tropical and subtropical latitudes. 2 The relevant decisions have been formally adopted by the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA). The body mirrors the Conference of the Parties to the UNFCCC but is legally separate. THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 8 Distribution and trends Just 15 countries represent roughly 75 percent of the stock (Hamilton and Freiss 2018). Deforestation trends global mangrove area (Friess et al. 2019). A global have seemingly decreased since the early 1900s, study assessing changes in mangrove area and carbon from a mighty 2 percent or more in annual losses stocks between 2000 and 2012, calculated a global to a—still substantial—0.4 percent. Most of today’s mangrove carbon stock of 4.19 petagrams of carbon emissions occur in Southeast Asia, though hotspots in (Pg C) in 2012, with Indonesia, Brazil, Malaysia, and deforestation occur in Latin America and Africa. Papua New Guinea accounting for 50 percent of the Global mitigation opportunities Globally, 42 percent of mangroves exist within protected areas recognized by the International Union for Conservation of Nature (IUCN). Global Mangrove Watch (GMW) has published its goals to halt further loss and restore 400 thousand hectares of mangroves by 2030 (Leal and Spalding 2022). Strengthening engagement with local governments and communities, and integrating policy action, will be key steps in ensuring further mangrove protections. 42% Restore of mangroves exist within protected areas 400,000 hectares of mangroves by 2030 Conservation opportunities Restoration opportunities Between 50 million and 130 million tons of CO2 (t CO2) Between 10 million and 600 million tons of CO2 (t CO2) annually may be removed from the atmosphere. is annually may be removed from the atmosphere. That is equivalent to taking between 11 million and 28 million equivalent to taking between 2 million and 130 million cars off the road for an entire year. cars off the road for an entire year. THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 9 1.1.2 Seagrasses Seagrasses can store up to twice as much carbon global carbon cycle, so combating climate change. They per hectare as terrestrial forests. Seagrasses are also play a role in supporting food security; enriching underwater plants that accumulate carbon, the biodiversity; purifying water; protecting coastlines; majority of which is stored in soils that can measure and battling disease. Seagrass meadows are often the up to 4 meters deep. With meadows found from largest in estuaries and bays where harbors and cities subpolar to tropical climatic zones (Duarte et al. 2005), are conjoined. seagrasses represent a significant carbon sink in the Distribution and trends Seagrass meadows cover an estimated area of between to the annual emissions of 900 million to 16 billion 30 million to 60 million ha (Oreska et al. 2019), though cars on the road. The estimated annual emissions modeling studies of potential seagrass area hint that from seagrass degradation are 150 million tons CO2 this may be a substantial underestimation (Jayathilake (Duarte et al. 2005; Pendleton et al. 2012). In many and Costello 2018). The World Atlas of Seagrass cases, global maps of seagrass area and area change (Green et al. 2003) highlights Australia as having the are incomplete or poorly resolved, which in turn limits most extensive areas (9.63 million ha), followed by accurate estimates of global seagrass carbon stocks Indonesia (3 million ha) and the Gulf of Mexico (1.94 (Oreska et al. 2019). Lack of detailed baseline data— million ha). Seagrasses are spread across the Coral Sea such as maps of historic coverage— and globally patchy countries, along East Africa and elsewhere. On a global carbon stock data are other key obstacles to overcome scale, seagrasses are estimated to store 15.4 to 72 (Fourqurean et al. 2012). billion tons CO2 equivalent—an amount roughly equal THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 10 Global mitigation opportunities Global loss of seagrass is proceeding at a rapid pace. Programme (UNEP), this is an amount roughly These losses represent potential emission of 650 equivalent to the annual emissions of the entire global million tons CO2 per year (Hoegh-Guldberg et al. shipping industry (UNEP 2020). 2019). According to the United Nations Environment Days 1 365 650 million tons CO2 per year annual emissions of the entire global shipping industry Conservation opportunities Restoration opportunities Between 130 million and 160 million tCO2 annually may Between 150 million and 210 million tCO2 annually may be removed from the atmosphere. That is equivalent to be removed from the atmosphere. That is equivalent to taking between 28 million and 35 million cars off the taking between 32 million and 46 million cars off the road for an entire year. road for an entire year. THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 11 1.1.3 Salt marshes Salt marshes are tidal ecosystems formed by accumulation of mineral sediments and organic material, and are regularly flooded with salt water at high tide. The soil, which can be several meters deep, contains almost all the carbon in salt marshes ecosystems. Distribution and trends Tidal marshes have not been systematically mapped Mexico (272,527 ha), and Russia (700,719 ha) host globally, though technology exists to do so. A total major extents of tidal marsh, with lesser degrees of estimate of the extent of 5,495,089 ha is provided protection. Southern Brazil and Uruguay (37,858 ha) by Byrd et al. (2019). Tidal marshes are found largely hold extents of marshes within estuaries. China once outside of the tropics, with those in the United States had extensive areas of tidal marsh; however, over 95 (1,723,410 ha), Canada (111,274 ha), Europe (356,947 percent of these marshes have been converted for rice ha) and Australia (1,325,854 ha) enjoying a relatively cultivation, aquaculture, and development. high level of regulatory protection. For these countries, inventories of change exist. Argentina (118,870 ha), THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 12 Global mitigation opportunities Between 2000 and 2019, an area of salt marsh of global salt marsh loss during this period. The net equivalent to two soccer fields was lost every hour, loss of salt marsh during this period released 16.3 totaling roughly 1,453 square kilometers (km ) globally. 2 teragrams of CO2—an amount equivalent to the annual The United States and Russia accounted for 64 percent emissions of approximately 3.5 million motor vehicles. 64% Between 2000-2019 of global salt marsh loss Conservation opportunities Restoration opportunities Between 40 million and 60 million tCO2 annually may Between 30 million and 40 million tCO2 annually may be removed from the atmosphere. That is equivalent be removed from the atmosphere. That is equivalent to taking between 9 million and 13 million cars off the to taking between 6.5 million and 9 million cars off the road for an entire year. road for an entire year. THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 13 1.2 Emerging Blue Carbon Ecosystems 1.2.1 Benthic sediments If left undisturbed, benthic sediments hold vast amounts of carbon on geologic timescales—from thousands to millions of years (Estes et al. 2019). Globally, seafloor sediments are believed to store nearly twice as much carbon as the top meter of terrestrial soils (Atwood et al. 2020). In fact, the amount of carbon stored by benthic sediments within exclusive economic zones (EEZ)—the 200 nautical mile area (from the coast) for which coastal nations hold special rights—is roughly the same as the amount stored in the high seas (Atwood et al. 2020). Distribution and trends To date, no maps have been produced on the global at a resolution of one kilometer (Atwood et al. 2020). distribution of benthic sediment extent or change Despite the uptick in research into this emerging BCE, in extent over time. However, a 2019 study used direct observations of benthic sediments are sparse, machine learning to predict and map global seafloor and spatially explicit estimates of global benthic carbon stocks (Lee et al. 2019), and a 2020 study sediment carbon stocks are lacking (Atwood et al. quantified global benthic sedimentary carbon stocks 2020; Lee et al. 2019). Global mitigation opportunities The widespread practice of bottom trawling 4 percent of the ocean floor, primarily within national disturbs the ocean floor, releasing stored carbon waters, could eliminate 90 percent of the risk of carbon and disrupting the capacity for future storage. While disturbance from bottom trawling (Sala et al. 2021). uncertainties remain on how to quantify the impact Prioritization frameworks are being developed, with of bottom trawling and dredging on atmospheric several calling for a globally coordinated effort towards CO2 contributions (Pidgeon et al. 2021), recent marine conservation for climate mitigation (Sala et al. assessments have been forthcoming. Currently, only 2021; Hutto et al. 2021). No information on emission around 2 percent of benthic sediment carbon stocks reductions through conservation or restoration is are in highly or fully protected areas (Atwood et al. currently available for this ecosystem. 2020). Yet studies suggest that protecting roughly THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 14 1.2.2 Coastal mud flats Coastal mud flats—also known as tidal flats—generally have higher carbon sequestration capacity when compared to vegetated coastal ecosystems. Coastal mud flats are formed by the slow accumulation of sediment left behind by rivers and tides. They commonly occur in sheltered areas along coastlines, such as lagoons, estuaries, and bays. Distribution and trends Research suggests that tidal flats across the globe occur in Asia, North America, and South America occupy an area of roughly 127 thousand km . For 2 (Murray et al. 2019). Natural- and human-driven comparison, this is an area roughly equal to that of stressors have resulted in a 16.02 percent reduction mangroves (81 to 137 thousand km ), less than the 2 (> 20 thousand km2) in the extent of global tidal flats known area of seagrasses (160 thousand km2), but far since 1984 (Murray et al. 2019). Rates of loss are greater than that of salt marshes (41 thousand km ) 2 particularly high in East Asia, where increased urban (Chen and Lee 2022). Coastal mud flats are found development is at a high (Chen and Lee 2022). across wide latitudinal ranges, but nearly 70 percent Global mitigation opportunities On the assumption that the rate of tidal-flat loss over 17.6 Tg CO2 to the water column and atmosphere (Chen the past three decades persists, and that all disturbed and Lee 2022). No information on emission reductions carbon is re-mineralized, the annual loss of carbon through conservation or restoration is currently from mud flat sediments would be 4.8 teragrams of available for this ecosystem. carbon (Tg C), which is equivalent to emissions of THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 15 1.2.3 Macroalgae: kelp forests and seaweeds Macroalgae have a wide reach. They can be found from the intertidal zone across most coastlines, out to the deepest depth of the world’s oceans. Macroalgae such as kelp forests and seaweed rely on the process of photosynthesis to store carbon in their living tissues. Upon death, macroalgae can sink to the ocean floor, where cold temperatures and lack of oxygen promote potentially long-term carbon sequestration (Duarte et al. 2022). Distribution and trends Global estimates of macroalgae distribution and area and changes in the global extent of macroalgae are carry high levels of uncertainty. However, huge growth important means of estimating the role and impact in research surrounding macroalgae has refined this ecosystem has on global carbon cycling and CO2 regional understanding of macroalgal extent (Duarte et emissions or removals. For example, a recent study al. 2022). Refined distribution models (which predict found that the kelp forest of Australia’s Great Southern the occurrence of macroalgal extent) have been used Reef sequesters 30 percent of national Blue Carbon to predict regional extent but are not yet effective at sequestration and around 3 percent of the global global scales. Refinement at regional scales has made Blue Carbon budget annually (Filbee-Dexter and it possible to estimate carbon stocks of macroalgae in Wernberg 2020). several regions. Improved understanding of the area Global mitigation opportunities Technologies surrounding the cultivation and sinking this ecosystem. However, in late 2022 Ocean Visions of seaweed as a means of sequestering carbon are still and the Monterey Bay Aquarium Research Institute in their early development as potential CO2 removal released a framework intended to guide and accelerate strategies (CDR) (Ocean Visions and MBARI 2022). the comprehensive science needed to determine the No information on emission reductions through actionability of seaweed (Ocean Visions and MBARI conservation or restoration is currently available for 2022). THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 16 1.3 Drivers of Degradation Coastal ecosystems have suffered from exceptional historical baseline—25 percent of total global seagrass degradation in the past. More than 50 percent of beds have been lost (Waycott et al. 2009). Drivers of the world’s original salt marshes were lost during degradation for these and other coastal ecosystems the twentieth century (Barbier et al. 2008; Duarte et can occur inland (known as upland degradation), or al. 2009; Xin et al. 2022) and estimates for loss of along coastlines at the seaward boundary (known as mangroves due to deforestation by the 1980s to 1990s seaward degradation). Often drivers of degradation are are reported to be as high as 35 percent (Friess et al. linked, compounding the intensity—and effects—BCEs 2019). Global seagrass data remains incomplete, but experience (see Table 1). researchers have estimated that—in relation to the Table 1 Primary drivers of degradation for Blue Carbon ecosystems Driver Primary Location BCEs Impacted (Established) Logging Upland Mangroves Coastal Development Upland Mangroves Salt marshes Seagrasses Commodities (agriculture, Seaward Mangroves Salt marshes Seagrasses aquaculture) Pollution Seaward Upland Mangroves Salt marshes Seagrasses Fisheries (small & large) Seaward Seagrasses Climatic Changes Seaward Mangroves Salt marshes Seagrasses (tropical stroms, sea-level rise) Source: Compiled using data from Campbell (2022), Global Mangrove Watch (GMW) (2022). THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 17 Commodity-dependent economies can drive the for offshore mining. Commodities vary regionally but loss of ecosystems. Coastal development includes broadly encompass agriculture, aquaculture, and timber. buildings and infrastructure on land (this encompasses Commodities can further drive coastal development and drainage of wetlands to reclaim land), and the build-out lead to contamination of soils and water, both upland of port facilities such as shipping lanes and of terminals and seaward (see Box 1). BOX 1 Commodity-driven mangrove losses in Southeast Asia Covering some 3.3 million hectares This is primarily due to widespread Commodity-driven losses in in area size, the largest and most mangrove conversion to aquaculture Indonesia have been decreasing. diverse mangrove ecosystems in the and agriculture (Goldberg et al. 2020). It has been noted that of all world are in Indonesia. Since 1985, Approximately 92 percent of all global anthropogenic drivers, commodity- however, the country has lost some commodity-driven losses (due to driven losses declined most 40 percent of its mangrove forests, shrimp farming, as well as rice farming substantially from 2000 to 2016, creating GHG emissions in the range and palm oil cultivation) occurred with a 77 percent decrease in total of between 70 and 210 m tCO2e in Southeast Asia. Just six nations— loss area. The reasons are not fully each year (Murdiyarso et al. 2018). Indonesia, Myanmar, Malaysia, the understood but this trend has been Here, and across the Southeast Asian Philippines, Thailand, and Vietnam— attributed to successful conservation region, anthropogenic losses remain account for some 80 percent of losses efforts, as well as temporary market high (even though they have recently in the region. saturation (Goldberg et al. 2020).. declined, mirroring global trends). The slowing of the trend toward mangrove Compared to salt marshes and mangroves, deforestation because of logging and timber seagrasses’ sensitivity to drivers of degradation can extraction over recent decades (FAO 2020), has been be acute. Heatwaves, as well as poor water quality due cautiously attributed to successful conservation efforts to pollution or sedimentation, have caused widespread in various—though not all—regions of the world (Friess die-offs in certain regions. In addition, destructive et al. 2020). The finding is corroborated by the fact that fishing practices—including use of nets and anchors in continuous deforestation is highest where protection shallow waters—can rip up and damage seagrass beds is the lowest; and it remains elevated, with agriculture, (Unsworth et al. 2022). When these ecosystems are aquaculture, infrastructure, and urban development degraded and converted, the carbon they store can be putting immense pressure on the ecosystems (Murray lost (Stuchtey et al. 2020). Studies estimate economic et al. 2022). Climatic changes—which broadly include damages of US$ 6 billion to US$ 42 billion annually due hurricane intensity and frequency, as well as climate- to degradation of BCEs (Pendleton et al. 2012). change effects such as sea-level rise—have been one of the primary drivers of BCE loss in recent decades (Campbell et al. 2022; Leal and Spalding et al. 2022). THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 18 1.3.1 Addressing degradation Restoration and conservation are two widely utilized restoration is the most appropriate practice to employ. practices in addressing and preventing degradation. If the ecosystem is not experiencing any degradation The application of one practice over another depends but is currently threatened or could become on the status of the ecosystem in question. If the endangered, conservation would be the primary ecosystem is currently experiencing degradation, practice to employ (see Box 2). BOX 2 Defining restoration and conservation Restoration is the practice of manipulating the physical, Conservation s the practice of protecting and preserving chemical, and or biological characteristic of a degraded characteristics and ecological functions of an ecosystem. ecosystem. The goal of restoration is to restore the natural, The goal of conservation is to maintain the services and or historic, functions of the ecosystem. values the ecosystem currently provides. Restoration is a commonly used technique and method of conservation. In recent decades, regional efforts to combat degradation have seen increased success. Policy Restoring hydrological conditions; approaches such as marine spatial planning (MSP); government conservation efforts through the creation Altering sediment supply; of protected areas; community-based restoration with a focus on fishing communities; and advances in Changing salinity characteristics; science have been utilized in an increasing number of projects, launched in both industrialized and Reintroducing or reforesting with native and developing countries (see Box 3). diverse plant species; Restoration of Blue Carbon habitats is an important Improving water quality; and part of this growing trend. Increasingly sophisticated restoration techniques include: Improving management practices (see Table 2). THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 19 Table 2 Non-exhaustive list of actions to restore Blue Carbon ecosystems Restoring hydrological Altering sediment supply conditions Remove tidal barriers Use dredge material beneficially Improve hydrological connectivity Divert river sediments to sediment-starved Restore tidal flow to wetlands areas Lower water levels on impounded wetlands Changing salinity Improving water quality characteristics Restore tidal flow to tidally restricted areas Reduce nutrient loads and improve water clarity to expand seagrass meadows Recover tidal and other hydrological flushing and exchange Reduce nutrient residence time Reintroducing native plant Improved management communities practices Re-seed or re-plant Remove invasive species Repopulate with native species areas that were Reduce grazing previously destroyed or degraded Shift to sustainable aquaculture practices (e.g. mangrove-shrimp, mangrove-oyster) Source: Developed for this product THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 20 BOX 3 Successes in reversing degradation MANGROVE In Senegal, roughly a quarter of the as alternative livelihoods training. One of the biggest mangrove total surface area of mangroves in Led by the International Union for restoration campaigns in the the country has been lost since the Conservation of Nature (IUCN), with world, Pakistan’s Delta Blue 1970s, as a result of drought and Wetlands International and 5Deltas, is a project located on the deforestation for timber (Livelihoods the project focuses on advancing south-eastern coast of Sindh. Through Fund, N.D.). As part of the largest mangrove restoration and the sharing a public-private partnership between mangrove restoration project in of science in West Africa (Marice and the regional government of Sindh and the world, the Livelihoods Fund33 Spalding et al. 2022). a private investor, restoration and restored 7,920 hectares of mangroves sustainable management of 350,000 in Senegal, with an estimated A small town in central Philippines ha mangroves is underway. More 500,000 tons of carbon offsets has completed a successful recently, the World Bank approved available by the time the project has four-year mangrove restoration of 9.5 the Mangroves for Coastal Resilience reached completion. ha of abandoned fishponds. Involving Project in Indonesia, which is thousands of community members, designed to support the government’s In another West African project, students, and government employees, National Mangrove Rehabilitation Mangrove Forest Management from the project showcased advances in Program. This program aims to Senegal to Benin is working across restoration techniques, as well as rehabilitate 600,000 hectares of nine coastal countries, providing the power of effective community mangroves by 2024. local partners with small grants engagement (Marice and Spalding et for mangrove restoration as well al. 2022). SALT MARSHES The number of salt marsh restoration There is growing awareness of barrier islands to protect against projects has increased in recent years, restoration opportunities, not least storm surges, and is implemented though most projects are small. For because of the protective functions on some 300,000 hectares. The example, the Indian Government has of healthy salt marshes in the face of Humber Estuary Partnership Project made efforts to restore marshland in increasing risks of sea-level rise. The (UK), which seeks to restore natural Chilika Lake, India, and a project in Mississippi River Delta Restoration habitat lost due to dredging and land the Peruvian Paracas Bay Area has Project (USA) aims to restore the reclamation, has an implementation undertaken salt marsh restoration. Delta’s wetlands and rebuild its scope of 10,000 hectares. SEAGRASSES Seagrass restoration is not yet 85-90 percent. While the seagrass areas in terms of seagrass cover and widely practiced, even though rehabilitation aimed at conserving the the density of associated biodiversity. researchers and experts at Gulf of endangered dugong, it also enhances It costs about Rs 8 to Rs 10 lakh Mannar Marine Biosphere Reserve carbon storage in the soil and living per acre for planting, monitoring in India have restored 14 acres of biomass. The ecological functions of and maintaining. degraded seagrass on the seabed the rehabilitation sites were attained of the Gulf of Mannar region from within two years as the rehabilitation 2011 to 2020, with a success rate if sites look similar to natural seagrass 3 https://livelihoods.eu/portfolio/oceanium-senegal/ THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 21 1.4 Associated Costs of Addressing Degradation It is difficult to provide average prices for Blue the cost incurred for restoration is up to 200 times Carbon interventions. This is because of high lower. Furthermore, restoration costs for mangroves variabilities in factors such as habitat, location, were found to be considerably lower (US $3,000 drivers of degradation, restoration needs, economic per ha). and logistical conditions, and so on. This is true even at the national level. For example, a seagrass Conservation interventions, on the other hand, are restoration project in West Papua will have different regularly calculated at much lower rates. Bryan cost factors from a seagrass restoration project et al. (2020)—who base their analysis on research in Sumatra. by McCrea-Strub et al. (2011), Vasconcelos et al. (2014) and Pendleton et al. (2014)—assume initial As the number of Blue Carbon projects grows, and protection costs of between US$ 25 and US$ 232 scientific experience accumulates, we are able to per hectare, with annual maintenance costs of US$ 1 generate increasingly reliable (hard), project-specific (not accounting for law enforcement and remedial data, primarily in the area of restoration. Real-cost actions). The large spread points to site-specific assessments for coastal wetland restoration—including differentiation and the hard-to-control opportunity for restoration of mangroves and seagrass beds—show costs of protection as opposed to conflicting land interesting trends. Reviewing hundreds of restoration use. The cost of protection of mangrove forest within projects in 2015, Bayraktarov et al. (2015) found that a marine protected area that does not permit land the overall reported median and average costs for conversion, is very different from the cost of protection 4 restoration of 1-hectare marine coastal habitat of areas that may be (legally) converted to agricultural were in the range of US$ 80,000 to US$1,600,000, or aquacultural use. respectively (2010 cost figures). If both capital and operating costs are included, the real total costs According to a recent report by McKinsey (Claes are likely four times higher, increasing median costs et al. 2022), about one-third of total abatement to between US$ 150,000 and US$ 400,000/ha opportunities worldwide would be viable below 5 (Bayraktarov et al. 2015). However, most marine and US$ 18 per tCO2e. The report translates these costs coastal restoration projects have focused on developed (with caveats) into costs per carbon credit (US$ per countries—in particular Australia, Europe, and metric ton of CO2e) (see Figure 7). USA. The authors estimate that, when accounting for the local value of the US dollar in developing nations, 4 Marine coastal habitat is a category that includes Blue Carbon habitat but is wider in scope. 5 This is at 2010 cost figures. THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 22 Figure 7 Abatement cost curve, nature-based solutions, US$ per metric ton of CO2e Established Blue Carbon (sequestration) Reforestation 1/3 of total potential Established Blue Carbon (avoided emissions) Avoided deforestation abatement would be viable below Emerging Blue Carbon (sequestration) Cropland (trees and cover crops) $18 per tCO2 Emerging Blue Carbon (avoided emissions) Peatland restoration Mangrove Kelp protection restoration Bottom trawling3 Salt-marsh (Denmark, France, Bottom trawling3 Seagrass protection Germany, Italy, (China) restoration Netherlands) Seagrass Seagrass protection restoration4 Mangrove Salt-marsh Kelp restoration restoration protection Bottom trawling3 (other nation’s exclusive economic zones) ~6,000 ~300 ~250 180 $ 160 140 120 100 80 60 40 Not costed2 20 0 0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 3.4 3.6 3.8 4.0 4.2 4.4 4.6 4.8 5.0 5.2 5.4 5.6 7.5 metric ton of CO2 Source: McKenzie and Company, 2022 THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 23 These figures broadly reflect studies for countries and regions deemed high opportunity for, firstly, the outstanding size of BCEs and, secondly, high levels of ongoing degradation. For instance, Jakovac et al. (2020) found that conserving remaining mangroves would prevent the release of up to 15.51 billion tCO2eq. to the atmosphere and could be achieved at carbon prices between US$ 3 and US$ 13 per tCO2 for 90 percent of remaining mangroves. Restoring mangroves can sequester up to 320 million tCO2e globally. Carbon prices between US$ 4.5 and US$ 18 per tCO2 could support the restoration of 90 percent of deforested mangroves—though these figures do not include opportunity costs from alternative land use (for aquaculture and infrastructure, for example). 1.5 Opportunities from Blue Carbon Protection and Restoration Despite their potential complexities and high costs, Blue Carbon investments are among the most effective climate solutions available. Mangrove interventions specifically stand unrivalled for their climate mitigation density—that is, the average mitigation opportunity per hectare (see Figure 8). Restoring 1 hectare of Seagrass restoration and seagrass For salt marsh mangrove forest offers, compares to terrestrial conservation at a factor interventions on average, a mitigation restoration at a factor of of almost 2:1. (restoration and output more than five 3:1, conservation), the ratio times higher than is almost 2:1. the mitigation output generated by restoration of a comparable area in terrestrial forests.For conservation, the ratio is 4:1. 4:1 3:1 2:1 2:1 R C THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 24 Average GHG mitigation density of Blue Carbon interventions, compared with Figure 8 average figures for terrestrial forests 1,400 Costal Terrestrial 1,287 Restoration Protection 705 x 10 522 tCO2 375 522 304 234 equivalent /ha 123 Ecosystem Magroves Seagrasses Salt marshes Terrestrial forests Source: Underlying data is sourced from Claes et al. 2022; Roe et al. 2021; and Griscom et al. 2017. Adapted for this report Looking beyond carbon, protection and restoration Blue Carbon habitats for fish stocks and for flood and of BCEs benefits coastal communities in numerous storm protection hold significant value. In the case ways—especially by strengthening climate resilience of mangroves, an estimated 4.1 million small-scale in the face of a warming planet and rising sea-levels. fishers globally rely on mangroves for fishing. In some Blue Carbon ecosystem services include: countries (for instance Bangladesh and Nigeria), up to 90 percent of fishers fish predominantly in mangroves Provisioning clean water, timber, fisheries; (Spalding et al. 2022). Mangroves’ value with regard to Supporting breeding and nursery habitats, the commercial fishing industry derives from their role biodiversity hot spots; as nursery habitats for many commercially important Regulating protection from storms and floods, fish and shellfish. erosion control, carbon sequestration; and Livelihood support of local communities. THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 25 Blue Carbon ecosystems have immense importance and adaptation. Nature-based approaches to for climate change adaptation and disaster risk adaptation, and disaster risk management, are reduction plans. Coastal areas have been centers considered to be more sustainable, cost-effective, of population growth and economic development for and ecologically sound alternatives for coastal centuries. Coastal hazards affect hundreds of millions adaptation (Losada et al. 2018).9 In addition to BCEs’ of vulnerable people, important infrastructure, and mitigation benefits, research on natural capital and economic activity, and cause significant losses to its contribution to coastal protection has shown, for national economies. Risks are expected to increase as instance, that mangroves protect more than six million a result of population growth, sea-level rise, and other people from annual flooding and prevent additional 6 climate-change impacts (Global Risks Report 2019). annual losses of US$ 24 billion of productive assets (World Bank 2021).10 Similarly, seagrasses contribute Over the last two decades, climate-related disasters to coastal protection through the accumulation of have accounted for 91 percent of recorded disaster sediment in their root systems (Ondiviela et al. 2014).11 events (United Nations Office for Disaster Risk Reduction 2017).7 As climate change is likely to Climate change adaptation and disaster risk increase the intensity of coastal storms, mangroves, reduction have similar aims and mutual benefits. coral reefs, and coastal wetlands will increase in Governments can tap into the multiple benefits that value, as they substantially reduce risks to critical BCEs provide to achieve national policy commitments economic infrastructure and help prevent loss of life related to climate change adaptation and disaster 8 (World Bank 2022) . Unsustainable natural resource risk reduction (see Box 4). The different services management and use, as well as land degradation, are provided by Blue Carbon habitats are typically rendered underlying drivers of risk. Concurrently, disasters cause cumulatively—that is, successful conservation and environmental impacts. Despite these challenges, restoration activities typically deliver on all the benefits nature is a solution—reducing risk as the sustainable outlined, often at significant and incremental scale. use and management of ecosystems builds resilience. In the Philippines, a study found that mangroves can reduce the damage from typhoons by 25 to 75 percent, Investing in nature through the restoration depending on the density of the mangrove forest. In the or conservation of ecosystems is increasingly Mississippi River Delta, a study found that marshes can understood to contribute to climate risk reduction reduce storm surge by up to 90 percent. 6 Global Risks Report. 2019. https://www3.weforum.org/docs/WEF_Global_Risks_Report_2019.pdf. 7 UNISDR (United Nations Office for Disaster Risk Reduction). 2017. “Economic Losses, Poverty and Disasters 1998-2017.” https://www.undrr.org/ publication/economic-losses-poverty-disasters-1998-2017. 8 https://thedocs.worldbank.org/en/doc/111a397e3cdec79a7f1ee6db6b329fb4-0020012022/original/WB-Nature-Based-221102-1838.pdf. 9 Losada, J. et al. 2018. “The global value of mangroves for risk reduction mangroves protect coastlines by decreasing the risk of flooding and erosion.” 44. doi:10.7291/V9DV1H2S. 10 World Bank 2021. The Changing Wealth of Nations 2021: Managing Assets for the Future. Washington, DC: World Bank. 11 Ondiviela, B. et al. 2014. “The role of seagrasses in coastal protection in a changing climate”. Coast. Eng. 87: 158–168. doi:http://dx.doi.org/10.1016/j. coastaleng.2013.11.005. THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 26 CASE STUDY BOX 4 Jamaica’s Forces of Nature report: An integral assessment of the contributions of mangroves to coastal disaster risk reduction, adaptation, and climate mitigation12 This report supports the development agenda’s growing interest in the inclusion of nature-based solutions (NbS) for disaster risk management. It also provides vital information for discussion on climate change adaptation and mitigation, insurance, and disaster-recovery decisions. Mangroves play a key role in protecting Jamaica from flood risks, and risk would be significantly increased if mangroves are lost. • If the current mangroves were lost, the proportion of the Jamaican population facing annual flooding would increase by over 10 percent. This represents an additional • During a 200-year storm, • Mangroves were found to reduce 1,458 people, many of whom live mangroves reduce the number wave height between 36 percent in poverty. of people flooded and avoid and 55 percent, and to reduce wind • Damages to residential and damages by nearly 50 percent speed between 64 percent and industrial property would increase throughout Jamaica. 80 percent. by nearly 24 percent, or by more • More than 770 hectares of than US$ 32.6 million annually, if mangroves have been lost in Mangrove benefits for Jamaica mangroves were lost. Jamaica over the past two decades, go beyond flood reduction. • One hectare of mangroves in but more than 70 percent of these Jamaica provides on average more could be potentially restorable. • Using global averages, 3.7 million than US$ 2,500 per year of direct • If Jamaica keeps its mangroves alive tons of carbon are sequestered flood reduction benefits from and healthy, they will continue to annually by Jamaica’s mangroves. tropical cyclones. keep pace with tectonic subsidence • Mangroves contribute between • If considered over a 30-year period, and sea-level rise, and therefore US$ 5,218 (at Salt Marsh) and US$ the average benefits per hectare continue to protect coastlines from 54,145 (at Portland Cottage) in for a mangrove conservation or storms/tsunamis. mixed fisheries per hectare per year. restoration project would exceed • Soil carbon stocks were higher than • Other currently untapped benefits US$ 43,000 in coastal protection the global average at all sites. include potential for high-end benefits alone. recreational fishing, low impact mariculture, and ecotourism. 12 World Bank. 2019. Forces of Nature: Assessment and Economic Valuation of Coastal Protection Services Provided by Mangroves in Jamaica (English). https://documents.worldbank.org/en/publication/documents-reports/documentdetail/357921613108097096/forces-of-nature THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 27 Case studies on restoration of mangroves have (Primavera et al. 1997).13 If well-managed, restoration proved that restoration works. Mangrove destruction is feasible within a relatively short timeframe. Fish leads to a loss of nursery habitat, loss of food sources, population and catch rates often improve significantly. loss of breeding ground and—often—increased For example, a study conducted in Indonesia found sedimentation, which negatively impacts fish that actively restored mangroves provided important productivity by smothering fish eggs and reducing habitat for juvenile fish, and that the abundance and water clarity. In a case study from the Philippines, diversity of fish in the restored areas was similar to that the loss of fish productivity was a startling 90 percent in nearby natural mangroves. 1.6 Knowledge Gaps Over recent years, considerable scientific progress longevity of storage (permanence), as well as inter- has been made to consolidate our understanding connectivity across marine ecosystems (Williamson of the planet’s Blue Carbon ecosystems. However, et al. 2022). Moreover, these gaps concern core important science gaps remain. They include information on geography and socio-economic factors. research into habitats beyond the recognized coastal Many, if not most, countries lack robust information, BCEs (mangroves, seagrasses, and salt marshes) to especially on mapping and monitoring of seagrass include macroalgae, benthic sediments, mud flats, and beds and other BCEs (including their health) in their phytoplankton. There are also science gaps relating to exclusive economic zones (EEZ). Nevertheless, the scope of Blue Carbon emission fluxes—including countries are making progress in the collection of methane and nitrous oxide emissions—and the scientific data to inform national policies (see Box 5). 13 Primavera, J.H. et al. 1997. “Mangroves as nurseries: shrimp populations in mangrove and non-mangrove habitats.” Bulletin of Marine Science. THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 28 BOX Addressing gaps examples: 5 Mapping seagrass to support climate action Although seagrass meadows are found along the coasts of all continents except Antarctica (Serrano et al. 2021), robust global estimates of seagrass carbon storage are limited by gaps in regional data. Estimates of carbon storage for seagrass meadows are scarce in portions of North and South America (Serrano et al. 2021), precluding seagrass incorporation into national On another continent, an initiative currently underway carbon accounting and implementation of Blue Carbon through Pew Charitable Trusts focuses on mapping the strategies within NDCs. Despite a limited extent of just extent of seagrass beds in Seychelles—generating the first 661 km2 within the Colombian Caribbean, a 2021 study countrywide estimates of the Blue Carbon ecosystem’s measured an annual carbon sequestration equivalent to carbon stocks. The data gathered through the study will roughly 0.4 percent of CO2 emissions from fossil fuels in provide a scientific baseline that policymakers will use to Colombia (Serrano et al. 2021). The addition of data from support the country’s climate action plan, and to include a data-scarce region bolstered a growing global dataset on seagrass protection in Seychelles’ Nationally Determined seagrass carbon storage. Contributions (NDCs) to the Paris Climate Agreement. There are also considerable gaps concerning continuity for the enhancement of Blue Carbon practical knowledge and expertise (Macreadie et al. science, improved policy design, and the scaling-up 2022). Mangrove restoration specifically is often done of Blue Carbon interventions. Several examples— without proper planting plans and designs, causing including from the forestry (REDD+) sector, such as unnecessary planting failures. A warming ocean, the Forest Carbon Partnership Facility (FCPF) and the extreme weather events, and sea-level rise have an Lowering Emissions by Accelerating Forest Finance ever-growing impact on the health of Blue Carbon (LEAF)—provide interesting templates for deep and habitats. Vastly lacking are practical datasets on how lasting international institutional cooperation. Some to respond to these factors, and how to make Blue of these initiatives (including the FCPF with its country Carbon habitats—and in turn coastal communities, programs in Indonesia, Madagascar and elsewhere) coastal infrastructure, and the broader Blue Economy— even give attention to Blue Carbon—albeit restricted to more resilient. mangroves and therefore marginal, since the portion of mangrove forests in a country’s overall forest inventory Furthermore, there are knowledge gaps at the level is usually minimal. Existing international initiatives may of governments and policymakers. This is often deepen their focus on Blue Carbon, and some of them the result of a conspicuous absence of institutional may be replicated specifically for Blue Carbon. structures, knowledge reservoirs, and governance THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 29 There are also various global initiatives dedicated to Blue Carbon knowledge sharing that link governments and non-state actors, including: The Blue Carbon Initiative (launched Blue Forests Project (2014–2021). in 2011, ongoing). This is a partnership BFP This project was a partnership between between the Intergovernmental several non-governmental organizations Oceanographic Commission of (NGOs) and the governments of UNESCO (United Nations Educational, Indonesia, Ecuador, and Mozambique. Scientific, and Cultural Organization), The project aimed to demonstrate the the IUCN, and the Food and Agriculture value of mangrove and other coastal Organization (FAO) of the United ecosystems for carbon sequestration, Nations. It works to raise awareness and to promote their conservation about the role of coastal and marine and restoration as a climate change ecosystems in mitigating climate change mitigation strategy. It has generated and to develop policies and strategies important platforms for Blue Carbon to promote the conservation and engagement between governments and restoration of these ecosystems. non-state actors in the participating countries, and given rise to a robust set of knowledge resources. Global Mangrove Alliance (launched The Changing Wealth of Nations in 2018, ongoing). This is yet another CWON (CWON) (launched in 1995, ongoing). successful partnership between CWON is a database on the world’s governments and non-state actors. wealth, which recently presented its The GMA brings together governments, first valuation of “blue natural capital,” NGOs, and private sector actors with a focus on mangroves and fisheries to promote the conservation and (World Bank 2021d). The initiative is a restoration of mangrove ecosystems, milestone for the universal recognition given their importance for Blue of the economic value of Blue Carbon Carbon storage and other ecosystem habitats. It is only a beginning, however, services. The Alliance has already and other BCEs outside mangroves achieved significant progress in should be added in the near future. The protecting and restoring mangroves CWON 2.0 (forthcoming), will present in several countries, including the technical results of the Estimated Indonesia, Madagascar, and the Global Carbon Storage in Mangrove Dominican Republic. Ecosystems (see Table 3). THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 30 Total carbon stock and change in stock (value, percent) in MMT for the Table 3 top 20 countries, 1996–2020 Country 1996 2010 2015 2020 1996-2020 % Change 2,036.06 1,910.22 1,894.96 1,892.07 Indonesia -143.99 7% 491.03 482.69 480.26 487.30 Brazil -3.73 1% 446.27 439.77 438.37 435.49 Nigeria -10.78 2% 431.47 410.86 406.57 405.95 Australia -25.52 6% 352.62 333.90 331.93 334.06 Mexico -18.56 5% 324.28 321.54 319.77 318.65 Malaysia -5.63 2% Papa New 277.86 277.47 276.35 274.11 -3.75 1% Guinea 223.27 207.41 203.41 206.44 Myanmar -16.83 8% 214.25 199.03 193.94 194.42 Cuba -19.83 9% 162.05 156.83 156.23 157.21 Colombia -4.84 3% 161.38 153.24 153.35 155.53 Philippines -5.85 4% 148.03 147.06 147.31 148.36 Venezuela 0.33 0% 139.93 135.56 133.07 134.75 United States -5.18 4% 120.54 121.48 120.94 121.45 Bangladesh 0.91 1% 117.37 113.79 114.90 114.61 India -2.76 2% 107.81 107.54 107.32 106.87 Gabon -0.94 1% 106.98 107.51 107.71 107.22 Cameroon 0.24 0% 105.16 99.09 99.17 101.53 Thailand -3.63 3% 103.16 100.43 100.32 100.66 Madagascar -2.50 2% 102.01 100.66 100.82 99.72 Guinea Bissau -2.29 2% Grand Total 6,171.53 5,926.09 5,886.69 5,896.41 Source: World Bank, and Silvestrum Climate Associates 2023. CWON 2.0 (forthcoming, 2024) THE SCIENTIFIC BASIS FOR ACTION ON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP BLUE CARBON ECOSYSTEMS (PILLAR 1) 31 These instances of institutionalization help ensure online tools on Blue Carbon data, with a wide variety of that knowledge is built, archived, updated, and formats customized for specific end-user communities. shared as needed among participating countries. Such initiatives could also enable identification of Ultimately, this will provide a multilateral, results- suitable partners—not just philanthropic donors but based finance framework dedicated to Blue Carbon also Blue Carbon delivery institutions—with the aim and/or acting as a conduit for national results-based of creating regional Blue Carbon clusters or “hubs” frameworks. Multilateral initiatives could promote and (regional Blue Carbon hubs or RBCHs). Key priorities to support science projects, including those concerning address knowledge gaps are presented in Box 6. the development of user-friendly and publicly available BOX 6 Key priorities to address knowledge gaps Design Blue Carbon-tailored research programs that deepen the understanding of BCEs, with a specific focus on actionability (see above). Improve mapping and monitoring of carbon stock changes, as well as of human-induced degradation trends. Promote the assessment of the economic value of BCEs outside mangroves by the Changing Wealth of Nations (CWON)—or similar—initiatives. Enhance the space for Blue Carbon in existing and planned initiatives on REDD+. That includes developing comprehensive carbon-stock data and data on stock changes; assessing drivers of degradation from land and sea; and designing tailored solutions to reverse the degradation trends. Create and boost national and international partnerships between government, non-governmental organizations, and private institutions, to promote knowledge-sharing of BCEs. Consider designing a multilateral initiative on Blue Carbon, building on the experience from REDD+ and including the experience from the FCPF to provide World Bank client countries with a Blue Carbon knowledge and technical cooperation framework. BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 32 (PILLAR 2) CH APTER 2 Building a Policy and Institutional Environment for Blue Carbon (Pillar 2) Governments are not entirely left to their own such as the 1971 Ramsar Convention on Wetlands devices when it comes to improving knowledge, (“Ramsar Convention”), were adopted even earlier. refining datasets, designing interventions, and However, the specific focus on conservation and mobilizing finance for meaningful Blue Carbon restoration of coastal wetlands as a means to combat action. Multilateral frameworks have facilitated the crisis of climate change and biodiversity loss international cooperation and enabled the has been a more recent development. The release establishment of platforms of collective action and of of dedicated guidance from the Intergovernmental innovative finance. Panel on Climate Change (IPCC) in 2013, the Wetlands Supplement (IPCC 2014), the adoption of the Paris The two key conventions, the United Nations Agreement in 2015, and the ubiquitous use of the Framework Convention on Climate Change (UNFCCC) mechanism that sits at its heart (Nationally Determined and the Convention on Biological Diversity (CBD), Contributions) added particular momentum to Blue have been in existence since 1992, while others, Carbon action. BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 33 (PILLAR 2) 2.1 United Nations Framework Convention on Climate The attention given to coastal wetlands within the IPCC “Guidelines for Greenhouse Gas Inventories.” UNFCCC was initially mixed. From 1992 onward, it The latter provides a comprehensive set of methods adopted a decidedly holistic view on sources of GHG for inventorying greenhouse gas emissions GHGs emissions (sources) and removals (sinks), noting the and removals caused by human activities in all role of “biomass, forests and oceans as well as other sectors—from industry and waste management to terrestrial, coastal and marine ecosystems” (Article agriculture and forestry. 4.1.d). The Paris Agreement has similarly explicitly encouraged countries to conserve and enhance coastal The guidance provides countries with default values ecosystems (Article 5.1), including the coastal and (known as Tier 1 values) with which to calculate their marine ecosystem referenced in Article 4.1.d of the GHG inventory data. In principle, countries where UNFCCC. Nevertheless, technical rules to track GHG wetlands are a major source of national emissions stock changes in wetlands were not available before must go beyond Tier 1 and conduct more sophisticated the release of the 2013 Wetlands Supplement. inventories, using more precise, location-specific datasets. (These are Tier 2 and Tier 3 values, with the The hiatus between 1992 and 2013 (when 2013 Wetlands Supplement also providing input data accounting guidance for coastal wetlands was for these values.) If a country lacks the capacity to finally released) can be partially explained by the complete its inventory using Tier 2 and Tier 3 values, Kyoto Protocol of 1997. That multilateral agreement, however, the application of Tier 1 provides a good adopted in 1994 and enforced in 2005, had set highly starting point. Countries still need to generate robust restrictive accounting and carbon crediting rules for activity data—that is to say, data on the magnitude of land use. While reporting obligations under the UNFCCC a human activity resulting in emissions or removals were not directly affected by these restrictions, in taking place during a given period. However—at least practice international reporting of GHG emissions for mangroves—these datasets mostly exist. Moreover, and removals from land—specifically from wetlands— their application to the tier values from the 2013 remained weak. Supplement (since updated with the so called “2019 Refinement”) is straightforward. Since the release of the Wetlands Supplement in 2013, the tide has been turning. The Wetlands Supplement is an addendum to the “Agriculture, Forestry and Land Use” (AFOLU) volume of the 2006 BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 34 (PILLAR 2) 2.2 Commitments under the Paris Agreement About 50 countries have committed to protect Across NDCs dedicated to coastal and marine and restore BCEs in their NDCs, and another 20 solutions, linkages are made to benefits beyond or so have put forward action goals on coastal climate mitigation and adaptation (“co-benefits”), 14 zone management and marine protected areas. both economic and social. This includes SDG 1 (no Signatory countries of the Paris Agreement agreed poverty); SDG 2 (no hunger); SDG 4 (quality education); to periodically communicate their NDCs, outlining SDG 5 (gender equality); SDG 13 (climate action); SDG each country’s efforts to reduce their national GHGs. 14 (life below water); and SDG 15 (life on land). Certain NDCs are both political and implementation-focused social groups (for example, African Americans, youth, documents, and they set the tone for international women, and indigenous communities) are identified cooperation. The fact that Blue Carbon is prominently as vulnerable with respect to coastal and marine addressed by a great many small island developing exposure, and NDCs highlight the need to engage these states (SIDS), as well as some of the countries with the groups in active climate action. highest Blue Carbon stocks in the world, is significant. 2.2.1 Nationally determined commitments and inventories While the value of BCEs for these countries lies The ability for a country to make such quantification primarily in their co-benefits (specifically for and to include a given sector (here, Blue Carbon) in adaptation and disaster risk reduction—see Box 7), a its NDC climate mitigation commitment, depends on growing number of countries specifically recognizes whether the sector is covered in the country’s GHG the role of BCEs as a carbon sink. That recognition inventory. As part of their NDC, very few countries have carries more complexities than might initially appear, formally committed to the use of the 2013 Wetlands at least if a country seeks to quantify the respective Supplement. However, since 2016 (when Australia mitigation output. was the only country making such a commitment) the pace has been picking up, with Australia, Canada, Fiji, Jamaica, Norway, Panama, Lebanon, Korea, Singapore, and UK formally committing to its use. 14 Lopez 2022 and observations of the authors. BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 35 (PILLAR 2) BOX 7 Blue Carbon ecosystems and adaptation measures: Global NDC practice There is growing attention worldwide other communications or documents, 71 Countries included to ocean-related measures in including an NDC. Adaptation coastal and marine climate strategies. This has led measures are crucial to protect NbS in their new or updated NDCs the international community and goods, people, and ecosystems national governments to advance their from increasing climate risks and climate mitigation and adaptation vulnerability15. assessments and to include coastal 45 and marine ecosystems as mitigation When Lecerf et al. examined the or adaptation measures. Adopting submissions until 2021, 71 countries and scaling-up coastal and marine included coastal and marine Nature- BOTH conservation and restoration based Solutions for adaptation in their measures in new or updated new or updated NDCs. Three types Nationally Determined Contributions of solutions for adaptation have been (NDCs) can, for some countries, act as incorporated in NDCs, including: a) 1 25 a multi-purpose solution for climate protecting and restoring coastal and mitigation and adaptation. marine ecosystems; b) coastal zone management and protected areas; and countries countries Under Article 7.11 of the Paris c) climate-ready fisheries and fishing included coastal included coastal Agreement, it is stated that adaptation communities. and marine and marine communication can be submitted as a NoS for only NUS for only component of, or in conjunction with, MITIGATION ADAPTATION 15 Lecerf, M. et al. 2021. “Coastal and marine ecosystems as Nature-based Solutions in new or updated Nationally Determined Contributions.” Ocean & Climate Platform, Conservation International, IUCN, GIZ, Rare, The Nature Conservancy, Wetlands International and WWF. Despite the policy priority on adaptation, risk commitments, through biennial reporting (as reduction, and perhaps other co-benefits, the required under the Paris Agreement). If GHG capacity to use the 2013 Wetlands Supplement for emissions and removals from coastal wetlands are NDC accounting is rightly se en as a key touchstone not covered in the GHG inventories, there is no way to for global cooperation on Blue Carbon as such rigorously monitor and report whether or to what extent (Thomas et al. 2020). While commitments do not commitments are achieved. necessarily need to cover climate-change mitigation and adaptation, the dual focus adds precision and While some countries include targets to conserve provides a measure for comparing climate targets. and enhance natural carbon sinks in their NDCs, support in making targets fully operational is A Blue Carbon mitigation commitment built on still needed. Notably, NDCs sometimes include comprehensive GHG inventory reporting also ambiguous or conditional language. They are also not allows countries to track progress against their always realistic when it comes to land-use and the BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 36 (PILLAR 2) complexities of land tenure. As the 2022 Land Gap Connections and complementarities between Report points out (Dooley et al. 2022), the total area of mitigation and adaptation measures; land needed to meet climate mitigation commitments Links to the GBF and the SDGs; and through natural carbon sinks is almost 1.2 billion Programs, plans, and other implementation details hectares, which is equivalent to the total area of global (von Unger, Herr & Castillo, 2020). cropland. Furthermore, countries’ climate pledges rely on unrealistic amounts of land-based carbon removal. Restoring degraded land and ecosystems accounts More than half of the total land area pledged for carbon for 551 million hectares pledged (all natural removal—633 million hectares—involves reforestation, landscapes). It is not surprising that many countries putting potential pressure on ecosystems, food struggle to adopt NDC implementation plans that security, and indigenous peoples’ rights. Support to spell out concrete measures to meet the NDC targets. operationalize NDCs can—and should—focus on: However, there are encouraging examples, such as the implementation plan from Costa Rica. The country Well-designed targets, with clear outlines of has been applauded for its wider NDC implementation relevant habitats and ecosystems; strategy, manifested in its Decarbonization Plan and Mitigation values (carbon sink credentials and the addition of a Blue Carbon Strategy to its toolbox quantities; GHG mitigation benefits); of implementation. The country recognizes the Information on assumptions and methodological extraordinary opportunities presented by Blue Carbon, approaches regarding how climate action is which provides optimal mitigation potential in terms of tracked, including GHG mitigation benefits; (per hectare) density and highly effective adaptation Outlines of adaptation and resilience values for and resilience benefits (see Box 8). vulnerable communities; Mitigation targets, adaptation actions and milestones; BOX 8 NDC implementation: Costa Rica’s 2023 Blue Carbon Strategy On World Wetland Day (2 February plans, and expand innovative effective Blue Carbon ecosystems 2023), the Government of Costa conservation finance mechanisms. The management. The strategy also Rica released its first Blue Carbon strategy not only promotes traditional plans to call for Costa Rica’s Central Strategy16. The fresh focus on Blue wetland protection measures; it Bank to develop and standardize, Carbon is in line with Costa Rica’s NDC also calls for Costa Rica to establish by 2030, a methodology for the commitment to protect 100 percent of official guidance and criteria for the economic evaluation of the benefits the country’s coastal wetlands, restore registration of Blue Carbon projects provided by Blue Carbon ecosystems— priority coastal wetland areas, develop by 2025—and at the same time to including but not limited to carbon wetland management and monitoring establish financial mechanisms for sequestration. 16 https://drive.google.com/file/d/111dSMS1TBtEL_TN-UErUc3899-GXk-Uw/view. BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 37 (PILLAR 2) 2.2.2 Blue Carbon and REDD+ Blue Carbon also indirectly benefits from the Paris articles (Article 5.2), the treaty specifically encourages Agreement’s close attention to the global policy Parties to take actions on “results-based payments” framework for reducing emissions from deforestation in relation to REDD+, as established under the UNFCCC and forest degradation (REDD+). In one of its main (see Box 9). BOX Reducing emissions from deforestation and forest 9 degradation (REDD+) At COP 19 in Warsaw (2013), the There is considerable guidance— There are rules both for national Conference of the Parties (COP) based on increasing practice—on REDD+ implementation as well as endorsed the Warsaw Framework the calculation of forest (emission) for sub-national (“jurisdictional”) for REDD+. The framework is based reference levels (FRL and FREL). approaches. Strong bilateral and on Article 5 of the Paris Agreement, These are benchmarks or baseline multilateral activities have supported encouraging governments at a national values that are established to measure the REDD+ development in recent level to voluntarily reduce human the GHG emissions and removals years, among them the United Nations pressure on forests that result in from forest-related activities such as Collaborative Initiative on Reducing greenhouse gas (GHG) emissions. The deforestation, forest degradation, and Emissions from Deforestation and framework acknowledges that each afforestation. A distinct body of work Forest Degradation (UN REDD) and country’s effort will vary according to Is dedicated to REDD+ safeguards, the World-Bank-managed Forest their capacities and capabilities. including with respect to governance Carbon Partnership Facility (FCPF). roles and participation rights of Some 50 (mostly tropical) countries Plenty of work has gone into local communities. have started building country-wide developing different features and REDD+ implementation frameworks, aspects of REDD+ to help make the with financial support from instrument operational for countries. developed countries. REDD+ and Blue Carbon share a wide range of benefit from. The concept of “results-based” (or characteristics. In most countries, mangroves are “performance-based”) support is particularly helpful considered forestland. Governments increasingly for both the promotion of transparent impact evaluation design REDD+ projects and toolkits for coastal (based on measuring-reporting-verification or MRV environments, in general, and mangrove forests, guidelines) and the installation of community-focused in particular (Fortuna 2020; Bhomia et al. 2021; benefit systems (carbon benefits as well as non- FAO 2020). carbon benefits). REDD+ policy development has also advanced land-tenure discussions and participatory REDD+ has also produced a blueprint for ecosystem engagement actions (including recourse mechanisms), interventions that Blue Carbon interventions benefiting indigenous populations (Halverson 2019). BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 38 (PILLAR 2) The global REDD+ infrastructure provides rich of an issue for seagrass beds and salt marshes, since models and templates for intervention that are they do not qualify as forests in national regulatory helpful for the planning and design of Blue Carbon systems and clearly fall outside the scope of interventions. This includes stepwise guidance on REDD+. For mangroves, however, there is potentially preparation of a financing plan, with a focus on the contentious overlap. organization of data on costs, revenues, and sources of financing; measures to address any funding gaps; First, while many REDD+ countries follow a broad process for conducting financial and economic analysis REDD+ forest scope that includes mangroves and sensitivity analysis of variables influencing program in their REDD+ scope, they restrict their REDD+ finance; and arrangements for flow of funds to ensure accounting framework to above-ground biomass, that the financing plan is robust in supporting emission leaving the enormous below-ground carbon sink 17 reduction program implementation. in limbo. For other countries, the REDD+ treatment of mangroves remains altogether unclear. This not This said, REDD+ engagement also holds a certain only has repercussions for the correct calculation of level of ambiguity for Blue Carbon environments—in emission reductions but also jeopardizes analytical terms of both overlapping scope and conflicting work, stakeholder involvement, and policy planning administrative responsibilities. This can impede (see Box 10). action on the ground. Perhaps the ambiguity is less 17 https://www.forestcarbonpartnership.org/system/files/documents/fcpf_process_guidelines_2021_v5.2.pdf BOX 10 Improving Blue Carbon accounting through REDD+, Indonesia Indonesia has built a robust carbon the form of methane. It also included dataset that includes removals of emissions from soil carbon only for mangrove forests. When Indonesia deforested or degraded terrestrial submitted its first forest reference peatlands, not mangroves (for which emissions levels (FREL) to the United too few data points were available). Nations Framework Convention However, in its new submission from 18 on Climate Change in 2016, the 202219, Indonesia comprehensively accounting lacked robustness, with accounts for emissions and removals various gaps and omissions. It did not of mangrove forests, including with account for emissions from peatland respect to soil carbon. fires (which accounted for almost 30 percent of national emissions in 2014) or for non-CO2 gases from land, in 18 https://ditjenppi.menlhk.go.id/reddplus/images/resources/frell/FREL-Submission-by-Indonesia-2016.pdf. 19 https://redd.unfccc.int/files/2nd_frl_indonesia_final_submit.pdf. BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 39 (PILLAR 2) Second, mangroves are often the subject of inter- frameworks, which in many countries complicates departmental administrative attention—from forestry coherent REDD+ governance for mangrove ecosystems departments to water and fisheries departments. (see Box 11). The latter rarely have institutional links to REDD+ BOX 11 Jurisdictional reach: Delta Blue (Mangrove) Project, Pakistan20 The Delta Blue Project is formally spreads over 350,000 hectares. A activities, and interacts with a restoration project but follows replication plan is in the making to communities on the ground. The a jurisdictional script in all but its include the remaining restoration provincial government also acts as a name. Borne out of a public-private sites in Sindh (Delta Blue II). The focal point for aligning the project with partnership with the provincial government—in this case—provides central government policies and NDC government of Sindh, the project the land, oversees restoration integration. 20 https://deltabluecarbon.com. 2.3 Convention on Biological Diversity’s COP15 and UNFCCC’s COP27 Parties at COP15 (CBD, Montreal) adopted the conservation and restoration targets. Described as long-awaited Kunming-Montreal Global Biodiversity “more inclusive, more comprehensive, more SMART Framework (GBF). It updates the Aichi targets for (specific, measurable, achievable, relevant, and 2020 and provides a roadmap towards 2030 and 2050. time-bound),” the GBF raises the ambition level on The GBF holds momentum for coastal and marine multiple fronts by: ecosystems—notably BCEs—by vastly increasing the BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 40 (PILLAR 2) Proposing spatial planning to Conserving 30 percent of Ensuring that at least reduce the losses to areas of terrestrial, inland water, 30 percent of degraded high biodiversity importance, coastal, and marine areas terrestrial, inland water, bringing losses close to zero by 2030 through protected coastal, and marine by 2030; areas and other effective ecosystems are under area-based conservation effective restoration by 2030 measures (compared to 17 (compared to 15 percent by percent for terrestrial and 2020, under Aichi); inland water, and 10 percent for coastal and marine areas by 2020, under Aichi); Ensuring the full integration Eliminating or reforming Increasing the level of of biodiversity into policies incentives that are “harmful financial resources from and regulations—including to biodiversity” (such all sources “substantially environmental impact as subsidies) by 2050, and progressively,” to at assessments (EIAs)—across progressively reducing them least US$200 billion per all levels of government and by at least $500 billion per year by 2030. This fresh and sectors, and progressively year by 2030, and by scaling unprecedented goal would aligning all public and private up positive incentives for be achieved by, for example, activities, fiscal and financial biodiversity conservation and increasing transfer from flows with the GBF; sustainable use; and developed to developing countries to at least US$20 billion per year by 2025, and at least US$30 billion per year by 2030. In support of the GBF, COP15 requested the Global Partnership, as well as concrete implementation Environment Facility (GEF) to set up a Special Trust activities in selected countries. Fund to assist developing countries to achieve their conservation targets. Then, with finance in mind, During UNFCCC’s COP 27 (UNFCCC, Sharm El 23 countries and organizations—led by Colombia and Sheikh), multiple initiatives were also launched Germany—launched the Accelerator Partnership. This regarding climate change, land, and ecosystem is intended to help countries fast-track and upscale degradation, and including BCEs in scope. One the implementation of their National Biodiversity of them is the Enhancing Nature-based Solutions Strategies and Action Plans (NBSAPs). The German (NbS) for Climate Transformation (ENACT) Initiative, Federal Government will support and kick-start which aims to drive collective action across climate, the operationalization of the NBSAP Accelerator biodiversity, and desertification, and to help close BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 41 (PILLAR 2) the finance gap for NbS. The initiative will serve as a by the Global Mangrove Alliance (GMA) in collaboration hub for government and non-state actors in fostering with the UN Climate Change High-level Champion. This collaboration, accelerating action, facilitating policy initiative represents a science-based, measurable, and dialogue and bringing global coherence to activities. achievable goal for non-state actors and governments Focus areas include food security and productivity, to commit on collective action to halt mangrove losses, adaptation and disaster risk reduction, oceans, restore half of recent mangrove losses, double the coastal systems, Blue Carbon and the sustainable protection of mangroves globally, and ensure long- blue economy, and green-grey infrastructure. Another term finance, with an investment level of US$4 billion initiative is the “Mangrove Breakthrough”, launched by 2030. 2.4 Stacking the Platforms: Synergies of Climate Action, GBF, and the Sendai Framework Other recent international developments have ecosystems in ways that address societal challenges tapped into the momentum for Blue Carbon and effectively and adaptively, to provide both human well- Nature-based Solutions, more generally. They being and biodiversity benefits” (IUCN, 2016). This is include the adoption of the IUCN Global Standard a concept that strongly resonates with Blue Carbon for NbS and the resolution from the fifth session of conservation and restoration. It enforces NbS as a the United Nations Environment Assembly (“UNEA- holistic tool, capable of providing climate mitigation 5”), which recognized the essential role for NbS in benefits and more. The UNEA-5 Resolution, in turn, achieving SDGs. Under the IUCN Standard, Nature- emphasizes the potential of NbS in delivering co- based Solutions are defined as “actions to protect, benefits (see Box 12) while addressing social issues sustainably manage and restore natural and modified (for example, land tenure rights clarification). BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 42 (PILLAR 2) BOX 12 Nature-based solutions Nature-based solutions are actions capable of “addressing major social, economic and environmental challenges, such as biodiversity loss, climate change, land degradation, desertification, food security, disaster risks, urban development, water availability, poverty eradication, inequality, and unemployment, as well as social development, sustainable economic development, human health and a broad range of ecosystem services” (UNEA, 2022). Many stakeholders have firmly embraced the Another important synchronization through new turn towards NbS. They include financial Blue Carbon can happen between climate action institutions (representing US$ 24.8 trillion in assets (mitigation and adaptation) on the one hand, and under management) that have spoken on the need the Sendai Framework for Disaster Risk Reduction to prioritize support for nature conservation and 2015–2030. The Sendai Framework is the first major restoration and to synchronize the different policy agreement of the post-2015 international development platforms, specifically on climate and biodiversity— agenda. It provides its member states with concrete that is to say, NBSAPs and NDCs (UNEP FI et al. actions to protect development gains from the risk 2022). The private sector’s commitment to “contribute of disaster. The Sendai Framework recognizes and to the protection and restoration of biodiversity and promotes the role of ecosystems and environment as ecosystems through [their] financing activities and a cross-cutting issue. The framework outlines seven investments” is linked to a clear GBF mandate for the targets and four priorities for action to prevent new, and alignment of financial flows, the disclosure of nature- reduce existing, disaster risks: and climate- related impacts and dependencies, and the development of a pipeline of nature-positive Understanding disaster risk; projects and investments. Moreover, BCEs provide a Strengthening disaster risk governance to manage valuable opportunity to link the UNFCCC and CBD by disaster risk; contributing to the achievement of the GBF’s terrestrial Investing in disaster reduction for resilience; and and marine conservation targets, through various Enhancing disaster preparedness to ensure an sources of funding—including traditional biodiversity effective response and to “Build Back Better” in funding and climate finance, carbon credits stacked recovery, rehabilitation, and reconstruction. with biodiversity benefits, and results-based funding from REDD+. BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 43 (PILLAR 2) Blue Carbon ecosystems—and the sustainable Sendai Framework, and are therefore critical to management of their surrounding land and water reducing climate risks in coastal areas. resources—are pertinent to all four priorities of the 2.4.1 National Delivery Frameworks While international momentum has been building, protected areas. However, despite these improvements practice points to the importance of building and over the past two decades, overall government efforts using suitable policy and institutional frameworks still do not match the threat, especially in countries at the national level to develop country-specific NbS with the highest rates of degradation, including in roadmaps—especially, to realize the opportunities Southeast Asia. It is hoped that the new protection for Blue Carbon. Not all of these frameworks are targets agreed under the GBF will specifically benefit new. Countries will often have existing structures, coastal systems, and that governments employ policies, and norms to manage and protect BCEs but community-based management tools for the operation they are sometimes too broadly or weakly formulated of protected areas. to have a specific impact, or they lack well-resourced and effectively-mandated enforcement agencies, and Novel challenges (linking law, governance, adequate enforcement powers. and finance for NbS interventions) concern the recognition of carbon rights in the context of land Recent decades have seen dramatic improvements tenure and the inclusion of local communities, when it comes to adopting and installing robust legal when setting out monetary and non-monetary protection regimes. Many countries have introduced arrangements for forest carbon and Blue Carbon protective bans, such as bans on cutting mangroves investments. The World Bank’s BioCarbon Fund and (Slobodian and Badoz, eds. 2019) and, less commonly, the Forest Carbon Partnership Facility (FCPF) provide sanctions on removing or damaging seagrasses invaluable insights into the challenges as well as ready- (Griffiths et al. 2020) as well as legal frameworks for to-use solution sets for countries to define carbon community-based mangrove management. There is rights, mandate carbon transactions, and set out also now specific protection of BCEs through marine principles for benefit-sharing with communities. 2.4.2 Land tenure and carbon rights Certainty regarding land tenure is essential for and interdependencies, as well as the modern era’s investments in conservation and restoration of disrespect for customary tenure, on the one hand, and natural habitats, particularly if private sector collective tenure, on the other. finance is involved, with its high expectations for predictability and its low appetite for risk. Land While governments, as a policy priority, should tenure over Blue Carbon habitats is often problematic formalize land tenure of Indigenous Peoples and for various reasons, including the natural variability Local Communities (IPLC) where mangroves, of the inter-tidal zone, multi-layered legal claims, seagrasses and salt marshes are located, Blue BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 44 (PILLAR 2) Carbon engagement can both pioneer and fast-track to the “implications” of the land and resource regime the effort. The recognition of carbon rights in coastal assessment for the program. Indicator 36.2 aims at the wetlands can help. Interventions may be modeled alignment between the two: “The emissions reductions on the FCPF’s work in developing countries across the program entity demonstrates its ability to transfer to globe. The facility, through the FCPF Methodological the carbon fund title to emissions reductions while Framework, connects the ability to hold (and transfer) respecting the land and resource tenure rights of the title to emission reductions with land and resource potential right holders, including indigenous peoples.” tenure rights. Indicator 28.3 of said framework refers Title to emissions reductions and removals, in this context, have a triple function. They support: A reward or A defensive or An exclusivity compensation protective claim claim claim Land and resource tenure holders Where emission reductions and Title to emission reductions must not be restricted in their removals are the result of an effort and removals may be (and rights and not be integrated in by stakeholders (including, but not often is) shared among various the emissions reduction program necessarily limited to, land and stakeholders, including land and outside an existing framework of resource tenure holders), such resource tenure holders. However, mandatory law or their free (prior, stakeholders acquire a right to the title itself is unique and not informed) consent; control and share the results and replicable. It gives a single, the proceeds; and exclusive right to the emission reductions or removals achieved through the specific program and the specific program activities. 2.4.3 Benefit sharing Blue Carbon ecosystems are increasingly understood Partelow et al. 2018). Integrating communities— in their role as “social-ecological systems,” specifically fishing communities, and indigenous providing a range of services to local communities peoples—into the governance framework for Blue and, depending on the stewardship of their natural Carbon interventions is essential (see Box 13). Equally tenure holders (fisher-people), acting as a buffer to a important is to have these communities partake in the multitude of threats. (Dahdoub-Guebas et al. 2021; distribution of investment benefits and proceeds. BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 45 (PILLAR 2) BOX 13 Payment for ecosystem services schemes on mangroves Ecuador The Socio Manglar Program in Ecuador is a successful payment for ecosystem services (PES) initiative launched in 2008. It aims to conserve and restore mangroves—vital ecosystems that offer services such as carbon sequestration, coastal protection, and biodiversity habitat. The program, supported by the Government, UNDP, NGOs, and community organizations, provides economic incentives to local communities. These incentives come in the form of direct payments and achieved significant results, including in 2021 by incorporating an additional support for sustainable livelihood the establishment and management 2,900 hectares of mangrove forest activities like ecotourism and of over 50 mangrove reserves, into the conservation program. The artisanal fisheries. To participate, covering more than 20,000 hectares. Socio Manglar Program exemplifies communities establish and manage It has also generated co-benefits how PES schemes can incentivize the communal mangrove reserves, such as sustainable livelihoods conservation of coastal ecosystems, legally recognized by the government and community empowerment. foster sustainable development, and and monitored for ecological and Recognizing the positive outcomes, empower local communities. social compliance. The program has the Government took a significant step Benefit sharing arrangements and plans refer to Negotiating benefit-sharing arrangements prior to a structure that allows distribution of monetary monetization (such as the sale of credits); and non-monetary benefits generated from carbon Transparently disclosing the portion of revenues projects among local communities. To ensure that directly benefits the communities; and equitability, it is imperative that governments and Clearly indicating how the funds are allocated investors alike understand the specific role of the among the communities (Meridian et al. 2022). IPLC. This understanding should encompass the Furthermore, project costs, finance flows, demography, economic activities, health, employment, and revenue sharing should be described in a education, and other relevant factors relating to the transparent manner. The transparency of this communities residing in and around the project area. information empowers individuals to make well-informed assessments about the project’s When formulating benefit-sharing agreements, structure and benefits distribution. investors and developers must adhere to core principles, and governments should provide relevant guidance. These principles include: BUILDING A POLICY AND INSTITUTIONAL Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP ENVIRONMENT FOR BLUE CARBON 46 (PILLAR 2) To ensure fair distribution of the proceeds generated payment of any charges, taxes or similar fees levied by a project, various methods can be employed, in by the host country, must directly benefit the Project terms of both content (setting specific quotas) and Participant(s) and other Local Stakeholders” (Plan Vivo process (such as establishing a trust, partnering 2022). While details may be missing regarding what is with local NGOs, or facilitating the formation of considered income and what direct benefits there are cooperative organizations). The community-oriented to communities, the standard’s programmatic approach Plan Vivo Standard requires that “[at] least 60% of represents a touchstone for Blue Carbon interventions income from the sale of Plan Vivo Certificates, after (see Box 14). CASE STUDY BOX 14 Mikoko Pamoja, Kenya Mikoko Pamoja is a project that engages local communities in the conservation and restoration of mangrove areas through the sale of carbon credits. The project was accredited by Plan Vivo Standard to operate for a period of twenty years. Under the coordinating body of the project, Association of Coastal Ecosystem Services (ACES), the credits are sold, and the community decides where the revenues will be allocated. To date, the money has supported local development projects in water and sanitation, education, health, and environment conservation. From the avoidance of deforestation of a 107-ha Standards to operate for a period of mangrove forest and 10 ha of plantation, prevention of forest degradation and new planting of trees, the project’s carbon benefits are estimated to be 2,400 CO2 yr -1. The project was awarded with the UNDP Equator Prize 2017 for being an outstanding example of a nature-based local solution to sustainable development. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 47 CHAPTER 3 Mobilizing Finance for Blue Carbon (Pillar 3) The gap between the financing needed to reverse biodiversity. An estimated US$ 360 million of bilateral nature’s decline, and current spending, is a major official development assistance (ODA) targets marine challenge. It is estimated that at least US$ 700 biodiversity each year as a principal or significant billion annually in financing is missing (World Bank objective—equivalent to 4 percent of total allocable 2022d). CBD-focused international financial flows bilateral biodiversity-related ODA. Multilateral 20 remain unimpressive . As the OECD reported in 2020 ODA targeting marine biodiversity as a principal or (OECD 2020), the majority of biodiversity-related significant objective, is estimated at US$ 63 million per development finance targets terrestrial and freshwater year, which is approximately 9 percent of multilateral biodiversity; only a small fraction is allocated to the biodiversity-related ODA reported. conservation and sustainable use of marine (ocean) 20 https://doi.org/10.1038/s41467-021-23168-y. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 48 The picture is not much different for climate finance of that amount, or US$ 160 million (CPI 2022). In leveraged in the context of the UNFCCC. While annual contrast, unsustainable fishing receives subsidies that financial flows for forest, agricultural, land use, and lead to overcapacity and overfishing. The International fisheries have exceeded US$16 billion, fisheries (the Monetary Fund estimates that US$ 22 billion is allotted category traced by the Climate Policy Institute that to fishing subsidies each year (Sumaila et al. 2021). comes closest to BCE) have received only 1 percent 3.1 Multilateral Funding At the level of financial support, Blue Carbon is National Cyclone Risk Mitigation Program–II, which on the way to receiving increasing attention by received a US$ 308 million loan in 2015. It seeks to multilateral funds and multilateral banks. Multilateral minimize vulnerability in the cyclone hazard-prone banks have a role to play in helping bring Blue Carbon states and aims to make people and infrastructure into development policy and bridging financial gaps. more disaster-resilient. Through the PROBLUE Trust Mainstreaming Blue Carbon into the development Fund, the World Bank has been strengthening the process requires scale and speed. protection and restoration of marine ecosystems by supporting policy development and strategic The World Bank Group is the largest multilateral investments. With a portfolio of technical assistance financier of climate action in developing countries. that amounts to US$ 134 million in 81 countries, Our climate financing and technical support reached a PROBLUE has played a catalytic role in accelerating the 21 record of nearly US$ 32 billion in fiscal 2022 alone . adoption of ecosystem-based approaches in ocean- The institution has become a key investor in coastal related sectors, including Blue Carbon interventions. protection, restoration, resilience, and the Blue PROBLUE has been instrumental in supporting the Economy. The World Bank Group recently approved for expansion of the World Bank Group’s blue portfolio, funding the Mangroves for Coastal Resilience project, which exceeds US$ 7 billion through core IBRD and which invests US$ 420 million as a concessional loan IDA financing. For a non-exhaustive funding overview, to enhance the management of mangroves and the see Appendix 2. livelihoods of local communities in Indonesia. The World Bank Group also recently approved a US$350 At the level of financial support, BCEs are attracting million loan to help Morocco launch its Blue Economy increasing attention from multilateral funds and Program for Results, aiming to improve job creation and multilateral banks. Since 2010, the Adaptation economic growth, as well as the resilience of natural Fund (AF) has invested around US$ 120.4 million in resources and food security. Another example is India’s coastal-related adaptation measures, with US$82.3 21 World Bank Press Release. https://www.worldbank.org/en/news/press-release/2022/09/07/world-bank-group-delivers-record-31-7-billion-in-climate- finance-in-fiscal-year-2022. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 49 million currently invested in projects approved equity for the Global Fund for Coral Reefs, which or under implementation. The AF has invested serves as a blended-funding vehicle using grants, most in flood defense and resilience. For example, debt, and other financial instruments to facilitate US$ 14 million is being invested in climate change private, return-oriented investments in coral reef adaptation in vulnerable coastal towns and ecosystems conservation and resilience. of the Uruguay River, and another US$ 14 million in reducing climate vulnerability and flood risk in coastal urban and semi-urban areas in cities in Latin America (Chile, Ecuador). The Global Environment Facility (GEF) currently has about US$ 208 million invested in about 40 blue or coastal projects (not all of them targeting Blue Carbon, however). The global Blue Nature Alliance has received US$ 22.6 million in grant funding for their efforts at improving the conservation of 1.25 billion hectares of ocean ecosystems. The PROCARIBE+ Project received grant funding of US$ 15.4 million. This project aims at protecting and restoring the ocean’s natural capital and building resilience in the Caribbean. Another US$ 15 million grant has been approved for the Pacific I2I Regional Project: Ocean Health for Ocean Wealth— The Voyage to a Blue Economy for the Blue Pacific Continent. Approximately US$ 24 million is currently being invested in nine mangrove projects (protection, conversion, and management). Between 2016 and 2021, the GEF (in partnership with UNEP), also funded the Blue Forests Project (at US$ 4.5 million), an initiative to improve the management of coastal carbon and ecosystem services to build climate-resilient and sustainable communities. The Green Climate Fund (GCF) has spent US $374 million in grants for projects that include coastal resilience, coastal protection/coastal communities, or flood protection. US$ 57.7 million has been raised to make Samo’s capital climate-resilient, and to strengthen adaptive capacity and reduce exposure to climate risks. US$ 30.4 million also partially funds, for example, the Blue Action Fund, which aims to improve the protection of the world’s oceans and coasts. In addition, there is US$ 125 million MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 50 3.2 Results-Based Carbon Finance Results-based carbon finance (RBCF) refers to a Importantly, REDD+-based RBCF does not involve financing mechanism that rewards the achievement emissions-trading in the sense that host countries of predetermined results, rather than the delivery would have to debit the units funded from their of inputs or outputs. In the context of REDD+ (see NDC accounting frameworks. That means that host above, section 2.2.2), RBCF is used to incentivize country governments can use the units paid for under developing countries to reduce their GHG emissions an RBCF scheme for their own NDC targets (on the from deforestation and forest degradation, and to debiting or “Corresponding Adjustments”22). The conserve and enhance forest carbon stocks. Under allocation is important for both the host country’s REDD+, developing countries can receive payments for capability of meeting its NDC targets and the wider the verified reduction of GFG emissions that result from discussion of double counting of emissions reductions deforestation and forest degradation. These payments or carbon credits. It is noted in this context that most are made based on the results achieved, rather than the experts agree that RBCF does not give rise to double inputs provided or the activities carried out. This means counting, as long as the purchaser makes no offset that the countries are rewarded for reducing their claim and the use towards the host country’s NDC is emissions, rather than simply for carrying out activities transparently communicated. that may or may not lead to emission reductions. The amount of funding provided for REDD+ through The RBCF approach in REDD+ is typically structured RBCF varies depending on the source of the funding as a performance-based payment system, where and the time period being considered. However, payments are linked to the achievement of specific according to the latest available data from the REDD+ targets or milestones. For example, a country may Resource Database, by the end of 2021, a total of US$ receive payments for reducing its deforestation rate 2.2 billion had been committed or disbursed for REDD+ below a certain threshold, or for increasing the area of through RBCF. This funding has been provided by a forest under protection. range of sources, including governments, multilateral institutions, and private sector actors. Some of the largest sources of RBCF funding for REDD+ include the World Bank’s Forest Carbon Partnership Facility (FCPF), the Green Climate Fund (GCF), and the Norwegian International Climate and Forest Initiative (NICFI). 22 This mechanism subtracts the GHG emissions reductions from the host country’s account and adds them to the importing country’s account. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 51 Several RBCF funding schemes included mangrove between US$ 5 and US$ 10 per tCO2 (FCPF and LEAF, interventions, although data is not available on the respectively). In the future, REDD+ and Blue Carbon RBCF share that went specifically into mangroves. may be unified under the World Bank’s Scaling Climate Overall REDD+ RBCF pricing has been mostly stable Action by Lowering Emissions (SCALE) Partnership over the past year, if at a relatively low level of Crediting Framework (see Box 15). BOX 15 Scaling climate action by lowering emissions partnership crediting framework As part of COP27, hosted in Sharm El-Sheikh, the World Bank presented the Scaling Climate Action by Lowering Emissions (SCALE). SCALE is a multi-partnered trust fund that seeks to catalyze transformative climate action by deploying Results- Based Climate Finance (RBCF) in developing countries, where countries receive grant payments for achieving pre-agreed, verifiable results, to accelerate the fulfillment of their National Determined Contributions of marginalized communities and • Sustainable infrastructure (NDCs). (The World Bank 2021f) indigenous peoples through the design solutions. SCALE incentivizes of benefit-sharing arrangements. the building and operation of SCALE supports countries to sustainable infrastructure— build a track record of generating SCALE supports just and inclusive including energy, industry, buildings, verified emissions reductions that transition towards reduced transport, urban water and they can apply towards their NDC greenhouse gas emissions in three waste management— delivering commitments, and yielding excess major pillars: direct emissions reductions credits that can be made available while improving public services, for carbon markets. To support the • Natural climate solutions. SCALE productivity, and resilience. achievement of its outcomes, SCALE supports the implementation of • Fiscal and financial solutions. also deploys targeted funding for mitigation actions conducive to SCALE supports green fiscal policy technical assistance activities such reducing emissions and enhancing reform, including harmful subsidy as knowledge generation, capacity removals under REDD+, Blue removal, energy pricing reform, building, development of tools and Carbon, Climate Smart Agriculture carbon pricing, and green financial modeling, and program preparation. (CSA), and landscape-scale sector interventions such as agriculture, forest, and other climate- smart public co-financing, Social inclusion is a central element of land-use (AFOLU) programs; incentivization of portfolio shifts all SCALE programs. Enhancing Access and delivering outcomes such as with commercial banks, and to Benefits while Lowering Emissions enhanced agricultural productivity, climate-risk- reflecting financial (EnABLE) is an associated trust ecosystem conservation, and regulation and monetary policy. fund that will enhance the inclusion resilient marine economies. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 52 3.3 Carbon Markets Setting incentives for communities, fishers, farmers, Some of the GHG accounting procedures for Blue and other landowners and land-users (including Carbon interventions are quite similar to those for governments) to conserve pristine coastal wetlands the more established category of forestry projects— and restore those that are drained or degraded, is for example, assessing baseline scenarios, carbon a key challenge in achieving the goals of the Paris stocks in biomass, leakage emissions from activity Agreement. Emissions trading (carbon markets) can shifting, as well as permanence. But specific play an important part in this incentivizing. While components are distinctly different when assessing carbon markets have long been used for terrestrial other dynamics, such as the effects of sea-level rise forest interventions, they have recently been tapped for (as the tidal zone may shift landward), ecological Blue Carbon interventions. leakage (changes to adjacent areas due to hydrological connectivity), carbon stocks in tidal wetland soils, and methane emissions. (For conceptual details, see Appendix 3.) 3.3.1 Clean Development Mechanism Most of the existing carbon markets are government- largest emissions trading scheme at the time—the backed. They are confined to domestic marketplaces European Emissions Trading Scheme (EU ETS), which (emissions trading in China, Australia, North America, drove most of the demand for CDM credits for many the EU, and so on), and they work based on a years—never opened up to land-based projects. To mandatory emissions reduction target to be met (hence reduce the non-permanence risk, buffer approaches, “compliance markets”). They are also primarily focused such as those piloted under FCPF and ISFL, could be on industrial emissions, rather than natural solutions. developed where a certain amount of verified ERs is set aside in a buffer mechanism to insure against any This said, the Clean Development Mechanism potential future reversal event under the BCEs project (CDM), the project-based mechanism for the and renders Blue Carbon ERs a more permanent— creation of officially recognized carbon credits in thereby more attractive— carbon asset. the era of the Kyoto Protocol (2008-2020), had a window for land-based interventions, including on Nevertheless, for all its limitations, the CDM mangrove restoration. However, the credits generated triggered the development of more than 10 were defined as temporary (in need of continuous ecosystem-based accounting methodologies. These replacement), which put them at the periphery of include one on Afforestation and Reforestation of investor interest. It is also one of the reasons why the Degraded Mangroves (UNFCCC 2013), and some MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 53 50 projects worldwide—among them Protection of Low-Income Community-Based Mangrove Afforestation Cameroon Estuary Mangroves through Improved Project on Tidal Flats (UNFCCC 2010b) in Riau Island Smoke Houses (UNFCCC 2010a) and Small-Scale and Province, Indonesia. 3.3.2 Voluntary carbon markets A small but growing market is built by and for non- Standard (VCS) and the Gold Standard—are available state actors (see Table 4). These privately organized, across countries, and carbon credits can be traded non-regulated (non-compliance) initiatives, or across borders. The other two—the American Carbon “voluntary carbon markets,” fill two significant gaps. Registry (ACR) and the Climate Action Reserve (CAR)— First, they have an important transnational segment. are available in the Americas. Two of the big four standards—the Verified Carbon Table 4 Comparison of the size of compliance and voluntary carbon markets. Compliance Carbon Market Voluntary Carbon Market Total market Total Market Value $272 billion USD (2020)23 Total Market Value $1 billion (2021)24 value Source: World Bank’s GFDRR 2023 (forthcoming) Second, voluntary carbon markets have moved into based solutions/natural climate solutions) account for the sectors left out by most compliance markets: much of the (strong) growth of the voluntary carbon agriculture, forestry, and other land use (AFOLU). markets, accounting for a trade volume of 37 million The World Bank and BeZero Carbon identified that tCO2e in 2019, 58 million in 2020 and, in a huge leap, of all voluntary carbon market credits issued, 48.85 227 million tCO2e in 2021 (Forest Trends 2022, Forest percent are categorized as nature-based solutions Trends 2021). (Figure 9). These nature-based projects (nature- 23 REFINITIV, Carbon Market Year in Review 2020, 2021, https://www.refinitiv.com/content/dam/marketing/en_us/documents/gated/reports/carbon- market-year-in-review-2020.pdf. 24 EM Insights Team, Voluntary Carbon Markets Top $1 Billion in 2021 with Newly Reported Trades: A Special Ecosystem Marketplace COP26 Bulletin, n.d., https://www.ecosystemmarketplace.com/articles/voluntary-carbon-markets-top-1-billion-in-2021-with-newly-reported-trades-special-ecosystem- marketplace-cop26-bulletin/. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 54 Figure 9 Voluntary Carbon Market credits issued by activity type (2022). 37% 40% Renewable energy NBS 9% 1% Waste Coal mine methane 7% 4% 2% Industrial gases Fuel switch Energy efficiency Source: World Bank GFDRR, 2023 (forthcoming). Voluntary carbon standards operate as “baseline- trades happen over-the-counter—that is, away from and-credit” instruments. They define methodologies centralized platforms or brokers. to calculate in detail “baseline” (or business-as-usual) GHG emissions (from land conversion, drainage of The end-buyers are companies (and also individual peatlands, degradation, and other) and issue credits consumers) committed to either offsetting part or when and after the project verifies that GHG benefits all of their GHG emission (carbon neutrality), or have been achieved compared to the baseline. Each contributing to climate change mitigation without credit stands for one ton of CO2e avoided, reduced, or claiming carbon neutrality as a result. Offsetting, removed (sequestered). in this constellation, is a voluntary action by the end users. They are not under obligation from their The credits are issued into a registry account, where government, and also the offsetting action does not they can be freely traded. While the registries follow show in a compliance registry—in particular, not in the all credit movements from issuance to retirement (each accounting/registry system under development at the credit has a unique serial number linking it to a specific level of the United Nations Framework Convention on project and a specific “vintage” or generation year), Climate Change (UNFCCC). there is no single marketplace for traders. Most of the MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 55 3.3.4 Voluntary carbon market approaches to Blue Carbon Carbon project interventions in Blue Carbon attempt to capitalize on the increasing interest in Blue ecosystems (BCEs) account for both GHG removals Carbon methodologies and lessons learned from years (for instance, through restoration practices) and of both restoration and conservation practices. The reduced GHG emissions (for example, through updated VM0033 will adopt the new REDD baseline conservation of coastal ecosystems). The Verified principles and procedures in the all-new VCS ARR Carbon Standard (VCS, managed by Verra), is by far the methodology (currently under validation). The new largest standard in the AFOLU sector, with the most methodology (VM0033 v3) is expected to be available projects registered, the most carbon credits issued, at the end of 2023, with tidal wetlands procedures and the most comprehensive coverage of conservation, removed from VM0007. restoration, and management practices across landscape and land-use types, including Blue Carbon In addition, certain countries or jurisdictions, from ecosystems. It is not the only standard available for the US (Louisiana), to Japan and Australia, have BCE, however (see Table 5). their local GHG accounting methodologies for BCEs. Australia has included BCEs in its national GHG The VCS has two global methodologies: VM0033 accounts. The Australian Government’s Emissions (Methodology for tidal wetland and seagrass Reduction Fund has developed comprehensive restoration) and VM0007 (REDD+ Methodology guidelines for that purpose (Kelleway et al. 2017). In Framework), which connect with tidal wetlands Japan, guidance documents describing measurement modules. The latter covers all functionality of VM0033, methods for seagrass meadows, tidal flats, which focuses on restoration activities, as well as embayments, and port facilities have been prepared activities for conservation. Under VM0033, additionality (Tokoro et al. 2015). is addressed using a standardized method, involving a so-called “positive list.” The methodology implies that As shown in Appendix 3, most currently registered projects that implement activities to the positive list mangrove restoration projects have previously are automatically deemed as additional, meaning that applied the CDM methodology AR-AM0014 projects automatically qualify for crediting. Classes of (Afforestation and Reforestation of Degraded Mangrove project activities that have low levels of adoption in Habitats). In 2022, Verra set a December 2022 the marketplace, that are not the least-cost option or deadline for new projects using the CDM afforestation/ that have no revenue streams besides carbon finance, reforestation methodologies (including AR-AM0014). can be predetermined as additionalities. Following an Since then, all projects must apply VM0033. attempt from Verra to harmonize baseline accounting procedures across all their REDD+ methodologies, the A small standard—Plan Vivo, which targets baseline accounting procedure of the VM0007 will be community-led projects that involve rural subject to changes after expert revisions. smallholders and communities dependent on natural resources for their livelihoods—has Verra has chosen to make VM0033 the all- recently become a favorite of many (potential) encompassing Blue Carbon methodology, in a further Blue Carbon developers. It currently has three MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 56 “approved approaches” for issuing certificates. by the project developer—will soon be replaced The current process—whereby Plan Vivo assesses by a more regulated approach, with predefined any methodological approach to measuring “Methodology Requirements”. carbon and other climate benefits suggested Carbon standards and methodologies for Blue Carbon credits in the Table 5 voluntary market. Carbon Standard body Methodology / Version AM0014 (available until 2022) Verra VM0033 Methodology for Tidal Wetland and Seagrass Restoration, Version 2.0 VM007 REDD+ Methodology Framework (REDD+MF), Version 1.6 Plan Vivo Project-specific The Restoration of California Deltaic and Coastal Wetlands, Version 1.1 American Carbon Registry (ACR) Restoration of Pocosin Wetlands, Version 1.0 Climate Action Reserve (CAR) Mexico Forest Protocol, Version 1.5 Source: Silvestrum Climate Associates (2023) 3.3.5 Blue Carbon pricing There have been too few credit issuances and at an average of US$28) due to their extraordinary purchases to establish clear trends as to how these capacity to deliver on carbon and on a multitude of co- credits are used and by whom. There are several benefits, such as food security and climate adaptation. indicators, however, that Blue Carbon credits are not This said, there is no clear pricing methodology for Blue commodity- and trade-driven in the same way as other Carbon in place, other than that that the credit price project categories. While average voluntary carbon is negotiated for each project anew. However, there market credits have been sold below US$5 for years, may be a trend toward higher prices for credits stacked credits from across NbS sectors— including agriculture with co-benefits (see Box 16) and for models under and forestry—now consistently trade above US$5, and which credit returns are transparently shared between Blue Carbon credits are at the top end (trading in 2022 communities and habitat protection. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 57 BOX 16 Stacking co-benefits Verra houses not only the VCS but VCS receives a CCB label. SD VISta only), Blue-Carbon-specific also, among others, the Climate, also provides for a label mechanism methodologies that focus on co- Community and Biodiversity (CCB) but allows SD VISta Claims Statement benefits are being tested within these Standard and the Sustainable and SD VISta credits. standards and beyond. Development Verified Impact Standard (SD VISta). Blue Carbon The Gold Standard (the other big Verra has released a draft projects that register under the international voluntary carbon methodology for measuring coastal- VCS can choose to go through a standard) does not yet have Blue- resilience benefits from restoration secondary screening by the CCB Carbon-specific methodologies in and protection of tidal wetlands. It Standard, which examines a project place. It is working on a mangrove seeks to lay out verifiable metrics for its specific social (community) restoration (not conservation) for gauging protection levels from and ecosystem (namely biodiversity) methodology, however. Once enhanced Blue Carbon ecosystems benefits, or SD VISta, which enables approved, the standard may offer and naturally raised shorelines for projects to measure their social and a solid alternative certification communities. The insurer Axa, one of environmental impacts and link them procedure. The Gold Standard offers the funders of the initiative, explains to the United Nations Sustainable projects certification for multiple that resilience credits—envisaged Development Goals (SDGs). CCB ecosystem services (including water to be purchased in tandem with applies to land-use projects only; SD benefits, gender benefits, as well as Blue Carbon (climate mitigation) VISta is not restricted to any sector. impacts to reduce short-lived climate credits or as a stand-alone—would Its current project list is strongest pollutants) within the Gold Standard then be issued on the back of the on cookstove, water-access, and for the Global Goals (GS4GG). quantification of risk-reduction rice-farming projects. benefits derived from preserving While these co-benefit standards these natural flood barriers, and If successfully verified under both VCS are generic and apply to all project from conserving and restoring and CCB, any credit issued by Verra/ categories (CCB applies to AFOLU coastal ecosystems. An interesting VCS model is the Vida Manglar project to fund Vida Manglar’s conservation management in Cispatá, Colombia (Conservation International plan. Revenues from future issuances are expected to 2022). The mangrove conservation project, which keep the distribution benchmark of above 90 percent uses VM007 for its carbon credit accounting and is (communities) and below 10 percent (transaction also registered under Verra’s Climate, Community costs). The project serves as a good model for funding & Biodiversity Standard, has been developed by a approaches that mix classic philanthropy funds with coalition of local stakeholders and communities. This Blue Carbon credit proceeds. has been facilitated by Conservation International, with philanthropy funding from Apple. The project’s Low price-predictability and the orientation at first credits were marketed close to or after credit standard market prices in practice (even accounting issuance to corporate buyers. While the price per for higher prices in ‘niche’ segments), on the other tCO2 has not been disclosed, it is expected to be hand, risk missing the target. Therefore, leading not- above US$20 and perhaps as high as US$30. A full 92 for-profit organizations—such as WWF (WWF 2021b)— percent of the proceeds flow back to the communities have suggested turning the traditional approach to MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 58 carbon pricing (reflecting the price of the offset) into For Blue Carbon interventions, such an approach reverse. This would mean that corporate investors ensures that investors are not simply going for calculate in detail their own (transitory and residual) the low-hanging fruits (interventions payable emissions and make a financial commitment for with offset prices of US$10 or US$20 a credit) but nature based on the cost of the emissions. The tackle the full scale of investment needs. These calculation may use generic figures on the social and include research, capacity-building, community environmental cost of emissions or, alternatively, development, and high-integrity restoration. However, calculate implicit carbon prices at the corporate level, this boutique-style approach may struggle when or against the collective effort to reach the 1.5-degree applied to larger, potentially jurisdictional interventions, Celsius goal. in which price elasticity will be less pronounced and government-backed re-investment models less discretionary. 3.3.6 Future opportunities: Emissions trading under the Paris Agreement The Paris Agreement’s crediting mechanisms also be used in the future for Blue Carbon actions under Article 6 (recently finalized, in principle) may (see Box 17). BOX 17 Crediting approaches under Article 6 of the Paris Agreement The instrument on cooperative The mechanism established Article 6.2 activities are bilaterally approaches (Art. 6.2 of the Paris under Article 6.4 of the Paris (and sometimes unilaterally, by the Agreement) covers internationally Agreement resembles the Clean host country) defined and developed. transferred mitigation outcomes Development Mechanism (CDM) of Article 6.4 activities are developed and enables parties to the Paris the Kyoto Protocol, in being the more under rules and methodologies that Agreement to engage in emissions centralized instrument governed are a priori the same for all countries. trading in a decentralized, bilateral, or by a Supervisory Board responsible These rules include provisions on multilateral manner. for the accreditation of validation set-asides (quotas of each issuance) and verification entities (Designated that are cancelled or transferred to Operational Entities or DOEs); the benefit overall mitigation efforts and approval of methodologies; the adaptation purposes. registration of activities; and the operation of a centralized registry. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 59 Both instruments allow for the trade when accounting for its NDC. This balanced non-market approaches” in “emission reductions” as well means that an emission reduction to enable voluntary cooperation as “emission removals”, provided traded under Article 6.2 must not among Parties in implementing their these are “real” (not hypothetical), be considered towards the host NDCs, to allow for higher ambition “verified” (independently confirmed) country’s own emission reduction in their mitigation and adaptation and additional (generated because (NDC) target. actions. The framework—currently of the incentive offered by emissions under development (a work program trading). Tradable credits are those Article 6.4 approvals do not require has been adopted)—will likely generated in 2021 or later. The Article a Corresponding Adjustment per se. widen its scope to include, not only 6.4 decision also provides for the use However, in practice, if a host country GHG reductions and removals, of some pre-2021 units issued under seeks to trade Article 6.4 emission but ecosystem services across the CDM between 2013 and 2020, for reductions/removals to another the spectrum of both mitigation use towards the first NDC period. country, the authorization procedure and adaptation, including flood of Article 6.2 applies as well (that protection. The Glasgow Climate Pact Article 6 instruments imply a form is, the host country must approve specifically referred to “Blue Carbon” of “approval” and/or “authorization” under Article 6.4 and authorize under as a programmatic item for the of crediting activities by the host Article 6.2). framework, however. country. For Article 6.2 authorizations, this means that the host country A third instrument under Article 6 is will need to make a “Corresponding provided by the framework for non- Adjustment”—that is, neutralize the market approaches to sustainable amount of traded emission reductions development (Article 6.8 and 6.9). or removals from its balance sheet It targets “integrated, holistic and In a radical departure from the Kyoto Protocol markets. The authorization entails an obligation and CDM precedents, the new mechanisms do not for the host country to undertake a “corresponding come with a priori sectoral exclusions. Land-use adjustment” in its books, even if the crediting interventions (including Blue Carbon projects and permitted is for voluntary carbon markets only. The programs) qualify for credit generation and emissions government authorization, together with the promise trading under these instruments, just like any project or of a corresponding adjustment, may consolidate program from another sector. the standing of voluntary carbon markets, which are currently going through a rough spell. Commentators Furthermore, the Paris rules also allow for the and sustainability standards—notably the Science- creation of hybrid markets. Governments can issue Based Target Initiative (SBTI)—are questioning the letters of authorization to interventions specifying motivation behind corporate carbon credit investment how credits can be used: for use towards an NDC (“greenwashing”) and discouraging the concept of (by another government); for “other international “offsetting” for climate neutrality purposes. purposes” (a code term associated with crediting under the Carbon Offsetting and Reduction Scheme At COP27, there was a noticeable, multi-level for International Aviation (CORSIA), an instrument convergence of official (traditionally referred to set up by a specialized United Nations agency called as “compliance”) voluntary carbon markets, and the International Civil Aviation Organization or ICAO); results-based finance. and for other purposes, including for voluntary carbon MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 60 Africa Carbon Markets Initiative LEAF Inks Agreements Multiple African nations, including Kenya, Malawi, A total of six new agreements with forest nations and Gabon, Nigeria, and Togo; global and regional states were announced by the Lowering Emissions by initiatives; and private sector representatives Accelerating Forest (LEAF) finance Coalition, whose announced the Africa Carbon Markets Initiative goal is to halt deforestation by financing large-scale (ACMI), which aims to dramatically expand Africa’s tropical forest protection on an RBCF basis. Amapá, role in voluntary carbon markets. ACMI seeks to Amazonas, Mato Grosso, and Pará have become the generate 300 million credits annually by 2030 and 1.5 first Brazilian states to sign Letters of Intent (LOI) billion credits by 2050. This level of production would with Emergent, the coordinator of The LEAF Coalition. by 2030 unlock US$6 billion in income and support 30 These LOIs demonstrate the commitment of all parties million jobs, and by 2050 unlock over US$120 billion to progress negotiations towards binding agreements in income and support over 110 million jobs. to supply emissions reductions to LEAF Coalition participants and signal significant progress for LEAF in Brazil. LEAF also announced that Costa Rica and Nepal have signed memoranda of agreement (MOAs) with Emergent. These agreements, for countries who have High-Quality Blue Carbon already signed LOIs, outline the next steps and put in Principles and Guidance place a clear roadmap and timetable for the signing of binding Emissions Reduction Purchase Agreements Conservation International, the World Economic (ERPAs) by the end of April 2023. Costa Rica and Forum’s Friends of Ocean Action, The Nature Nepal join Ecuador, which at COP27 was announced as Conservancy, Ocean Risk and Resilience Action the first country to sign an MOA. Alliance, and Salesforce, with the support of the Meridian Institute, announced the High-Quality Blue Carbon Principles and Guidance, a framework that VCMI and We Mean Business Join provides a consistent approach to ensuring that Forces Blue Carbon credits optimize outcomes for people, biodiversity, and the climate. The guidance is set out in five key principles, “each of equal importance” Through a new partnership, the Voluntary Carbon (Meridian 2022a; Meridian 2022b): Market Integrity (VCMI) Initiative and the We Mean Business (WMB) Coalition will deepen engagement • Safeguard nature; and feedback from companies in the VCMI process. • Empower people; WMB will support companies to follow VCMI’s claims • Employ the best information and carbon code. This is a set of principles and rules designed accounting principles; by VCMI to specify to what extent carbon market • Operate contextually and locally; and investors can claim the GHG benefits the purchased credits represent within their value chain and towards • Mobilize high-integrity capital. a net-zero trajectory. These principles and rules help ensure that voluntary carbon crediting will strengthen, rather than undermine, global action towards achieving the goals of the Paris Agreement. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 61 3.4 Emerging Financing Approaches Emerging funding alternatives are gaining time, they effectively drive sustainable action through importance as an alternative to political obstacles tax incentives and positive subsidies for conservation and limited government resources. Governments, and habitat restoration. However, in practice, phasing in theory, dispose of their wide set of classic fiscal out long-granted subsidies is politically difficult, policies and instruments to create disincentives for and government funding is limited. Policy makers non-sustainable habitat management (think of the therefore keep a lookout for opportunities for private phase-out of harmful subsidies to industrial fishing and sector investments, while considering a range of novel non-sustainable, area-extensive farming). At the same funding approaches. 3.4.1 Financing facilities and impact funds Blue Carbon Accelerator Fund (BCAF) and Blue Natural Capital Financing Facility (BNCFF) Recent years have seen increasing The IUCN, through its Global Marine and Polar Program, recognition of the economic value of coastal operates both funds to advance financially viable coastal ecosystems and the need for investment climate-resilience projects with clear ecosystem-services in their protection and restoration. This benefits. The aim is to integrate Nature-based Solutions has led to the emergence of a number of (restoration of coastal wetlands, including mangroves) with innovative financing mechanisms that seek modern data systems and marine technology, as well as small to leverage private sector finance for coastal renewable energy and clean water solutions, to strengthen the investment case for integral coastal-resilience management. conservation and restoration. Active facilities The facility is intended to operate for projects in developing and impact funds include: countries, especially small island developing states. BCAF is funded by the Government of Australia, and BNCFF is funded by the Government of Luxembourg. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 62 Global Innovation Ocean Innovation Green Ocean Lab for Climate Challenge Fund Finance is a platform that incubates and is a global funding program that is a funding mechanism develops innovative financial supports innovative projects established by the South Korean instruments to support climate aimed at addressing ocean- government, which provides change mitigation and adaptation related challenges, including the financing for marine conservation efforts, including Blue Carbon conservation and restoration of and restoration projects, initiatives. coastal and marine ecosystems including BCEs that support Blue Carbon. These are just a few more examples of programs, funds, and facilities that Natural Capital Ocean 14 Capital NCFF provide funding for Blue Carbon Financing Facility conservation or restoration action Impact Fund is a joint initiative of the European is a partnership between the Investment Bank and the Ocean Fund and founders of Vedra Partners Ltd., European Commission, which Pontos Aqua Ltd., and Blue ReOcean Fund provides financing for projects Marine Foundation. Blue Marine (Prince Albert that promote the conservation Foundation is an investment II of Monaco and sustainable use of natural advisory to Ocean 14 Capital Fund Foundation) capital, including coastal and 1, a Private Equity fund focused marine ecosystems on the United Nations’ Sustainable are funding mechanisms Development Goal 14, Life established by the Prince Albert II Below Water. of Monaco Foundation to support ocean conservation projects, Althelia including the restoration of BCEs. Biodiversity Fund Blue Forest Conservation is a private equity fund that invests in sustainable land use Aqua-Spark and conservation projects around is a private equity fund that the world, with a particular focus invests in the conservation and on the conservation of marine and restoration of coastal and marine is a venture capital fund that coastal ecosystems. ecosystems, including mangroves, invests in sustainable aquaculture projects that promote healthy seagrasses, and coral reefs. oceans, enhance food security, and create economic opportunities for coastal communities. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 63 Encourage NatureVest Meloy Fund Capital Blue Ocean is a private equity fund that is a private equity fund that is a conservation finance initiative invests in sustainable fisheries, invests in sustainable small-scale of The Nature Conservancy, which aquaculture, and marine fisheries and coastal enterprises focuses on investing in sustainable conservation projects that deliver in Indonesia and the Philippines, fisheries, coastal resilience, and environmental and social benefits. with a focus on improving marine conservation projects. livelihoods and conserving marine ecosystems. 3.4.2 Emerging government-led financing approaches There are multiple income streams to support long- term sustainability for Blue Carbon conservation and restoration actions. They include habitat and fisheries- Public sensitive public procurement standards; public-private procurement partnerships; payment for ecosystem services (PES) schemes; as well as new financing tools (including Blue Bonds, debt swap agreements, impact insurance, as Governments can use public procurement well as project finance for permanence (PFP)). policies to encourage the use of sustainable practices in construction and infrastructure The overall numbers are still modest. According projects that impact coastal habitats. This to Convergence, which tracks blended finance can include requirements for the use of transactions against their alignment with the sustainable materials and the incorporation of Sustainable Development Goals (SDG), in the period habitat restoration measures in project design. 2018 to 2020 only 2 percent of transactions supported Priority can also be given to suppliers that SDG 14 (Life below Water), mobilizing US$130 demonstrate strong supply chain rules in their million (out of US$31 billion in SDG funding overall) own procurement. (Convergence 2021). Yet, the number of transactions based on innovative and “blended” funding tools (linking public and private finance) is growing. The list includes: MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 64 Public-private partnerships (PPPs) Governments can collaborate projects. PPPs can leverage private provide important incentives and with private sector companies sector investment and expertise support for the conservation and and organizations to finance to achieve conservation and restoration of coastal habitats, and implement coastal habitat restoration goals. Overall, fiscal helping to protect and restore these conservation and restoration policies and instruments can critical ecosystems. Payment for ecosystem services (PES) schemes PES schemes are mechanisms outcomes, such as the maintenance been implemented in various that aim to create financial or restoration of a particular contexts (including agriculture, incentives for landowners and habitat, or the provision of clean forestry, water management, other stakeholders (in the case of water to downstream users. PES and mangrove conservation) and Blue Carbon habitats, primarily schemes can take various forms, they are at the basis of REDD+ fishing communities) to protect or such as direct payments, subsidies, results-based finance frameworks enhance the provision of ecosystem tax incentives, or tradeable credits. and carbon crediting (see Box 18). services. In a PES scheme, a They are often used to address They are often used in developing buyer or group of buyers (such market failures that result in the countries, where ecosystems as a government, NGO, or private under-provision of ecosystem are particularly valuable but also company) pays a provider (such as services, such as the inability of vulnerable to degradation, and a landowner or community) for the landowners to capture the full where rural communities depend delivery of a specified ecosystem value of their ecosystem services, heavily on ecosystem services for service. The payment is typically or the negative externalities their livelihoods. based on the achievement of generated by activities that harm pre-defined ecological and social ecosystems. PES schemes have MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 65 BOX 18 Examples of payments for ecosystem services schemes on mangroves The Socio Manglar program in Ecuador is a payment for ecosystem services (PES) program that targets mangrove conservation and restoration in the country. The program was launched in 2008 by the Ministry of Environment and the Ministry of Finance, with the support of the United Nations Development Program (UNDP) and various non-governmental (NGO) and community organizations. The program provides economic incentives to local communities to conserve and restore mangroves, which are important ecosystems that provide a range of services, including carbon sequestration, coastal protection, and habitat for biodiversity. The incentives take the form of direct payments to communities, as well as support for sustainable livelihood activities such as ecotourism and artisanal fisheries. To participate in the program, Ecuador communities must establish and manage communal mangrove reserves, which are legally recognized by the government. These reserves are monitored and evaluated to ensure that they meet the program’s ecological and social standards. The Socio Manglar program has been successful in promoting mangrove conservation and restoration in Ecuador. As of 2021, the program had supported the establishment and management of over 50 communal mangrove reserves, covering more than 20,000 hectares of mangroves. The program has also generated important co-benefits, including the promotion of sustainable livelihoods and the empowerment of local communities in natural-resource management. Overall, the Socio Manglar program is a good example of how PES schemes can provide economic incentives for the conservation and restoration of important coastal ecosystems, while also promoting sustainable development and community empowerment. The program in Sulawesi, Indonesia, pays local fishers to restore and maintain Indonesia mangrove forests, in exchange for access to fishponds that are integrated into the mangrove ecosystem. Mexico’s Payments for Hydrological Services Program is a program that provides payments to landowners who maintain and restore forests—including mangroves— Mexico that help protect water quality and quantity in critical watersheds. The program is administered by the National Forestry Commission and is supported by various government agencies and NGOs. Blue Carbon Initiative in Vietnam pays local communities to restore and protect Vietnam mangroves in exchange for carbon credits that are sold on the voluntary carbon market. The program is supported by the International Union for Conservation of Nature (IUCN), the Vietnamese government, and various NGOs. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 66 Blue Bonds Blue Bonds offer tremendous same way as traditional bonds, the Guidelines for Blue Finance: business opportunities and with investors purchasing bonds Guidance for Financing the Blue address pressing challenges such from the issuer, who then uses Economy, Building on the Green as climate change, biodiversity the proceeds to fund projects. The Bond Principles and the Green loss, and pollution, all of which issuer typically agrees to repay the Loan Principles.25 This identifies affect BCEs. Blue Bonds are a bondholders at a predetermined eligible blue project categories to variant of Socially Responsible interest rate over a specified time guide IFC’s investments to support and Impact (SRI) Bonds, which period. Blue Bonds can be issued the Blue Economy, in line with the enable investors to deliver positive by a variety of entities, including Green Bond Principles and Green societal impact, while generating governments, development banks, Loan Principles. The market has long-term, competitive financial and private sector organizations. been seeking guidance on project returns. Proceeds raised finance For example, the Republic of eligibility criteria, translating climate-friendly projects for Seychelles issued the world’s first general Blue Economy Financing preserving the Blue Economy and Blue Bond in 2018, while the World Principles, such as the Sustainable increasing clean water resources. Bank and the European Investment Blue Economy Principles and the These projects can include initiatives Bank have also issued Blue Bonds Sustainable Ocean Principles, into to protect marine ecosystems, to finance ocean conservation guidelines for Blue Bond issuances mitigate climate-change impacts on projects. In 2022, the International and blue lending. oceans, and promote sustainable Finance Corporation (IFC), from fisheries. Blue Bonds work in the the World Bank Group, released Project finance for permanence (PFP) PFP combines results-based finance goals are adequately funded. (The goals, and to deliver the money approaches (known from REDD+) PFP in Belize is currently in the once all the key financial and legal as well as carbon project finance design phase, with an initial focus preconditions required from the models with classic philanthropic on the sustainable financing of government are met. Finally, the funding. PFP approaches are MPAs, then expanding into coastal government will progressively also currently pioneered by the ecosystems like mangroves and increase its level of spending Government of Belize, in partnership seagrasses, fisheries, and upstream until it fully assumes the costs of with the World Wildlife Fund (WWF). ridge-to-reef areas.) Following this, conservation. A PFP program begins with the the program will need to find donors design of conservation goals and a willing to commit the initial funds financial plan to ensure that these required to achieve the conservation 25 IFC. 2022. Guidelines on Blue Finance. https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/financial+institutions/ resources/guidelines-for-blue-finance. MOBILIZING FINANCE FOR BLUE CARBON Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP (PILLAR 3) 67 BOX Emerging blue financing tools: 19 Bonds and debt-for-nature swaps Various novel funding instruments have been proposed in recent years, and some of them have been tested (Finance Earth 2022). The Global Environment Facility (GEF) provided support to the Seychelles in the past to design and issue the world’s first Blue Bond. Conceptually based on the model of a Green Bond, a Blue Bond earmarks the use of the proceeds to finance coastal, marine, and ocean-based projects (Roth et al. 2019). The Seychelles Blue Bond was a US$15 million sovereign bond sold in a private placement to three US-based impact investors: Nuveen, Seychelles the asset management arm of TIAA (which will include the bond in the TIAA-CREF Social Choice Bond Fund), Prudential Financial, and Calvert Impact Capital. Each bought US$5 million of the notes. The bond has a maturity of 10 years and a “coupon” (that is, an annual interest payment value) of 6.5 percent. The bond was secured with the GEF providing a coupon guarantee and the WB a repayment-guarantee of US$5 million, covering a third of the principle. Another debt instrument of sorts are debt-swap agreements, in which concessional (“blue”) loans are used to help a developing country convert its outstanding debt at a discount (“haircut”) and use the savings to invest in ocean conservation. Debt-swap arrangements are of specific interest after the COVID-19 pandemic, which created havoc for the balance sheets of many developing countries. A recent example is provided by the Government of Belize, which announced the conversion of US$ 553 million of its debt (about 10 percent of the total) with the help of a “blue loan” (a loan raised through a corporate Blue Bond arranged by Credit Suisse) from The Nature Conservancy. Creditors accepted a haircut of Belize 45 percent so that the actual cost of the conversion was US$ 364 million. The reduction in principle brought savings amounting to US$189, which the Government of Belize committed to funding protection of 30 percent of its exclusive economic zone (TNC 2021). More broadly, the Belize debt-swap arrangement also points to a new trend of seeking out financial opportunities for private sector investors from public finance instruments or (as in the case of Belize) philanthropic funds. Under blended-finance structures, donors—governments, multilateral development banks, and philanthropy—create credit enhancement and other risk-reduction and/or revenue-boosting incentives to crowd in private capital. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 68 CH APTER 4 Scaling Blue Carbon Opportunities: Creating a Blue Carbon Readiness Framework Over the past decade, there has been impressive blue carbon—stands at 2.4 billion tCO2e per year progress on placing blue carbon at the center of (calculated for the period 2030 onwards), the current international policymaking, and there is a growing annual output is 22 million tCO2e (number of retired set of funds and tools tailored to blue carbon credits in 2021). In Africa and elsewhere, there are investments. Yet, the gap between action and technical reasons for today’s dismal carbon-finance investment potential and reality, could hardly be performance outside the control of governments, more pronounced. Let us take the example of the including slow methodological uptake and below- African continent. As the Africa Carbon Market Initiative cost carbon prices. Yet, there are important enabling (ACMI) pointed out in the report accompanying its conditions that governments can control and that may launch at COP27 in Sharm El-Sheikh, while Africa’s enhance blue carbon habitats, while catalyzing carbon carbon credit potential—across sectors and including market activities. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 69 The creation of a bespoke Blue Carbon Readiness change. Integrated land and seascape management— Framework—bringing together data and analytics, including MSP, ICZM and REDD+—should become the regulatory and institutional aspects on the one hand, cornerstones of NDC implementation, facilitating both and financial and investment aspects on the other— better legal protection and financial opportunities. will put conservation and restoration of Blue Carbon Figure 10 provides countries with an overview and ecosystems at the center of a country’s sustainable a stepwise approach to building their Blue Carbon Blue Economy transformation, and rapidly scale Blue Readiness Frameworks. The checklist (in Appendix 1 of Carbon investments. The framework can, and should, this report) provides further guidance for execution of be built into the NDC architecture as today’s guiding Blue Carbon readiness. and most comprehensive plan for combatting climate Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 70 Figure 10 Blue Carbon Readiness Framework Blue Carbon Readiness Framework Welcome to the Blue Carbon Readiness Framework - a decision tree approach to assessing and identifying steps in pursuing blue carbon readiness within your country. Starting with Pillar 1, move your way through the tree using the below legend as a guide. Pay special attention to ‘Checklists’ which may correspond to a specific action/step. Checklists provide in-depth descriptions of steps to continue along your journey to readiness (refer to Appendix 1.) complementary actions can be completed in tandem with moving onto the next section of the tree. PILLAR PILLAR PILLAR 1 2 3 DATA & ANALYTICS POLICY & INSTITUTIONS FINANCE NDC COMMITMENTS LEVERAGE BLUE A B & IMPLEMENTATION CARBON FINANCE EVALUATE ASSESS GHG BLUE CARBON INVENTORIES ACTIONS CO₂ Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 71 SECTION COMPLEMENTARY REDD+ PRIVATE NO ACTIONS/ PILLAR PATHWAY ACTIONS/ STEPS COMPLETE ACTIONS COUNTRIES SECTOR STEPS 1 A B 2 3 1 PILLAR DATA & ANALYTICS A EVALUATE BLUE CARBON ACTIONS NO Does your country currently have any of the following blue carbon ecosystems (BCEs)? Use the links in Checklist 1 to determine if any of the Has your country previously had NOT SURE listed BCEs are present within any of the established BCEs? your country. YES NO EMERGING BCEs ESTABLISHED BCEs Macroalgae | Benthic Mangroves | Salt Marshes | Sediments | Mudflats Seagrasses NO BLUE CARBON ACTIONS YES YES AVAILABLE 1 1. Follow Checklist 2 for GHG inventories SCALE – The scale of greenhouse gas Does your country have PERFORM the following data for the steps to gather the necessary data and; removals or emissions is significant; ACTIONABILITY established BCE(s): 2. Check if relevant data can be ASSESSMENT NO extrapolated from existing policy and/ 2 LONGEVITY – The ecosystems can store • BCE extent/ area (maps, or knowledge frameworks, such as Mangroves, salt the CO2 sequestered long-term; spatial data) the Ramsar Convention or National marshes, and • Human activity data Adaptation Plan seagrass beds are 3 THREAT – Anthropogenic impacts on considered the the ecosystems are leading to CO2 YES established or emissions; “actionable” Blue Carbon ecosystems. Some emerging Blue VIABILITY – It is practically viable to 4 RECOMMENDED Conduct economic Carbon ecosystems manage the ecosystems concerned NO valuation using global may be on their way sustainably and reduce CO2 emissions Economic valuation of BCEs regional or local data to actionability if they or enhance existing carbon stock; meet all the following requirements: 5 KNOWLEDGE – The science behind these findings is sufficiently robust. • Leverage collaborations – inter- USE RESULTS FROM agency as well as the private sector COMPLETED ACTION/ – to further development of robust STEPS TO: and relevant datasets on BCE’s for YOU CAN your country • Build up your country’s capacity to MOVE ON TO CO₂ • Pilot or encourage non-state-actors collect blue carbon data by funding PILLAR 1-B to pilot Blue Carbon projects by and/or collaborating with technical providing access to site and data and scientific organizations Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 72 PILLAR 1 A B 2 3 1 PILLAR CO₂ DATA & ANALYTICS B ASSESS GHG INVENTORIES PATHWAY ACTIONS/ STEPS Are BCEs included in your country’s NO Use the Wetland Supplement and Tier 1 default GHG inventory? values (or Tier 2/3 depending on available data) to determine carbon stock values for your country’s BCE(s). Refer to Checklist 3 for steps YES and guidelines. CO₂ COMPLETE SECTION Improve your GHG Inventory via integration of WS13/R19 1 GHG • Identify where bottleneck(s) are – e.g., soil INVENTORIES Does your country apply the carbon data 2013 Wetlands Supplement NO • Review Checklist 3 for ways to improve your (WS13)/2019 Refinement (R19)? existing inventory ACTIONS COMPLEMENTARY If you are engaging YES in REDD+ • Consider developing a REDD+ FRL/FREL COUNTRIES REDD+ with Blue Carbon integration • Decide to build a separate blue carbon framework (using synergies) Has your country submitted a NO Forest Reference Level (FRL)/ Forest Reference Emission Levels YES • Review Checklist 4 (FREL)? 2 REDD+ • Confirm and iterate consistency between FOREST your Forest Reference Levels (FRL)/ Forest SECTOR PRIVATE REFERENCE Reference Emission Levels (FREL) and your LEVELS GHG inventory STEPS NO ACTIONS/ • Strengthen calculated carbon stocks USE RESULTS FROM by substituting regional/ local values COMPLETED ACTION/ in place of Tier 1 default values GHG STEPS TO: • Compare calculated carbon stock INVENTORY values to existing activity data, and IS DONE! use results to improve your GHG YOU CAN MOVE inventory ON TO PILLAR 2 • Integrate calculated carbon stocks into your FRL/FREL while improving inventory capacities Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 73 2 PILLAR CONSIDER | • Turning this procedural Extending the scope of milestone into a target, POLICY & INSTITUTIONS your NDC to account for e.g., by [Year] or when BCE(s) submitting the second NDC COMMITMENTS & Biennial Transparency • Make sure your GHG Report, [Country] will use IMPLEMENTATION 1 inventory can accurately the WS13 and account for all report emissions and anthropogenic carbon stock removals from BCE(s). If your changes in [BC Habitat] and country cannot yet do this, [BC Habitat 2]. PATHWAY you can still acknowledge the mitigation impact of BC 1 Are emissions and interventions → Move to Box removals from 2 below. IDENTIFY BCE(s) included in COMMITMENTS your country’s NDC? FOCUS ON | • Halt and reverse all ACTIONS/ STEPS YES Acknowledging degradation in [BC Habitat] YES NO mitigation impact • Restore [#] hectares of 2 of BC interventions [BC Habitat] Formulating stand-alone FOCUS ON | 1. Consider inclusion (action) targets: Accounting for Emissions in economy-wide or Reduction/Removals sector-wide (AFOLU) targets [Review Checklists 5 and 6] and/or 2. Include action-specific target COMPLETE SECTION Does your county FOR REDD+ COUNTRIES such as “restore x hectares of have a REDD+ Build reference levels for mangroves by [date]”. framework that conservation aligned with Synchronize and refine with existing policy instruments beyond integrates BCE(s)? REDD+ targets, and define mitigation (and/or climate change), notably National Adaptation sequestration targets Plans NBSAPs for restoration ACTIONS COMPLEMENTARY If you are engaging in REDD+ Review integration of BCE(s) in your REDD+ policy framework 2 IMPLEMENT NEXT STEPS 2. Develop a bespoke Blue 7. create a benefit sharing YOUR NDC Carbon Strategy arrangements 3. Work through MSP and ICZM 8. Policy reforms for BCEs 1. Where feasible, prepare a 4. Focus on land tenure and conservation, restoration, or COUNTRIES REDD+ cost-benefit analysis for community involvement sustainable management (NBS). conservation and restoration 5. Tackle bottlenecks to NO options (use CWON and other Refer to Checklist 7 for a detailed Do you have an NDC datasets for valuation) implementation 6. Design the plan with Section 4 list of next steps Implementation Plan? NO (Financing) in mind YES Set out investment parameters Promote private sector initiatives ADDRESS THE and clear guidance for the private and create institutional structures PRIVATE SECTOR: SECTOR PRIVATE sector engagement (cf. Section 4: for private sector and community Financing, see below) involvement (planning, decision making, implementation FOCUS ON | Design 1. Identifying and using or • Technical governance (task force / of Bespoke Governance synchronizing with parallel technical unit) for FRL calculation, Framework governance frameworks on MRV, and other Does your plan adaptation/resilience, private • Institutions & policy governance STEPS NO ACTIONS/ [Review Checklist 8] incorporate appropriate sector initiatives, technology • Financial governance (receiving NO institutional/governance FOR REDD+ COUNTRIES transfer, and more. and distributing funding in line frameworks? Checking if your REDD+ framework 2. Developing an institutional/ with benefit sharing arrangements) provides key structures (to be governance framework: • Community governance models to adjusted as needed) drive implementation YES • Use input data to inform biennial • Seek synergies with policy USE RESULTS NDC reporting and accounting actions across the board YOU CAN FROM COMPLETED • Design commitments for (SDG focus) MOVE ON TO ACTION/ STEPS TO: subsequent rounds of NDCs PILLAR 3 and long-term plans Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 74 PILLAR 1 A B 2 3 3 PILLAR FOCUS ON | Developing a framework that integrates with FINANCE the implementation plan LEVERAGE BLUE CARBON FINANCE 1. Scrutinizing existing funding flows to benefit/disadvantage Blue PATHWAY Carbon investments 2. Conduct Stock-take of financing approaches (including the use of mechanisms such as Article 6 and jurisdictional REDD+/RBCF) and sources/instruments (concessional and non-concessional, considering Does your country innovative business models, see ACTIONS/ STEPS have a blue further below) carbon finance 3. Set out stable investment and investment parameters for the private sector, framework in place? including with respect to carbon finance: Define and allocate carbon YES NO rights, create mandates for carbon trading, and present models for community involvement and COMPLETE SECTION benefit sharing FOCUS ON | Accessing Grant CONSIDER | Operationalizing Funding in line with survey above – Have you leverage tools such as: operationalized NO Accessing grant funding for capacity-building specific funding tools? ACTIONS COMPLEMENTARY • Concessional instruments, including and related needs, namely: blended finance instruments • Design and operationalize the governance and philanthropy YES framework • Inventory work • Dedicated sovereign and/or corporate • BCEs mapping, carbon stock assessments debt finance instruments (blue loans, • Preparation of a pipeline of shovel-ready blue bonds) projects • Blue infrastructure /NBS finance • Conceptualization of blue infrastructure COUNTRIES REDD+ finance • Business models that stack multiple revenue streams Does your country • Results Based Carbon Finance (RBCF) intend to use carbon • Blue carbon project finance markets as a means of (carbon markets) investment? SECTOR PRIVATE Review Checklist 9 for examples and YES NO guidelines on leveraging investment. 1 B STEPS NO ACTIONS/ CONSIDER | • Using Article 6 of the Paris Climate Agreement; 1 A 2 • Allowing Voluntary Carbon Markets with corresponding adjustments YOU ARE READY TO ACCESS CLIMATE & CARBON FINANCE! 3 Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 75 4.1 Blue Carbon Data Requirements for Pillar One: Data and Analytics Nationally Determined Contributions Nationally Determined Contributions (NDCs) have are increasingly likely to check a country’s NDC, and gained importance as they reflect a country’s how a specific measure fits into the wider context of climate mitigation vision, as well as its technical country targets and policies and measures, before and sustainability plans. NDCs were first designed making a funding decision. It is important to note as a technical tool for countries to formulate their that Blue Carbon ecosystems have multiple and GHG mitigation targets (or “commitments”). Yet, they deep exposures to NDCs —including for their climate quickly evolved as both comprehensive high-level mitigation density. Their close integration into NDCs visions for short-term and long-term action on climate and the definition of clear and ambitious, but realistic and sustainable development, and as technical— and implementation-ready, targets is essential. sometimes extremely detailed—implementation plans. As such, NDCs have become gatekeepers for As described in Figure 10, the Blue Carbon formulation of high-level policies; provision of technical Readiness Framework should focus on Blue Carbon capacity and expertise; and international investment integration in NDCs and, in the process, follow in climate action, including Nature-based Solutions. four steps: Donor governments and private-sector funders alike Determine actionable Technically assess a Define tailored Blue Carbon Design financial Blue Carbon habitats, country’s inventory and targets and provide an mechanisms to extent, condition, and REDD+ reference level; NDC implementation leverage finance. economic value of goods plan that outlines both and services; a Blue Carbon strategy (in line with a country’s REDD+ framework, where available) and an institutional (governance) framework to lead on technical, policy, financial, and community aspects; and Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 76 4.1.1 Determine actionable Blue Carbon ecosystems and their economic value Coastal countries should determine their actionable Governments are also advised to develop a holistic BCEs in accordance with available data. When assessment of the value of their blue natural capital preparing their GHG reporting (GHG inventories), and the specific natural capital value of their coastal formulating NDC updates (specifying the scope, wetlands to 1) inform planning efforts (e.g. MSP accounting rules, and actual targets and actions), and ICZM) in general, and environmental impact and accounting for NDCs, governments should take assessments in particular; 2) better understand stock of the existing science on BCEs along their costs and benefits of managing BCEs; and 3) direct coastline and their exclusive economic zones (EEZ). policymaking (see Box 20). Valuation will help frame the Then, if datasets such as the World Bank Technical case for conservation and restoration differently: less as Report Estimating Global Carbon Storage In Mangrove an opportunity cost, and more as an opportunity value. Ecosystem from the CWON 2.0 (forthcoming), Ocean+, It will also allow governments to identify value hotspots and others presented in this Blue Economy Data and and priorities for action that ultimately enhance, not 1 Tools Guidance Note are available, they should map hamper, the Blue Economy. Finally, it will promote the different Blue Carbon habitats and determine which investments in BCE protection and restoration that yield are considered actionable (see Chapter 1) and offer the greatest returns in enhanced ecosystem services mitigation opportunities. At present, actionable Blue (including carbon storage and sequestration) as well as Carbon habitats are limited to mangroves, seagrass tourism, fisheries, coastal risk-reduction, and more. beds, and salt marshes. BOX 20 Valuating blue ecosystem services Belize seagrass beds. The quantification of protected status and where prioritizing carbon storage and sequestration, and Blue Carbon strategies would provide For the past two decades Belize of optimized co-benefits, permitted the greatest delivery of co-benefits to has pursued efforts for innovative, the discussion of realistic, high- communities. These findings informed evidence-based target setting for value, time-bound targets and the Belize’s updated NDCs (submitted to coastal zoning and management identification of priority locations for the UNFCCC in fall 2021) to include purposes, by accounting for and mangrove protection and restoration. an additional 12,000 ha of mangrove valuating the multiple benefits of protection and 4,000 ha of mangrove its coastal ecosystems, specifically As part of the assessment, locations restoration, respectively, by 2034. mangroves and—more recently— were mapped that at the time lacked 1 World Bank. 2022. Blue Economy Data and Tools. https://documents1.worldbank.org/curated/en/099610006152282116/pdf/ P1750970004c390c60b64707db29cb15a4c.pdf. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 77 4.1.2 Technical assessment of inventories and REDD+ reference levels Governments are advised to test the completeness In addition, governments will need to have robust and accuracy of their inventories of actionable BCEs institutional systems in place for data management, and—if available—of their REDD+ reference levels. It quality control, and reporting, to ensure that their is important to verify whether the (previous or current) estimates are accurate and transparent. Building NDC has yet made a commitment to use the IPCC’s this capacity can be a complex and resource-intensive 2013 Wetland Supplement. The guidelines for wetlands process; but it is essential for improving a country’s provide a standardized framework for estimating and inventory, allowing governments to formulate precise reporting GHG emissions and removals from wetlands, mitigation targets for these ecosystems, and tracking including Blue Carbon. While the tool is generally action in the long run. considered to be user-friendly and, importantly, offers a wide range of default emission factors for countries At the level of REDD+ accounting, it is important to to use, governments that commit to reporting on first check the scope of coverage. Many systems will Blue Carbon emissions and removals in line with the cover emissions and removals from mangroves, but guidance will need to have the capacity to collect, other BCEs are likely left out. Then, the attention should analyze, and apply data on Blue Carbon stocks and shift to the extent to which all relevant carbon pools for fluxes. This requires technical expertise in areas such mangroves are addressed. Often, REDD+ reference levels as remote sensing, GIS, and carbon accounting, as still exclude soil carbon in mangrove forests or generally. well as the ability to collect field data on Blue Carbon Reference level documents are outspoken about the ecosystem characteristics and carbon stocks. exclusions, so there is little room for ambiguity. 4.1.3 Defining country-tailored Blue Carbon targets Each (coastal) country has an interest in formulating “the inventory holds at present no [robust] [complete] Blue Carbon-specific commitments and actions, data on emissions and removals from coastal and each country can put forward a commitment to wetlands. Relevant data will be gathered by [add action, not only on adaptation but also on mitigation. year] and the NDC scope and accounting approach In other words, no country should refrain from putting will include coastal wetlands and the 2013 Wetland forward a Blue Carbon-specific initiative. If a country Supplement by [add year]” (see Box 21). has no reliable data on the existence or distribution of BCEs, or if a country lacks the capacity to use the 2013 Wetland Supplement, all these items should become accountable action items. When noting the scope of emissions and the reporting guidelines used, the country concerned should specify that Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 78 BOX 21 Planning for the 2013 Wetlands Supplement Seychelles and waste sectors. However, it made to measure the rate at which coastal an important concession on future and marine ecosystems sequester and For the past years, Seychelles has been steps, with the following statement: store carbon. Through the application mapping the seagrass beds spread of cutting-edge technologies in across its exclusive economic zone “Seychelles is committed to partnerships specifically designed (EEZ). When the country submitted recognizing within its climate goals to strengthen local, scientific, its NDC update in 2021, consolidated the interlinked climate, ecosystem methodological and governance data was not yet available, and the and biodiversity benefits provided capacities, Seychelles intends to Government assessed that it was not by its mangrove and seagrass map the full extent of seagrass and yet able to apply the 2013 Wetlands ecosystems, including fully mapping mangroves (Blue Carbon) habitats Supplement for its inventory reporting. their extent and assessing their within Seychelles’ territorial sea carbon stock capacity. The 2013 and EEZ and assess carbon storage As a result, Seychelles kept the NDC IPCC Wetlands Supplement provides capacity within these ecosystems.” scope restricted to energy, industry, a framework that allows countries A similar approach should apply to REDD+ reference BOX levels and—more broadly—the integration of Blue Carbon in a country’s REDD+ framework (see also 22 Action-specific Blue below, Section 4.3). If sufficient data (for instance, Carbon targets on the coverage of soil carbon) is not available, the constructive solution is to make a commitment Belize concerning coverage and integration by a specific year, or for the next iteration of the NDC. Since first mentioning coastal wetlands in its intended NDC in 2015, delving into the topic of its NDC in 2016, On content, similarly, a country may not have sufficient and an update in 2021, Belize has extended the coverage of Blue Carbon emissions and removals and data confidence or may hold structural reservations has built on the list of interventions planned. Among the about integrating Blue Carbon targets into an economy- list of action items, the latest NDC iteration includes the wide or land-use sector target. That does not mean that following commitment: Blue Carbon should be ignored for the formulation of “Restore at least 2,000 hectares of mangroves, (mitigation) targets. Countries can always set action- including within local communities, by 2025, with an specific targets: for example, additional 2,000 hectares by 2030…” (from Belize’s NDC 2021). “Halt [all] [net] seagrass loss by a specific date or restore a specific area or an area size of mangroves by the NDC’s target date” (see Box 22). Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 79 4.1.4 Nationally Determined Contributions’ references on finance In their NDCs, countries can reflect the financial information on its high-level vision for international and non-financial support they need for specific finance and the use of specific tools and actions. For actions with Blue Carbon relevance, a mechanisms. If a country wishes to add more detail, country can outline, for instance, what type of support the approach to carbon finance would particularly it needs to implement the application of the 2013 benefit. As countries are piloting transactions under Wetland Supplement for its inventory. With such Article 62 of the Paris Agreement, no country has yet specific requests of support, governments can navigate committed to a transaction based on a Blue Carbon international donors and grant facilities to establish intervention. Clarifying at the NDC level that Blue technical assistance programs, including the one Carbon is a priority for an Article 6 transaction, would offered under NOAA’s Blue Carbon Inventory Program. provide a powerful signal to partner and/or other Apart from technical assistance needs, governments donor countries. can use the NDCs to outline their financing approaches for specific interventions. Belize, for instance, included For (project-based) carbon finance, countries are a section in its latest (2021) NDC that reads as follows: advised to clarify: “Explore alongside Article 6 of the Paris Agreement, • Whether and how they see Blue Carbon projects new financing options to support forest protection integrated into their REDD+ efforts (for example, and restoration, including REDD+ performance- through “nesting”) based payments, multilateral and bilateral funds, • How they see carbon finance as part of their targets insurance products, debt-for-nature swaps, private (for instance, carbon finance accounts towards investment, carbon credits and bonds, and other conditional NDC targets, which are set subject to innovative conservation financing mechanisms…” international funding) • Whether they foresee a domestic regulatory While this is not very detailed or specific, the framework to accompany voluntary carbon commitment provides other governments as well as standards (for example, on corresponding private investors with basic—yet extremely useful— adjustments), or not. 2 Article 6 of the Paris Agreement allows countries to voluntarily cooperate with each other to achieve emission reduction targets set out in their NDCs. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 80 4.2 Institutional and Legal Framework for Pillar Two: Policies and Blue Carbon Institutions Governments and regulators play a crucial role 1.1.1 These past decades have seen dramatic in establishing the enabling environment for improvements when it comes to adopting Blue Carbon development through policies and and installing legal protection regimes. regulations that level the playing field. For the Many countries have introduced protective sustainable management of BCEs and for channeling bans, such as the ban on cutting mangroves investments into their enhancement, it is crucial to (Slobodian and Badoz, eds. 2019) and—less work within a robust institutional framework, with frequently—a ban on cutting or deteriorating a clear legal basis, and to have all stakeholders seagrasses (Griffiths et al. 2020). Aside from participate and co-design the effort. Public law bans, many countries have specific protection (command-and-control), community-based, and through MPAs and legal frameworks for individual (private law) protection measures are community-based mangrove management. critical and often lacking. Successful planning can help While governments have made improvements overcome isolated zoning, permitting, and policymaking throughout the past two decades, overall more broadly. The baseline often is non-integration. efforts still do not match the threat, especially Holistic planning can also help overcome overlapping, in countries with the highest rates of if not dysfunctional, administrative responsibilities. degradation, including Southeast Asia. It is For this to happen, it is important that governments hoped that the new protection targets agreed choose hard legal and institutional frameworks, with under the GBF will specifically benefit coastal a permanent design, combined, as appropriate in systems, and that governments employ the country context, with soft law or project-based community-based management tools for the approaches. Within these frameworks, it is crucial to operation of protected areas. establish clear and specific targets for Blue Carbon conservation, restoration, and management—including in terms of monitoring and tracking. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 81 4.2.1 Blue Carbon and integrated spatial planning Policy makers often struggle to formulate monitoring of management actions. Lastly, OECMs are comprehensive regulatory frameworks beyond gaining attention in international policy discussions the demarcation of protected areas. Planning laws as new conservation approaches, that go well beyond (including on infrastructure planning); agricultural the established protected areas such as MPAs. OECMs policies; water and waste regulation all yield a massive are distinguished from protected area management regulatory imprint for natural habitats, including coastal by not having a primary conservation objective, while habitats. Yet, these laws, regulations, and policies are at the same time being capable of delivering in-situ rarely harmonized with the specific aim of boosting conservation of biodiversity (IUCN, 2019). Owing to conservation and restoration. their importance, they have also been included in the GBF as means to reduce biodiversity threats. Several integrated planning tools—including marine spatial planning (MSP), integrated coastal zone MSP and ICZM are used to inform new policies management (ICZM) and other effective area-based and regulations for, among others, the sustainable conservation measures (OECMs)—help governments use of marine resources (including BCEs), and to regulate the coastal and marine space through more support future investments that promote growth, holistic and collaborative approaches. The Blue generate jobs, and support local communities Carbon Readiness Framework should use them. (see Figure 11). OECMs can be additional tools MSP refers to the process that helps to guide the use for promoting biodiversity conservation, while and management of ocean and coastal resources regulating BCE preservation and other sectors (for in a coordinated and sustainable manner. It is a example, water and waste). Integrated marine spatial tool for balancing competing uses of marine space, planning and management de-risks the wide range of including coastal development; (commercial) fishing; economic sectors for future investments and has the shipping; energy production; as well as conservation potential to mobilize additional financial resources, and restoration, taking into account economic, social, including through the private sector. Overall, MSP and and ecological considerations. ICZM, on the other ICZM can provide a valuable tool for the conservation hand, refers to the management of the coastal zone and restoration of BCEs, which are important for with respect to the marine environment, as well mitigating climate change and supporting biodiversity as economic usages of land and water. It aims to and ecosystem services. By integrating Blue Carbon achieve sustainable development by integrating the considerations into marine-planning processes, MSP management of coastal and marine habitats with can help ensure that these ecosystems are effectively economic activities, across sectors, from agriculture protected and managed for future generations. On the to urban planning and tourism. Similar to MSP, ICZM other hand, OECMs, materialized through government seeks to balance environmental, economic, and social actions that have biodiversity conservation benefits objectives, and to promote stakeholder participation as secondary objectives (such as policies to protect and collaboration. It typically involves the identification or sustainably manage water bodies, for example) can of coastal issues and problems, the development contribute to enforcing the ecological connectivity of management plans, and the implementation and between protected areas or other areas of high Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 82 biodiversity, adding to the viability of preserving by combining co-benefits of BCEs and biodiversity these. In other words, OECMs can be used to increase conservation with adaptation activities, such as the synergies between mitigation and adaptation actions, sustainable management of water resources. MSP and ICZM informing new policies and regulations for the sustainable use of Figure 11 marine resources, and job generation Coastal Biodiversity construction No fishing setback hotspots Source: World Bank 2022 The World Bank, supported by PROBLUE, produced the This toolkit closes some of the knowledge gaps and Marine Spatial Planning for a Resilient and Inclusive highlights countries’ opportunities to take advantage Blue Economy Toolkit, comprising a series of guidance of planning and investment options to improve food notes and factsheets related to the different MSP security and livelihoods, and to strengthen community phases, and the data and tools to inform these efforts. resilience to natural and economic shocks. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 83 4.2.2 MSP and ICZM process and use The legal nature of MSPs and ICZM—and their legal ensure that these areas are protected and managed implications—can differ considerably. While the effectively, contributing also to the GBF and its process as such often has a mandatory legal character, fresh 2030 targets. and while there are often preset institutional linkages • Integration of conservation and restoration goals (executive or advisory boards with heads of various in broader national strategies: MSP and ICZM agencies as pre-set members), the MSP/ICZM outputs can facilitate the integration of conservation and may be binding for government agencies or have restoration goals into broader marine management indirect legal value (for instance, to guide administrative strategies. This can help ensure that Blue Carbon discretion or the interpretation of law), or they may habitats are not overlooked in marine planning merely be recommendations. Whatever the legal processes and that management efforts are structure, MSP and ICZM can provide considerable coordinated across different sectors and jurisdictions. opportunities for the conservation and restoration of • Improved monitoring and research: MSP and Blue Carbon habitats, while generating a wide array ICZM can provide a framework for monitoring of positive effects for users of coastal environments, and research to better understand the ecological benefitting the blue economy at large (see Box 23). functioning and carbon storage capacity of BCEs. This information can help inform management In the MSP Guidance Note, the World Bank makes decisions and conservation efforts. recommendations on the strategic use of MSP/ICZM • Support for ecosystem-based management: for BCEs conservation and restoration, including: MSP and ICZM can facilitate the implementation of ecosystem-based management approaches, which • Identification of important Blue Carbon areas: aim to protect and restore the ecological integrity MSP and ICZM can help identify and prioritize of marine ecosystems. This can help promote the BCEs, including those that are particularly resistant health and resilience of Blue Carbon habitats and to global sea-level rise or that can easily migrate the services they provide, such as carbon storage, inland as a result of sea-level rise. This can help erosion control, and support for fisheries. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 84 BOX 23 Marine spatial planning and Blue Carbon: Examples from Indonesia and Mozambique Indonesia manage marine and coastal areas for for the development and management various uses, including conservation, of Mozambique’s national marine Following years in which Indonesia’s fisheries, aquaculture, shipping, space, as defined under the United government agencies moved without and tourism, among others. The Nations Convention on the Law of the a clear legal framework on marine MSP framework is also designed Sea, considering both current and spatial planning (resulting in ad to enhance coordination among potential marine uses. The POEM hoc engagement, long delays, and various sectors and stakeholders was developed through a broad a reluctance to design specific (including government agencies, participatory process led by the targets and plans), Indonesia local communities, and the private Ministry of Sea, Inland Waters and adopted its Marine Spatial Planning sector) to ensure the sustainable Fisheries, involving the engagement (MSP) framework in 2017. The MSP development of Indonesia’s marine of more than 15 ministries at framework, adopted through the and coastal resources. national and subnational level, Indonesian National Ocean Policy and consultations with dozens of by the Ministry of Marine Affairs Mozambique organizations from the private sector, and Fisheries in collaboration with civil society, and academia. The other government agencies and Mozambique has developed an POEM spatially defined priority areas stakeholders, aims to promote MSP framework, which goes under for considering the establishment of sustainable use and management the name of POEM, to promote additional marine protected areas, in of Indonesia’s marine and coastal sustainable use and management line with the High Ambition Coalition resources, through a spatial planning of its marine and coastal resources. for Nature and People’s goal of approach. The MSP process is Approved in November 2021, the achieving the protection of 30 percent ongoing and aims to identify and POEM set out a vision and guidelines of the world’s oceans by 2030. 4.2.3 Marine protected areas and Blue Carbon Blue Carbon should be considered in Marine MSP must respect existing MPAs, and may provide Protected Areas (MPAs) designation and for future MPAs, but in the sense that MPAs can be management. MPAs are areas in the ocean that used in combination with other measures (such as are set aside and managed for the protection and zoning, fisheries management, and ecosystem-based conservation of marine ecosystems, species, and approaches) to achieve multiple objectives, balance habitats. They represent a key benchmark for competing demands for ocean space and resources, measuring the success of coastal countries against and create synergies. For example, strict conservation the 30 percent protection target agreed under the MPAs can be used to restore depleted fish stocks for Global Biodiversity Framework. They are also a key areas outside the MPAs and reinvigorate the local MSP component. This is not only in the sense that fishing industry. The integration of MPAs into MSP Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 85 requires careful consideration of ecological, social, and to ensure effective implementation and management economic factors, and engagement with stakeholders (see Box 24). BOX 24 Designing and managing marine protected areas Belize cruise ships) and more targeted EAFM-based (Ecosystems Approach eco-tourism (“sea safaris”). It also to Fisheries Management) network The Turneffe Atoll Sustainability includes a carbon finance element to of MPAs that cover over 1.4 million Association (TASA), a local not- support TASA’s long-term financial hectares of coastal and marine for-profit entity, has since 2012 sustainability. The MPA-specific habitats. These MPAs are managed co-managed the Turneffe Atoll initiative speaks to broader marine by local communities, with support Marine Reserve (TAMR), a marine spatial planning (MSP) objectives from the government and non- protected area (MPA), under a power- and can serve as blueprint for MPA governmental organizations. In sharing agreement with the Belize engagement through MSP. addition to MPAs, the Philippines Government. TASA has recently has also implemented a system of secured “blended” funding (grants Philippines fisheries management that includes and loans) to pursue a strategy that the establishment of closed seasons, combines classic MPA management Under the auspices of the Department size limits, and gear restrictions, as with wider sustainable economic of Environment and Natural Resources well as the promotion of alternative activities in the region. and using broad powers provided livelihoods to reduce fishing pressure. by the Philippine Fisheries Code One of the key factors contributing to The strategy covers surveillance, of 1998, the National Integrated the success of MSP in the Philippines monitoring, and enforcement, while Protected Areas System Act of 1992, has been the active involvement of addressing the wider context of and the Clean Water Act of 2004, local communities in the planning and classic tourism (mostly visits from the Philippines has developed an management process. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 86 CO₂ 4.3 Blue Carbon and REDD+ Within the Blue Carbon Readiness Framework, This is not a contradiction but rather the foundation for governments should focus on both the integration using the policy tools in the most synergetic and even of Blue Carbon into their REDD+ frameworks and synchronized way. the design of a separate Blue Carbon strategy. 4.3.1 Technical REDD+ integration Many coastal countries have gone through years of protocols (including redress mechanisms). These REDD+ preparations (REDD+ readiness), building procedures and protocols can and should be used everything from governance tools to REDD+ and refined to include mangroves—and perhaps salt reference levels, from forest monitoring systems to marshes, seagrass beds, and even kelp forests (should community engagement modes, and from business the latter become actionable BCEs). plans for alternative land use to safeguards 4.3.2 Institutional REDD+ integration Over the past two decades, REDD+ has dramatically These structures can be used to define a Blue changed forest governance in many developing Carbon governance framework either by integrating countries. Technical units were created at central Blue Carbon into the existing structures, or by government level, and sometimes at regional level, to replicating institutional templates that have proved gather data, establish monitoring systems, and oversee successful in the REDD+ context. Navigating Blue implementation. Cross-ministerial REDD+ policymaking Carbon responsibilities among core ministries— namely bodies emerged to set out strategies and steer forestry, fisheries and water—should receive specific through the REDD+ readiness process. Administrative attention. Hierarchies for technical and policy units responsibilities were re-assigned in line with REDD+ should be clear and, while these bodies must act with needs, including with respect to results-based finance broad buy-in from across government levels, functional responsibilities. Many REDD+ systems have given rise coherence and efficiency remains the goal. The to multilayered institutional “nesting” arrangements creation of a new, independent agency—reporting to (Lee 2018). A growing number of countries has chosen the prime minister or the president—may be a suitable to define a bespoke REDD+ funding and benefit- way forward for many countries. sharing architecture (see Box 25). Platforms for PPP engagements within REDD+ frameworks can be found across countries. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 87 BOX 25 Mangroves REDD+ frameworks Madagascar forests. The program has a strong frameworks for community-based emphasis on securing land tenure for mangrove management, such as the Madagascar is a biodiversity hotspot local communities, and on promoting national policy on community-based with significant areas of mangroves, community-based natural resource forest management, which recognizes seagrass beds, and other coastal management. The national REDD+ the rights of local communities to forests. As in many other coastal program in Madagascar includes a manage and benefit from mangrove areas around the world, these habitats range of activities related to mangrove forests. Overall, Madagascar’s REDD+ have been threatened by a range conservation and restoration, such as program for mangrove conservation of factors, including deforestation, the development of community-based and restoration has been recognized overfishing, and climate change. To management plans, the establishment as a successful example of integrating address these challenges, Madagascar of community-based monitoring climate-change mitigation and has developed a national REDD+ systems, and the implementation adaptation with community-based program that includes a focus of sustainable livelihood activities natural resource management. It has on mangrove conservation and for local communities. To support the potential to contribute significantly restoration, as well as conservation these activities, the Madagascar to global efforts to address and restoration of other coastal Government has also established legal climate change. 4.3.3 International REDD+ support While overall REDD+ financial flows may remain The development of benefit-sharing schemes, such modest, there is a strong network of international as the ones developed under the Enhancing Access partnerships on capacity-building and bilateral to Benefits while Lowering Emissions (EnABLE) and multilateral funding frameworks, including multi-donor trust fund from the World Bank, are the World Bank’s Forest Carbon Partnership Facility critical for social equity, and long-term sustainability (FCPF). They should be used to offer windows for Blue of carbon investments. These efforts enhance Carbon interventions. Many existing REDD+ programs the inclusion of marginalized communities and will provide the framework for jurisdictional Blue disadvantaged groups as beneficiaries in Emission Carbon interventions, securing size and reducing the Reductions Programs (ERPs) under the different carbon risk of leakage. The mitigation density of Blue Carbon finance trust funds, to maximize their carbon and interventions should help navigate more funding per non-carbon benefits. Achievement of this objective area for Blue Carbon habitats than terrestrial habitats. is expected to contribute to broader outcomes, Credits may also be stacked with unique co-benefits, including improvement in the resilience of livelihoods, which raise the level of interest from donors, and local biodiversity conservation, and climate change communities that may benefit from them. mitigation (see Box 26). Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 88 BOX 26 Community participation, and land and marine tenure It is estimated that communities habitat outcomes (Viet 2021). REDD+ support frameworks hold as much as 65 percent of the Ecosystems held by IPLCs with secure also offer community-based world’s land area through customary, land rights are generally associated management approaches that focus community-based tenure systems, with lower rates of deforestation, on the recognition of land tenure and even though only some 10 percent reduced greenhouse gas emissions, equitable benefit-sharing. The EnABLE of land ownership by indigenous better biodiversity protection, and program,4 for instance, set up in peoples and local communities improved livelihoods. December 2020 with a EUR 20 million (IPLCs) is formally recognized (Rights grant from Germany, aims to mobilize and Resource Initiative 2015). Simplified tracks for legal recognition up to US$200 million for commitment In coastal zones, small-scale fishers of IPLCs, and the design of community and disbursement between 2021 play a significant role in the global governance tools, can help address and 2030, including US$100 million fisheries sector. They represent about these gaps, and provide a strong basis earmarked to support inclusion in 90 percent of the world’s nearly for the sustainable management of Forest Carbon Partnership Facility 51 million capture fishers, of whom critical coastal Blue Carbon habitats. (FCPF) REDD+ programs. EnABLE- about half are women. Small-scale MSP and ICZM frameworks are funded activities are guided by the fishers produce half of all global fish particularly suitable for ensuring notion that: catch and supply two thirds of the fish social inclusion. Building on smart, consumed by people (USAID N.D.). disaggregated data (providing • REDD+ programs must contain information according to sex, age, strong benefit-sharing plans that Despite their social and economic specific groups, and so on) and recognize community tenure and relevance, land and coastal habitats integrating culturally sensitive stakeholder efforts, while being suffer from a low rate of (customary) consultation and respect for existing socially inclusive tenure recognition. This also cooperatives, they also unlock the • The design and execution of the has ramifications for the state of potential of women and marginalized programs and benefit-sharing (sustainable) habitat management. groups as employees, leaders, and plans are stakeholder- and 3 Community ownership not only decision-makers (World Bank 2021). community-driven. correlates with, but leads to, positive 3 World Bank 2021, “Gender, Marginalized People and Marine Spatial Planning,” at https://documents1.worldbank.org/curated/ en/924011636704855990/pdf/PROBLUE-Gender-Marginalized-People-and-Marine-Spatial-Planning-Improve-Livelihoods-Empower- Marginalized-Groups-Bridge-the-Inequality-Gap.pdf. 4 https://www.worldbank.org/en/topic/climatechange/brief/enable-enhancing-access-to-benefits-while-lowering-emission. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 89 4.3.4 Blue Carbon stand-alone approaches There are two main areas for independent Blue As they may not be easily integrated into REDD+ Carbon development. One concerns habitats that fall strategies and governance models, specific policy outside the scope of a country’s REDD+ framework; frameworks are needed to access and convert this will often be the case for seagrass beds and salt degraded lands, mitigate the risk of conflicting use, marshes. The other concerns the importance of Blue manage leakage, and much more. Carbon restoration. A multitude of factors make BCE restoration a global priority: Therefore, stand-alone Blue Carbon approaches are needed. As in the case of forest landscape restoration High degradation trends (past and present); (Sapkota and Hoang 2020), these approaches High economic value of BCEs, including the should be designed to closely resemble existing resilience value for coastal communities faced REDD+ frameworks but with their own strategy and with sea-level rise and coastal erosion; governance, as well as their own technical framework. High mitigation density of BCEs; and Potential conflicts from overlapping policy frameworks Simplicity of mangrove restoration (as in the case of mangroves, which may be covered (Ellison et al. 2020). a priori by both REDD+ and a bespoke Blue Carbon framework) should be solved through nesting models. 4.4 Financing Approaches Pillar Three: Finance As stated above, in order to position BCEs at the to be recognition of the economic value of blue natural heart of the Blue Economy and accelerate the capital and scaling up of available financing. implementation of Blue Carbon strategies, there needs 4.4.1 Scaling up Blue Carbon finance Leveraging Blue Carbon finance, which includes to finance, fostering sustainable private investment, investing in conservation and restoration-focused and providing an enabling environment for investors. Nature-based Solutions in the most effective and A national Blue Carbon framework should prioritize the efficient way, requires scaling up of available following on the finance front: funding. This can be achieved by simplifying access Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 90 • Regularly analyze existing fiscal allocations and Carbon development. The financial analysis should financial flows in the Blue Economy, to better consider positive funding, such as funding for the spend the resources available and thereby development and management of MPAs, NbS, achieve results focused on sustainability and sustainable supply-chain development, and law integration. The World Bank developed the enforcement. It should also identify and withdraw Blue Public Expenditure Review to guide countries direct and indirect funding of key drivers of national in their assessment of how public expenditures degradation of BCEs (such as environmentally address issues related to coastal and marine harmful subsidies) or other traditional financial resources, environmental degradation, and support for aquaculture and agriculture that does development aspirations that depend on these not effectively mitigate degradation risks. blue resources and environments—including Blue Figure 12 Figure representing budgetary allocations for the Blue Economy development Source: World Bank 2022. “Blue PER Factsheet”. • Conduct a stock-take of complementary climate and nature commitments); as well as funding mechanisms and specific financial jurisdictional (regional or state-level) mechanisms instruments that induce sustainable funding like Blue Carbon-focused jurisdictional REDD+. for BCEs. This includes policy; debt and non- Multilateral development banks play an important debt instruments such as taxes and fees; Blue role in bringing together multiple actors, building Bonds (e.g. commercial or multilateral banks); technical capacity, and mobilizing finance through multilateral development banks’ concessional/ non-concessional and concessional instruments non-concessional loans; grants (e.g. trust (for example, PROBLUE, PROGREEN, Global funds, philanthropy), private sector investments Partnership on Sustainability, Global Environment (e.g. corporate social responsibility, or corporate Facility, and so on) (See Box 27). Non-state-actor- Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 91 driven sustainable business models and initiatives and energy infrastructure linked to mangrove that monetize ecosystem services by “stacking” restoration, sustainable shellfish-farming, tourism- multiple revenue streams from ecosystem- funded MPA management in public-private generated goods and services should also be partnership, climate-resilient seaweed cultivation, considered. Examples include initiatives on waste among others. BOX 27 Strategic deployment of concessional resources: PROBLUE In 2018, the World Bank announced PROBLUE focuses on four main • Helping governments build capacity PROBLUE, a Multi-Donor Trust Fund themes: to manage their marine and coastal that supports the sustainable and resources in an integrated fashion integrated development of marine and • Sustainably managing fisheries and (including the development of Blue coastal resources in healthy oceans. aquaculture; Carbon as a Nature-based Solution PROBLUE supports SDG 14 (Life Under • Addressing and preventing the to climate change), to deliver Water) and is aligned with the Bank’s threats posed to ocean health by more and longer-lasting benefits twin goals to end extreme poverty marine pollution; to their respective countries and increase income and welfare • Supporting a sustainable economy, and communities. in a sustainable way, by providing with a focus on tourism, shipping, financial support, advisory services, and offshore renewable energy; and and technical expertise across all ocean sectors. • Develop blended finance mechanisms to or high-net-worth individuals) and are used in a make Blue Carbon investments attractive. way that removes uncertainty or risk (IFC 2023).5 When traditional finance is insufficient to attract (see Box 28). investment for nascent projects, blended finance • Identify large-scale Blue Carbon opportunities can come into play. Blended finance is a model to attract investments. Larger-scale opportunities that allows investment of different types of are the main draw for asset owners and managers capital alongside each other—such as grants and to increase their exposure to natural capital concessional finance (for example, low-interest investments. Aggregating several projects, and loans and price guarantees). These funds come pooling services and expenses, would help lower from governments, multilateral development banks, costs and increase the overall ticket size of private sector, and philanthropic elements within the investments. civil society (such as not-for-profit organizations 5 International Finance Corporation. 2023. Deep Blue—Opportunities for Blue Carbon Finance in Coastal Ecosystems. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 92 BOX 28 Blue Carbon opportunities for financial institutions: International Finance Corporation There are opportunities for generally high (three-star) impacts frameworks to evaluate the use of financial institutions to support the for mitigation and adaptation; relevant proceeds; and development of the Blue Carbon • Supporting insurers in developing • Revising definitions and metrics markets, including: markets (through financial for climate-related activities to assistance and advisory services) to define direct and nested coastal • Revising existing guidelines for tailor flood-risk policies to wetland wetland conservation and blue finance to add red (No-Go) enhancement interventions; restoration activities. and green (Go) lists for the blue • Building on experience with finance areas, ensuring that no issuing Green Bonds, designing (Source: International Finance new deforestation or degradation “blue” bond products to focus on Corporation 2023. Deep of coastal wetlands happens and coastal wetland conservation and Blue—Opportunities for Blue Carbon clarifying that coastal wetland restoration activities, and defining Finance in Coastal Ecosystems.) ecosystem interventions have workable metrics and impact Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 93 Blue Carbon interventions depend on key building regulatory and investment frameworks can learn from blocks to ensure their effectiveness. Blue Carbon decades of REDD+ experience (Table 6). Table 6 REDD+ building blocks and reference resources Element Description Resource Legal and Legal and institutional frameworks are The FCPF’s Readiness Fund has created a normative institutional required to enable access to results- framework for REDD+, formulating core elements which can framework based climate finance and carbon be used, mutatis mutandis, for establishing Blue Carbon finance. These include frameworks for frameworks: institutionalization of measurement, https://www.forestcarbonpartnership.org/resources reporting, and verification system (MRV). Useful literature sources on legal and institutional readiness include the Little Book of Legal Frameworks for REDD+: https://globalcanopy.org/wp-content/uploads/ 2020/12/ LittleBookofLegalFrameworksforREDD_EN.pdf The WB’s REDD+ Nesting Manual provides guidance for the design and implementation of accounting systems, which may include integration of project-level activities into national accounting frameworks (also known as “nesting”). This manual provides guidance on multiple dimensions including institutional frameworks and legal frameworks, benefit sharing, safeguards, registries, which could be applicable to BCE. It includes a decision-support tool to help decision-makers in defining the most suitable nesting framework. MRV system Measurement, Reporting and Verification The Global Forest Observation Initiative (GFOI) has system that is able to report verified developed different guidance materials for REDD+ countries, Emission Reductions in accordance with but it could also be applicable to Mangroves and other BCE: a defined standard. • Methodology and Guidance Document (MGD) which provides guidance for MRV design and implementation, including definition of institutional arrangements: https://www.reddcompass.org/mgd • Open MRV which provides practical learning modules for estimating the Activity Data with different operational tools: https://openmrv.org/home/measurement/ activitydata Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 94 Land tenure and Land tenure represents one of the most There are various sources available to help navigate land carbon rights significant challenges for successfully tenure and carbon right claims, including from the World implementing integrated land use Bank’s BioCarbon Fund: https://biocarbonfund-isfl.org/ initiatives. The identification of carbon integrated-land-use/land-tenure. rights promotes the recognition of The FCPF has issued a useful “guidance note” on the ability customary tenure and the active of program entities to transfer title to emission reductions: stewardship role of communities for https://www.forestcarbonpartnership.org/sites/fcp/ natural habitats. files/2019/July/FCPF%20Guidance%20Note%20on%20 the%20Ability%20of%20Program%20Entity%20to%20 Transfer%20Title%20to%20Emission%20Reductions_2018. pdf. For the FCPF’s legal documents on transfer of title, see https://www.forestcarbonpartnership.org/standards-and- management. Benefit Sharing Equitable sharing of carbon and non- The World Bank’s FCFP and ISFL have developed some Arrangements carbon benefits is important to provide resources for the design of benefit-sharing arrangements rewards to sustainable and expansion of for REDD+ and integrated-landscape programs, including mitigation actions. guidance documentation and collection of lessons learned. https://www.forestcarbonpartnership.org/bio-carbon/en/ index.html Safeguards In the planning and implementation of REDD+ countries have developed a number of systems to mitigation actions, countries require that manage safeguards including: safeguards be put in place to ensure • Safeguard Information Systems for providing publicly that mitigation activities take into available information on how safeguards are being account a range of policies and rights, addressed and respected in REDD+ Readiness and including those related to conservation, implementation activities. stakeholders, and their access to • A Strategic Environmental and Social Assessment (SESA) sustainable livelihoods. helps to ensure compliance with relevant safeguards by integrating key environmental and social considerations covered by the relevant safeguard policies and procedures at the earliest stage of decision making. Feedback and grievance redress mechanism (GRM) needs to be effectively available, and if necessary strengthened, as part of the country’s REDD+ institutional arrangements. The World Bank developed the Environmental and Social Framework to support the sustainable development vision of the countries’ projects: https://thedocs.worldbank.org/ en/doc/837721522762050108-0290022018/original/ ESFFramework.pdf More information may be found at https://www.forestcarbonpartnership.org/topics and https://www.un-redd.org/work-areas/safeguards-multiple- benefits. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP SCALING BLUE CARBON OPPORTUNITIES 95 Registries An emissions trading registry is an online The World Bank’s Partnership of Market Readiness database that issues, records, and tracks (PMR) and the FCPF developed guidance on regulation, the carbon units that are exchanged development and administration of emission trading within market mechanisms or financed registries: https://openknowledge.worldbank.org/entities/ through Results-Based Climate Finance publication/02603f21-25b1-538a-af49-01ab11ed51cd (RBCF) programs. The Partnership for Market Implementation (PMI) developed an open Measurement, Reporting, and Verification system that supports capturing emissions, emission reductions and finance received by each mitigation activity, and tracks these at individual project, sector, and national level: https://pmiclimate.org/. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP RECOMMENDATIONS FOR ACTION 96 CH APTER 5 Recommendations for Action Propelling Blue Carbon to its full potential Adopting such a comprehensive response will help requires governments to undertake a harmonized countries shift to a more productive and resilient response that combines technical, institutional, Blue Economy that gives stability to natural habitats regulatory, and financial aspects. This is to tap into and predictability to the private sector. Practical and the many opportunities presented by Blue Carbon actionable recommendations for governments are development—for climate mitigation as well as for the proposed to improve readiness and to help accelerate rich portfolio of ecosystem services beyond carbon. Blue Carbon investments. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP RECOMMENDATIONS FOR ACTION 97 Pillar One: Data and Analytics considerable technical and institutional capacity. Yet, Recommendation 1 practical guidelines (chiefly in the form of the 2013 Wetlands Supplement) are available, and governments Strengthen country enabling can access various technical assistance programs for environment to develop GHG capacity-building purposes. Ideally, governments add inventories for above and a training program for the existing GHG inventory team, below-ground carbon. prepare a gap analysis for available data points on GHG emissions and removals from coastal BCEs (focusing GHG inventories are the backbone of all climate on coastal BCE mapping and human activity data), and mitigation actions, yet emissions and removals use the timeframe until the next major NDC update from coastal wetlands that include above and in 2025 to build or complete the inventory section on below-ground carbon, are often omitted from them. coastal BCEs. Integrating coastal Blue Carbon ecosystems requires to engage with sovereigns in an effort to manage Recommendation 2 BCEs more sustainably. These ecosystem valuation assessments can include a true price mechanism for Promote the Use of Ecosystem Blue Carbon credits linked to the degree of permanence Valuation in Decision Making. achieved and co-benefits such as ecosystem services, gender, indigenous peoples, and local communities. Developing and implementing natural capital and Such assessments—which can draw from the ongoing ecosystem valuation is a critical step to shedding light Changing Wealth of Nations (CWON) work, the Global on the significance of nature at the macroeconomic Ocean Accounts Partnership, or other tools presented policy level and engaging economic decision-makers in the Blue Economy Data and Tools Catalogue— (including ministers of finance and planning) in the will be important features to allow stakeholders to global response to the climate change and biodiversity identify win-win investment opportunities. These are crises. The availability of such data would also opportunities that promote Blue Carbon protection and greatly benefit the private sector, helping to inform restoration, while creating sustainable returns from the decisions of firms and financial institutions at fisheries, tourism, coastal risk-reduction, and more. the project and portfolio levels, and assisting them Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP RECOMMENDATIONS FOR ACTION 98 Pillar Two: Policies and Institutions to engage in Blue Carbon (project) development, Recommendation 3 and the design of legal tools that recognize title to emission reductions and removals, link such title to Strengthen existing national the participation of local communities in decision institutional structures, and design making, and trace any transfers and monetization specific policies that facilitate actions in transparent and publicly accessible the implementation of Blue registries. Community stewardship arrangements Carbon commitments. should include formats and institutional structures for rewarding individuals and communities for efforts Activities should include legal screenings and option to enhance BCEs, including through the development assessments for better and smarter protection, of benefit-sharing plans (e.g. for example, EnABLE). including through community governance formats, Other measures could be on re-purposing subsidies to fit-for-purpose assessments of enforcement agencies, prevent BCE degradation, or implementing tax/policy legal mandates for governments (local, state, national) reforms for deforestation-free products. Marine Spatial Plans (MSPs) and Integrated Coastal Recommendation 4 Zone Management (ICZM) plans. Such tools will inform policies and regulations that are key to leveling Adopt integrated planning and the playing field for Blue Carbon investments and to Blue Carbon Strategy to enhance incubating a pipeline of bankable projects. In terms of local benefits. institutional strengthening, leadership on technical, policy, and finance matters requires that operational Plans for Blue Carbon interventions must address units are defined and clear responsibilities carved the cross-sectoral nature of BCEs and must be out. In this process, the preparation of a Blue Carbon underpinned by effective benefit-sharing mechanisms, strategy that takes into account integrated planning and unified with livelihoods development. It is would provide a roadmap to support Blue Carbon important to integrate Blue Carbon considerations investments at the national level and leverage the many into the broader context of national policy planning, co-benefits of these investments. for example by using governance tools such as Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP RECOMMENDATIONS FOR ACTION 99 biodiversity crises have not only a local dimension, but Recommendation 5 also regional and global public goods dimensions. As a result, a broad stakeholder engagement is required Leverage partnerships between to provide ambitious solutions for a swift response to governments, private sector, climate change and biodiversity loss. Consensus needs international financing institutions, to be built around bold yet realistic targets, a systemic and philanthropies. response, and appropriate support mechanisms that harness sufficient technical and financial resources for This could help address the systemic risks stemming implementation. An effective and coordinated response from BCE loss and influence global agendas. Multiple requires active engagement of the UN system, economic and financial sector initiatives focused multilateral development banks, bilateral donors, on climate change and sustainability have emerged and philanthropies. There are also opportunities to in recent years and have convinced economic and strengthen dialogue with financial institutions and financial policy makers of the need to integrate regulators on Blue Carbon and biodiversity, and the role climate into their respective agendas. The climate and of trade policy as a means to curb BCE degradation. Pillar Three: Finance Blending public and private funds, including private Recommendation 6 sector, and philanthropic funds, offers opportunities for alleviating and repurposing public debt towards actual Adopt a holistic approach to Blue Carbon investments. Blended finance can support mobilizing finance. the development of proof-of-concept business models and make the risk- return profile of the private sector A combination of suitable innovative or emerging more competitive, allowing for expansion to other funding mechanisms, including “blended” finance, locations. A phased approach can be considered that concessional resources, and infrastructure finance blends concessional and commercial capital and uses are critical to scale up Blue Carbon investments. The innovative funding mechanisms to enhance coastal financial gap analysis (for instance, the Blue Public resilience for communities and put countries on a net- Expenditure Review) should inform the opportunities zero emissions path. for mobilizing finance for Blue Carbon development. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP RECOMMENDATIONS FOR ACTION 100 be used for capacity-building at the government level; Recommendation 7 inventory work; technical infrastructure for mapping; carbon stock assessments; and monitoring of GHG Access international funding for fluxes (emissions and removals). This institutional Blue Carbon readiness. infrastructure can be built together with weather information and warning systems (sea-level rise International grant-based support, which is and extreme drought and/or flooding) to inform available under many bilateral (for example, UK Blue policymakers and directly enhance coastal resilience Planet Fund, Norway’s Oceans for Development), for communities. Funding should also be used to international (for example, PROBLUE, PROGREEN, prepare a pipeline of shovel-ready projects and ready- Global Partnership on Sustainability, GEF, and so on), to-use platforms for community-governance formats, and philanthropic programs, as well as private sector on the one hand, and public-private partnerships finance (corporate climate and nature commitments, on coastal management and investment, on and corporate social responsibility programs) should the other hand. Recommendation 8 Promote public-private partnerships (PPPs) for Blue Carbon market development. Through these partnerships, additional funding can be mobilized for the capacity building and science needed to scale the supply of high-quality Blue Carbon credits to the market. PPPs could help overcome key policy barriers to scaling private investment in Blue Carbon ecosystems in an equitable and transparent manner. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 101 A P P E N DIC E S Appendix 1: Checklist (Blue Carbon Readiness Framework) Checklist Blue Carbon Readiness Framework PILLAR 1 CO₂ DATA & ANALYTICS EVALUATING BLUE CARBON ACTIONS CHECKLIST 1 Identifying Established Blue Carbon Ecosystems Within Your Country The first step in the process of evaluating blue carbon actions is identifying if your country currently has, or has had, any of the following blue carbon ecosystems (BCEs). BCEs fall into one of two categories: Established or Emerging. ESTABLISHED BLUE CARBON ECOSYSTEMS – Mangroves, seagrass beds, and salt marshes are recognized as falling into an established inventory category of wetlands. These ecosystems are considered “actionable” because they are eligible for Blue Carbon crediting instruments. Salt Marshes – explore the Seagrasses - explore the UNEP Mangroves – Global Mangrove UNEP Global Distribution of Salt Global Distribution of Seagrass Watch (GMW) provides a Marshes map located at the link map located at the link below. variety of data on the global below. From the link you can From here, you can zoom to distribution of mangroves at download spatial data on the your country to view salt marsh yearly intervals going back baseline inventory containing distribution or download spatial to 1996. Using their online global seagrass distribution. data to view distribution across mapping portal, you can view Data used to develop this a customizable area. Data used the distribution of mangroves map covers studies from to develop this map covers within your country, as well as 1973 – 2015. studies from 1934 – 2015. a variety of different data layers https://data.unep-wcmc.org/ https://www.unep.org/ on carbon storage, mangrove datasets/43 resources/publication/global- type, and mangrove area distribution-seagrasses change over time. www.GlobalMangroveWatch.org EMERGING BLUE CARBON ECOSYSTEMS – The following BCEs are considered emerging as they are “likely” actionable, meaning they meet some of the actionability criteria. In the future, these ecosystems may be eligible for Blue Carbon crediting instruments. Currently, there is limited data on the global extent of emerging BCEs, and as such, there are few resources available for countries looking to assess national extent/area of these ecosystems. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 102 Checklist Blue Carbon Readiness Framework CHECKLIST 2 Resources for Gathering Required Data for GHG Inventories References: The Blue Carbon Initiative’s BC & NDC Location and Extent of BCEs – For inventory Guidelines on Enhanced Action, Landsat data reporting purposes, maps, or spatial data on the available from the U.S. Geological Survey distribution of BCEs within your country is critical. This data can be used to calculate all required There are several datasets required for the carbon stocks (above and belowground biomass development of an effective GHG inventory. The and soil organic carbon (SOC)) and change in requirements fall into two general categories: carbon stocks over time using default values from Location and extent of BCEs, and activity data. No the IPCC Wetlands Supplement. This information matter your level of capacity, the prevalence of is also valuable in determining carbon stock global datasets and methodologies – such as the gains and losses over time when paired with land IPCC Wetlands Supplement – mean there are still use and land use change (LULUCF) data, and for actions your country can take to improve existing identifying a baseline for BCE location and extent. inventories and work towards policy and financing With knowledge of location and extent of BCE(s) actions for your BCE(s). within your country, you can then estimate the amount of carbon stored, sequestered and/or released from the BCE(s) based on land conversion or change. a. Landsat (and similar satellites) supply free, open-source imagery at a global scale, and across various timeframes – check the link below for 1. Determine the current, and further information: historic location and extent of BCE(s) – Satellite imagery is an https://landsat.gsfc.nasa.gov/data/where-to-get-data/ effective solution for this step. Note: Your country may already b. Map the location and extent of all BCEs present within your country account for mangroves as part of Refer to Checklist 1 for resources on location of established BCEs their National Forest Inventory. c. Incorporate data from new technologies, such as drones, as they become available a. Identify the earliest year the Landsat imagery covers for your nation, 2. Determine the baseline year for ensuring this coverage includes any present BCEs assessing location and extent your b. This year will serve as your baseline year – e.g, 2005 is the first year country’s BCEs where you can clearly identify BCE within your country 3. Calculate changes in BCE location and extent over time Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 103 Checklist Blue Carbon Readiness Framework ACTIVITY DATA – Activity data refers to rates of carbon accumulation and loss based on uses of, and impacts upon, BCEs. Specifically, activity data refers to the magnitude of human activities or actions which result in emissions or removals during a designated timer period. As a result, activity data is highly country specific. 1. Obtain spatial layers on land use and land use change (LULUCF) for regions of your country where BCE(s) are present a. Established BCEs are included within the Wetlands Supplement in the 2. Follow guidance laid out in “Coastal Wetlands” category. Emissions factors and methodologies Chapter 4 of the Wetland are provided for various categories of BCE use/ impacts upon BCEs Supplement to estimate such as mangrove management practices, revegetation, aquaculture, activity data and drainage. CHECKLIST 3 Applying the IPCC Tier 1 Default Values References: The Blue Carbon Initiative’s BC & NDC Guidelines on Enhanced Action TIER 1 DEFAULT EMISSION FACTORS – TIER 2/3 DEFAULT EMISSION FACTORS – Chapter 4 of the IPCC Wetlands Supplement provides global When available, country specific emission factors can provide default emission factors for designated activities within more accurate estimates of national BCE carbon stocks. established BCEs: mangroves, salt marshes and seagrasses. These global default values are referred to as Tier 1 estimates. Tier 1 emission factors can be used in conjunction with data on BCE extent and change in extent over time to estimate carbon stock values at a national level. Tier 1 factors as especially important when it comes to estimates of SOC stocks or changes in stocks, as lack of data on SOC is a common bottleneck country run into. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 104 Checklist Blue Carbon Readiness Framework CHECKLIST 4 Updating & Improving GHG Inventories References: The Blue Carbon Initiative’s BC & NDC Guidelines on Enhanced Action Accurate reporting and accounting of emissions and removals of coastal wetlands must be complete before a country can incorporate coastal wetlands within the mitigation section of their NDCs. Development and continued maintenance of GHG Inventories is an important tool in meeting evidence-based climate mitigation policy requirements. 1. Determine the location and extent of the BCE(s) habitat within a. Calculate the approximate area of the habitat your country a. Identify a baseline year – commonly the earliest year with complete 2. Map the distribution and change data on ecosystem extent – and compare extent from subsequent years of the BCE habitat coverage to this baseline. over time b. Quantifying change over time is important for inventory and reporting purposes. 3. Estimate the BCE’s existing carbon a. Gather data on the relevant carbon pools pertaining to the BCE(s) (ex: stock – now that we know the aboveground biomass, soil organic carbon (SOC), standing deadwood, habitat extent and change over etc.). time, it is important to understand b. Utilize the calculated area of the BCE(s) to estimate a carbon the amount of carbon sequestered stock value and stored by the BCE(s). 4. Estimate the BCE’s emissions rates 5. Estimate the rate of carbon a. Pay attention to potential changes in land use, and how this will affect accumulation and loss over time existing and future carbon stocks Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 105 Checklist Blue Carbon Readiness Framework PILLAR2 POLICY & INSTITUTIONS NDC COMMITMENTS & IMPLEMENTATION CHECKLIST 5 Accounting for BCE in NDCs References: NDC Guidelines on Enhanced Action; NDC Partnership: Opportunities for Ocean-Based Climate Action There are various options for countries to include BCE in their NDC accounting framework. Depending on the state of the GHG inventory and the capacity to report emissions and removals in line with the 2013 Wetlands Supplement, countries may include BCE within their economy-wide target or not. In the latter case, countries can still present stand-alone, action- based targets for BCE. They can and should also set out a timeframe for when they will be able to report GHG emissions and removals from coastal wetlands in their inventory and, hence, when they will be able to account for emissions and removals from BCE under their NDC. a. Does your country have a central agency for coordinating ocean/coastal and BCE management b. Is there a clear division of roles and responsibilities regarding BCE management and protection among relevant government entities and 1. Check Government Roles and other stakeholders Responsibilities over BCEs c. Are there comprehensive laws and regulations, at various levels, that specifically protect or conserve BCEs? d. Which agency(ies) are responsible for enforcing such laws and regulations, and are they adequately resourced and mandated to do so? a. Refer to explicit language (“all sectors” include in scope, as well as “2013 Supplement”). 1. Check if BCE are (already) b. In case all sectors fall within the abstract scope, but IPCC guidance included in a country’s NDC is not referenced beyond the 2006 Guidance, there is a good chance accounting scope. that the de facto accounting framework ignores GHG emissions and removals from wetlands. 2. Confirm that BCE are included or clarify that they will be by a certain date, referencing the capacity to use the 2013 Supplement. 3. Check if BCE habitats are covered in your REDD+ framework (and target setting), if applicable (see below, Checklist 6). Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 106 Checklist Blue Carbon Readiness Framework a. If full BCE inventory reporting occurs, a mitigation target may be included in a country’s cross-economic or cross-sector target. i. Consider a commitment to a complete halt of deforestation (mangroves) and/or 4. Describe the type degradation (all BCE). of BCE-related b. If full BCE inventory reporting ii. Alternatively, consider a commitment to (mitigation) target, does not occur or if a country net-zero deforestation of degradation, or applying principles of wants to highlight a specific BCE-positive conservation. clarity, unambiguity, target for BCE, check which iii. In addition, set restoration targets and ambition. action-based targets you can for BCE habitats (ideally, expressed set out: in hectares) iv. In addition, make a commitment for BCE area coverage under sustainable management. CHECKLIST 6 Accounting for BCEs in your NDCs as a REDD+ Country References: The Blue Carbon Initiative’s BC & NDC Guidelines on Enhanced Action REDD+ countries are well placed to expand their NDCs to include BCEs. The following steps can be taken when considering how to account for BCEs in existing and upcoming NDCs a. Review your National Forest Definition – are mangroves referenced or included? b. Is the project area included in the RAMSAR list of wetlands of international importance? 1. Determine if mangrove forests are c. Does the Forest Reference Layer incorporate all relevant mangrove accounted for in existing NDCs and carbon pools, including soil carbon? Are there separate measures as part of your country’s REDD+ specifically for soil carbon stocks that can be included within the NDC? program using the following questions as a guide: Note: Often REDD+ reference levels will exclude soil carbon pools d. Are there MRV/FREL or alternative GHG accounting methodologies used within the REDD+ program for my country that can be applied? Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 107 Checklist Blue Carbon Readiness Framework a. which governmental department(s) oversee forests and coastal ecosystems and GHG reporting to ensure streamlined action for including this data within new/existing NDCs 2. Identify the following: b. relevant legal/policy governance involving BCE(s) c. clear division of roles and responsibilities among BCE entities and stakeholders d. BCE agencies are adequately resource 3. Determine how to effectively keep data on GHG emissions/ removals relevant – source new data as it becomes available, identify ways to improve existing data sources so they account for all carbon pools, especially soil organic carbon. CHECKLIST 7 NDC Implementation Implementing your NDC targets for BCE usually requires concise and multi-layered planning and the creation of an inducive regulatory and institutional (governance) framework. Please take into consideration the time-frame required to strengthen the legal and governance systems. Relevant steps include: a. Often, mangroves are included in REDD+ approaches, and it is important to clarify to what extent BCE-specific targets on conservation 1. Review the integration of BCE and restoration are compatible with REDD+ targets and whether in your REDD+ framework reference level calculations include BCE (or mangroves) in full. (if applicable). b. Often, soil carbon accounting is excluded from REDD+ forest reference levels. Make sure that are included and specify dates by when this will happen. a. The strategy should come with a list of (priority) interventions and project-sites. b. It should clarify administrative responsibilities and mandates, including for engaging in RBCF and/or blue carbon project finance, if applicable. 2. Develop a bespoke Blue Carbon c. It should set out predictable investment parameters for the private strategy that includes a list of sector, which include clarity on land-based carbon rights and the actions as well as financing authority to transfer emission reductions/removals and the underlying opportunities (see below carbon rights, as well as clarity on land tenure, community involvement, Checklist 9). and benefit sharing. d. It should address structural drivers of degradation and conflicting land use. And e. It should present a template for how to use the Blue Carbon investment framework (see Checklist 9 below). 3. BCE needs to be valuated for the ecosystem services they provide. That includes GHG mitigation services but covers adaptation-focused services as well as other services to coastal communities and others. CWON 2.0 has made a strong start with valuating mangroves. It should be extended to cover other BCE in the future. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 108 Checklist Blue Carbon Readiness Framework 4. Key planning tools are marine spatial planning (MSP) and a. Check if your country or its regions have MSP/ICZM procedures and integrated coastal zone capacity in place. management (ICZM). b. Check to what extent BCE conservation, restoration and management It is recommended to use the are part of these procedures and enshrined as decisive planning and Marine Spatial Planning Toolkit: management objectives. https://www.worldbank.org/en/ c. Check what role valuation plays for MSP/ICZM. programs/problue/publication/ d. Check what level of regulatory compliance MSP/ICZM gives rise to marine-spatial-planning-for- and how compliance for BCE conservation and restoration targets can a-resilient-and-inclusive-blue- be improved. economy-toolkit 5. The recognition of land tenure and a. Check how land tenure over BCE is defined in your country. community tenure is essential b. Check what role fishing and other coastal communities have for for the success of many planned BCE use and management. BC interventions. c. Check community governance and stewardship options. a. Lack of planning capacity and funding are often systemic and should be tackled as a priority (see this Checklist 7 and Checklist 8). b. Uncertain and limited legal protection – including with respect to 6. Establish a comprehensive list special protection regimes (marine protected areas or “MPAs” and of bottlenecks and concerns community governance – represent another frequent bottleneck of and keep the list updated structural nature. through implementation. c. So do gaps in knowledge (of BCE maps, drivers and magnitude of degradation, economic value), and so do limitations in comprehensive monitoring. CHECKLIST 8 Developing and Incorporating Governance Models Successful governance models will commonly incorporate the following: 1 TECHNICAL GOVERNANCE – 2 POLICY GOVERNANCE– 3 FINANCIAL It is important to employ a team to This team will guide implementation, focus GOVERNANCE– handle all necessary data, such as on creating a functional decision-making Focus on distributing carbon stock values or spatial data on process and will help ensure inter-magisterial funding in line with ecosystem extent. This team is integral cooperation and participation. Effective appropriate benefits to ensuring Section 1 of the decision communication with all magisterial groups sharing arrangements. tree is fully built out. This unit will managing or working nearby coastal wetlands handle: FRL/ FRLE calculations, MRV, will be critical to ensuring permanence of carbon and other activities. stocks in restoration or conservation projects, as one example. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 109 Checklist Blue Carbon Readiness Framework 4 PRIVATE SECTOR ENGAGEMENT– 5 COMMUNITY GOVERNANCE – It is paramount to set out investment parameters and the governance Community involvement, input and engagement framework for engaging the private sector (establishing the “rules are crucial, and identifying a community role and the structures of the game”) defining involvement in planning and within any project is important to ensure the decision making and address key aspects, notably carbon rights, the permanence of carbon stocks, especially when authority to, and the terms for (including in terms of taxes), transfer(ing) restoration or conservation is involved. emission reductions/removals and the underlying carbon rights, and that define models for the involvement of communities and benefit sharing. PILLAR3 FINANCE LEVERAGE BLUE CARBON INVESTMENT CHECKLIST 9 Developing a Carbon Finance and Investment Framework Any such framework should start with an assessment of how existing funding flows (including government, and private funded ones) benefit or disadvantage BCE. It is recommended to apply the Blue Public Expenditure Review: https://documents1.worldbank.org/curated/ en/789491639977748921/pdf/Blue-Public-Expenditure-Review-Guidance-Note.pdf a. MPA design and management b. Law enforcement 1. Check for positive flows: c. Capacity-building d. Sustainable supply chain investment, and more 2. Check for negative flows: a. Subsidies into industrial fishing recommended publication as b. Subsidies for non-sustainable aquaculture guidance https://openknowledge. c. Agricultural subsidies that incentivize the extension of farmland worldbank.org/entities/ d. Agricultural subsidies that incentivize the overuse of fertilizers publication/4217c71d-6cbc- e. Other. 46b6-942c-3e4651900d29 Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 110 Checklist Blue Carbon Readiness Framework 3. Then, survey financing approaches and sources/instruments a. Existing, planed, or potential investments in restoration, conservation, Recommended literature or sustainable management of BCEs. as guidance: https:// Note: Promote private sector initiatives and create institutional thedocs.worldbank.org/en/ structures for private sector and community involvement. Use of doc/916781601304630850- mechanisms such as Article 6 0120022020/original b. Jurisdictional REDD+/RBCF FinanceforNature28Se c. Concessional instruments (including blended finance models) pwebversion.pdf d. Non-concessional models (including payment for ecosystem services https://documents1. and innovative business) worldbank.org/curated/ en/099060123121542587/pdf/ a. Carbon finance and the use of markets b. Taxes, fees, charges c. Definition and allocation of carbon rights d. Government mandate for carbon trading (especially for government 4. Set out stable investment owned coastal lands) parameters for the private sector e. Models for community involvement and benefit sharing for Benefit sharing arrangements please visit https://www.worldbank.org/en/ topic/climatechange/brief/enable-enhancing-access-to-benefits- while-lowering-emission a. Are there plans to use blended finance, i.e., funding that combines public and private funds? b. Can private finance be mobilized for blue carbon project development? (consider private sector engagement for operational costs, restoration, management, etc) Recommended IFC report: Deep Blue: Opportunities for blue carbon finance in 5. The actual coastal ecosystems https://climatefocus.com/wp-content/uploads/2023/05/ implementation and DeepBlue-OpportunitiesforBlueCarbonFinanceinCoastalEcosystems- scale-up will be linked Optimized.pdf to the deployment of actual financing i. Is a regulatory framework in place for b. Are structures and templates tools: government- public-private partnerships? available to guide the design driven and private ii. Can you use MDB-funded programs to and implementation of blended sector-focused. promote blended finance opportunities finance opportunities? for BCE? c. Are independent debt finance solutions being drawn up, or can they been drawn up? Blue bonds and debt-for-nature swap agreements with a focus on BCE would be prominent examples. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 111 Checklist Blue Carbon Readiness Framework i. Can the current legal and regulatory framework accommodate Article 6 transactions, and is this desirable? ii. What needs to be put in place to create enabling environment for Article 6 transactions? iii. Should rules be adopted regarding approval of programs, monitoring, reporting and verification (MRV) of blue a. Consider prioritizing BCE for carbon ERs, authorization of ITMOs, Article 6 Paris Agreement registries, corresponding adjustments for programs Consider prioritizing Article 6 activities? BCE for Article 6 Paris iv. Is there a comprehensive legal and Agreement programs and regulatory framework that specifies transactions. and transactions. who owns blue carbon ERs, and how 6. Does your country related property rights and interests plan to use carbon can be transferred domestically markets for BCE and/or internationally? interventions? v. Does the relevant agency have the capacity to access blue carbon ER markets, engage with potential buyers or brokers, and negotiate agreements for their sale? b. Consider incentivizing the i. Earmarking government-owned land for development of voluntary carbon market integration carbon projects through ii. Creating administrative powers and responsibilities to engage in voluntary carbon markets iii. Consider the adoption of a BCE project recognition procedure that provides developers with a guarantee to perform corresponding adjustments. MORE INFORMATION problue@worldbank.org worldbank.org/problue Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 112 A P P E N DIC E S Appendix 2: Blue Carbon Habitats A. Established Blue Carbon systems Mangroves Mangroves are a group of trees that grow in coastal in 2012, with Indonesia, Brazil, Malaysia, and Papua saltwater zones in at least 124 tropical and subtropical New Guinea accounting for 50 percent of the stock. countries around the globe (Spalding et al. 2010; Giri et More recently, Kauffman et al. (2020) estimated that al. 2011). They are the only trees in the world that can mangroves globally store about 11.7 Pg C, based on tolerate salt water and excrete the excess salt through soil profiles greater than 1 meter in depth. Globally, their leaves. Often located at the boundary between 20 to 35 percent of mangroves were lost between land and sea, mangroves are among the most carbon- 1980 and 2000 (Millennium Ecosystem Assessment rich tropical forests and cover an approximate global 2005; Polidoro et al. 2010), although deforestation extent of 14,735,900 hectares (ha) (Bunting et al. trends seem to have decreased since the turn of the 2022). Estimates suggest that mangroves can store twentieth century: from a mighty 2 percent or more in on average between 6 and 8 Mg Coe ha annually— −1 global annual losses to a (still substantial) 0.4 percent. about two to four times as much as mature tropical The main causes of loss include conversion to forests. Because of threats in tropical regions, and agriculture; development of industrial and urban areas; because of the potential overlap with REDD+ programs, conversion to fish and shrimp ponds; logging for wood mangroves have received particular attention as a and charcoal; and conversion to open water due to Blue Carbon mitigation opportunity. Fifteen countries climate change (Servino et al. 2018; Sippo et al. 2018). contain 75 percent of all mangrove areas globally (Fries Most of today’s emissions occur in Southeast Asia et al. 2019). A global study by Hamilton and Fries (0.18 percent per year; Richards and Friess 2016), (2018) estimated mangrove carbon stock (assuming though hotspots in deforestation rates can be traced 1 meter soil depth) over the period 2000 to 2012. They also in Latin America and Africa. estimated global mangrove carbon stocks of 4.19 Pg C Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 113 Tidal salt marshes Tidal salt marshes are formed by an accumulation (Colombano et al. 2021; Gilby et al. 2021). Emissions of mineral sediments and organic material, which is from converted tidal salt marshes on organic soils can then flooded with salty tidal waters. These marshes be prolonged, with examples from locations such as the accumulate almost all of their carbon in their soils drained agricultural soils of Sacramento-San Joaquin (which can be several meters deep) at a rate up to Delta continuing for over a century (Deverel and 55 times faster than tropical rainforests, and—under Leighton 2010). Emissions patterns resemble those optimal conditions—can store it for thousands of from peat forests, with emissions continuing decades— years (McLeod et al. 2011). Tidal marshes have if not centuries—after initial conversion to agriculture. not systematically been mapped globally, though technology exists to do so. A total estimated tidal salt In most industrialized countries, tidal marshes are marsh extent of 5,495,089 ha is provided by McOwen heavily degraded. The installation of levees, train et al. (2017), of which 4,548,200 ha are non-arctic tracks, and roads has severed the connection to the tidal salt marshes (Greenberg 2006). Tidal marshes are sea and altered the hydrology. Apart from draining and largely found outside of the tropics, with those in the filling, tidal marshes are diked, grazed, harvested for United States (1,723,410 ha), Canada (111,274 ha), fodder, and otherwise used for agriculture. The loss of Europe (356,947 ha), and Australia (1,325,854 ha) tidal marsh habitats resulting from these disturbances enjoying a relatively high level of regulatory protection. can result in Blue Carbon loss through greenhouse gas For these countries, inventories of change exist. (GHG) emissions back into the atmosphere (Beckett Argentina (118,870 ha), Mexico (272,527 ha), and et al. 2016; Himes-Cornell et al. 2018). Russia (700,719 ha) host major extents of tidal salt marshes with lesser degrees of protection. Southern While there is comprehensive data on human-induced Brazil and Uruguay (37,858 ha) hold extents of marshes habitat losses, including the impact on carbon stocks, within estuaries. for a number of estuaries, jurisdiction-wide information and information on global degradation (ongoing The sustainability of tidal salt marshes as a carbon annual losses and carbon flux changes) is less readily sink is continuously threatened by environmental available. While protecting and maintaining tidal salt disturbances, linked to both human-driven changes in marshes to avoid GHG emissions is a high priority for land use and global climate change (Gilby et al. 2021). climate change mitigation efforts, quantification of their Land-use changes affect the supply of freshwater, carbon stocks and flux changes is equally as important nutrients, and sediments from coastal watersheds to minimize carbon loss. to tidal salt marshes, influencing carbon cycling Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 114 Seagrasses Seagrasses are slender, green, underwater flowering At the global scale, seagrasses are estimated to plants that form extensive meadows in shallow coastal annually sequester 4.2 to 19.9 Pg C (Fourqurean et waters worldwide and accumulate carbon—almost all al. 2012). However, seagrasses still represent the of which is stored in soils measuring, in some species, largest source of uncertainty in global Blue Carbon up to four meters. As a coastal ecosystem, seagrass stocks and inventories owing to incomplete and plays a significant role in purifying ocean water; poorly resolved maps of seagrass extent and changes battling disease; supporting food security; protecting in extent (Chmura et al. 2016; Oreska et al. 2018). coastlines; and storing carbon (United Nations There is a lack of detailed baseline information on Environment Programme (UNEP) 2020). Seagrass former coverage extent, and mapping is challenged meadows are often largest in estuaries and bays where by the submerged nature of seagrasses. Carbon- harbors and cities are conjoined. It is estimated that stock data is globally patchy and shows a high degree seagrasses globally store 140 Mg organic carbon of regional heterogeneity (Fourqurean et al. 2012). per hectare in the top meter of soils, accumulated With that caveat in mind, seagrass loss is believed to over centennial-millennial time-scales, and that be significant (29 percent global loss since 1980s), the seagrass beds are up to 40 times more efficient resulting in emissions of potentially 0.65 Gt CO2 per at capturing organic carbon than land forests’ soils year, according to Hoegh-Guldberg et al. (2018). (Serrano et al. 2021). This is roughly equivalent to the annual emissions of the entire global shipping industry (UNEP 2020). Seagrass habitats represent a significant carbon With 40 percent of the world’s population living in sink in the global carbon cycle, with meadows found coastal areas (Seas and Plans 2011), the magnitude from subpolar to tropical climatic zones (Duarte of human pressure on seagrasses is increasing. et al. 2005). Meadows cover an estimated area of Exacerbated by global climate change, this means that between 16,000,000 and 60,000,000 ha (Oreska seagrasses continue to be lost at a rate of 1.4 percent et al. 2020; McKenzie et al. 2020), though modeling per year (Short et al. 2011). studies of potential seagrass area hint that this may be a substantial underestimation (Jayathilake and The 2013 IPCC Wetlands Supplement (IPCC, 2014) Costello 2018). Australia has the most extensive allows reporting of GHG emissions or sequestration areas (8,301,300 ha), representing 31 percent of from seagrass conversion and restoration in country global known seagrass area, followed by Indonesia national inventories, and carbon standards have (3,000,000 ha), and the Gulf of Mexico (1,934,900 ha) been developed as well so that restoration projects (Green et al. 2003; McKenzie et al. 2020). Seagrasses can benefit from carbon credits (for example, the are spread across 209 countries and territories located Verified Carbon Standard since 2015). However, there within global seagrass bioregions, including along the are mainly gaps in data, regulations, and incentives Mediterranean and East African coast, and elsewhere that prevent their implementation. Notably, no (McKenzie et al. 2020). emissions reduction projects for seagrasses have been carried out to date. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 115 B. Emerging Blue Carbon systems Seaweeds Seaweeds, another macro algae, are plant-like the deep ocean for extended time periods, seaweeds organisms that generally live attached to rocks or are globally relevant contributors to oceanic carbon other hard substrates in coastal areas. Seaweeds sinks and can help combat the local impacts of ocean capture a significant amount of CO2 from the marine acidification (Duarte and Krause-Jensen 2022; Yong environment and provide various ecosystem services, et al. 2022). With these new findings about seaweeds’ including bioremediation of coastal pollutants, involvement in carbon storage, seaweed is now coastal protection, food security and carbon storage. emerging as a nature-based climate-change- mitigation Despite all these benefits, seaweeds have not been strategy, because seaweeds are incredibly efficient at incorporated into Blue Carbon strategies or seriously absorbing CO2: they pull more GHG from the water than evaluated as a permanent carbon sink because seagrasses, mangroves, and salt marshes combined, of the preconception that seaweed decomposes based on biomass (Krause-Jensen and Duarte 2016). completely in the ocean and does not store carbon. Seaweed farming has a potential carbon sequestration However, several studies (Krause-Jensen and Duarte intensity of about 1500 tCO2/km2/year (Duarte and 2016; Duarte and Cebrian 2017; Barron and Duarte Krause-Jensen, 2017), highlighting its role as a major 2015) have suggested that, since a considerable player in climate- change mitigation (with challenges, part of seaweed production gets exported outside however, on securing permanence). its natural habitat and remains as shelf sediments in Kelp forests Kelp forests are extensive underwater habitats much as 80 percent of their production (Krumhansl and dominated by large algae and they cover a narrow strip Scheibling 2012), much of which leaves the nearshore along 26 percent of the world’s coasts (Wernberg and and gets stored in the deep sea as allochthonous Filbee-Dexter 2019). They grow in dense groups, much detritus (Ortega et al. 2019). Research has shown like a forest on land, and provide food and shelter for that Australia’s kelp forests contribute to more than thousands of fish, invertebrates, and marine mammals. 30 percent of the total Blue Carbon sequestered by Kelp forests harbor a variety of plants and animals. marshes, mangroves, and seagrass beds; and about Many organisms use the thick leaves as safe shelter 3 percent of the total blue carbon worldwide (Filbee- from predators or storms (Steneck and Johnson 2013). Dexter and Wernberg 2020). However, they are treated It is still unclear to what extent kelp forests act as a as non-accumulating coastal vegetative ecosystems sink (Johnson 2021), but they can sequester significant and are not considered by the IPCC as Blue Carbon amounts of carbon. Kelp forests export on average as ecosystems (BCEs) (Macreadie et al. 2019). A key Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 116 challenge of including kelp forests in Blue Carbon Similar to other BCEs, kelp forests have been declining assessments and policy is accounting for carbon that globally, and this decline is projected to continue in the is mainly stored as allochthonous detritus in the deep coming decades (Wernberg et al. 2019). Degradation ocean, because it is difficult to trace the source to the does not stop at kelp forests: in the North Atlantic alone, site of storage. There is a risk of overestimating the ocean warming has caused 85 to 99 percent of kelp carbon that ends up in other BCEs, and also because biomass to decline over the last 50 years (Filbee-Dexter sink habitats in the open ocean do not fall within et al. 2016). At least 140,187 ha of Australian kelp national jurisdictions (Macreadie et al. 2019). forests have been lost due to extreme marine heatwaves, coastal pollution, and overgrazing by sea urchins and herbivores (Wernberg et al. 2016; Verges et al. 2016). Benthic (marine) sediments If left undisturbed, seafloors hold vast amounts of to bottom trawling and dredging. Even in countries carbon on geologic timescales: from thousands to with generous marine protected areas (MPAs) bottom millions of years (Estes et al. 2019). Globally, seafloor trawling and dredging is permitted almost everywhere. sediments are believed to store between 2239 and The UK, for instance, which protects some 300,000 km2 2391 Pg of carbon (C) in the top meter, or nearly twice of its territorial waters, bans trawling only in about the carbon stocks in the top meter of terrestrial soils 5 percent of those areas (Marine Conservation Society (Atwood et al. 2020). The amount of C stored within 2020). Ninety-nine percent of fish caught by bottom exclusive economic zones (EEZ)—the 200 nautical trawlers is caught in EEZ waters (Steadman, D. et al. mile area (from the coast) for which coastal nations 2021). Within the EEZ, the average trawling intensity in hold special rights—is roughly the same as the amount territorial seas is double the average trawling intensity stored in the high seas (Atwood et al. 2020). in EEZ overall (ibidem). A likely major cause for disturbance is bottom While significant uncertainties remain concerning trawling, whereby large, weighted nets are dragged the quantitative atmospheric impact of trawling and across the ocean floor, clear-cutting a swath of dredging (Pidgeon et al. 2021), tentative assessments habitat in their wake. When that happens, sediment have been forthcoming. Hutto et al. (2021) estimate becomes suspended, exposing organic carbon to that emissions are in the range of 36 million tons of remineralization into the water column. The process carbon, or 132 million tCO2, every year. A feasibility may also further acidify ocean water and thus reduce assessment—and draft methodology—tracing mitigation the ocean’s capacity to absorb CO2 (Sala et al. 2021). benefits from avoided trawling is under way. In terms of protection, there are few legal restrictions Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 117 Coastal mud flats Coastal mud flats (or tidal flats) are tidal habitats that Lee (2022) at 129.8 g C m2 yr−1, with the top-meter are often adjacent to vegetated coastal wetlands. sediments containing on average 86.3 Mg C ha−1. Accounting for at least 127,921 km2 across the Globally, the authors find that tidal flats can bury Americas and Asia, they are areas of intertidal sand 6.8 Tg C (24.9 Tg CO2) per year and can store 0.9 Pg C or mud accumulation on gently sloping coastlines (3.3 Pg CO2) in the top meter sediment. Assuming with heavy sediment inflows (Murray et al. 2019). the same rate of tidal flats loss as in the past three Like their vegetated peers, mud flats provide coastal decades, and assuming that all disturbed sediment communities with critical ecosystem services, C is re-mineralized, 4.8 Tg C are lost from mud- including storm and shoreline protection and flat sediments annuallyequivalent to emissions of food production. Mud flats have generally high C 17.6 Tg CO2 to the water column and atmosphere. sequestration capacity, similar to that of vegetated The calculations come with several caveats. The coastal ecosystems—especially in estuaries where current datasets are limited; the knowledge about the hydrodynamic environment promotes C burial and CO2 and other GHG emissions from lost mud flats is riverine sediment supply provides large quantities of particularly limited; and the (long-term) temporal organic matter. Their global average carbon stock and trajectories for carbon storage require more analysis. accumulation rate has been calculated by Chen and Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 118 A P P E N DIC E S Appendix 3: Examples of Multilateral Funding for Oceans Examples of blue/coastal projects from international funding agencies Table 7 (top five in each case) Amount Name Where (US$ million) Type Approved WORLD BANK Mangroves for Coastal Resilience Project Indonesia 400 Grant 2022 Blue Economy Program for Results Morocco 350 Loan 2022 National Cyclone Risk Mitigation Program–II India 308 Loan 2015 Sustainable Coastal and Marine Fisheries Bangladesh 240 Loan 2018 West Africa Coastal Areas Resilience Western and 190 120 Loan / 2018 Investment Project Central Africa 70 Grant GREEN CLIMATE FUND Global Fund for Coral Reefs Global 125 Equity 2021 Integrated Flood Management to Enhance Samoa 57,7 Grant 2016 Climate Resilience Enhancing Climate Resilience of India’s India 43,4 Grant 2018 Coastal Communities Coastal Adaptation Project (TCAP) Tuvalu 36 Grant 2016 Enhancing Climate Change Adaptation in Egypt 31,4 Grant 2018 the North Coast and Nile Delta Regions GLOBAL ENVIRONMENTAL FACILITY Blue Nature Alliance to Expand and Improve Global 22,6 Grant 2021 Conservation of 1.25 Billion Hectares of Ocean Ecosystems Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 119 Amount Name Where (US$ million) Type Approved Protecting and Restoring the Ocean’s Regional / 15,4 Grant 2021 Natural Capital, Building Resilience and Caribbean Supporting Region-Wide Investments for Sustainable Blue Socio-Economic Development (PROCARIBE+) Pacific I2I Regional Project: Ocean Health Regional 15 Grant 2021 for Ocean Wealth—The Voyage to a Blue Economy for the Blue Pacific Continent Mainstreaming Sustainable Marine Fisheries Global 11 Grant 2022 Value Chains into the Blue Economy of the Canary Current and the Pacific Central American Coastal Large Marine Ecosystems Blue Pacific Finance Hub: Investing in Regional 9 Grant 2022 Resilient Pacific SIDS Ecosystems and Economies ADAPTATION FUND Climate Change Adaptation in Vulnerable Argentina, Uruguay 14 Grant 2019 Coastal Cities and Ecosystems of the Uruguay River Reducing Climate Vulnerability and Flood Chile, Ecuador 14 Grant 2018 Risk in Coastal Urban and Semi-Urban Areas in Cities in Latin America Enhancing the Resilience of the Agricultural Jamaica 10 Grant 2012 Sector and Coastal Areas to Protect Livelihoods and Improve Food Security Reducing Vulnerability by Focusing Costa Rica 10 Grant 2014 on Critical Sectors (Agriculture, Water Resources and Coastlines) in order to Reduce the Negative Impacts of Climate Change and Improve the Resilience of these Sectors Adaptation to the Impacts of Climate Peru 7 Grant 2016 Change on Peru’s Coastal Marine Ecosystem and Fisheries Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 120 A P P E N DIC E S Appendix 4: Blue Carbon Projects (Global) The following list shows existing wetland carbon projects (registered, under validation, or under development), structured along the different international standards: I. Verified Carbon Standard The most concentrated project portfolio is provided by the Verified Carbon Standard. Table 8 Existing wetland carbon projects (Verified Carbon Standard) Methodology Annual emission and year of Size reductions / ID: Project Name Country registration Activities (hectares) removals (tCO2eq) 1318: Livelihoods’ Senegal AR-AM0014 ARR; Mangrove 10,415 30,000 Mangrove (2014) reforestation (228,542 issued in Restoration Grouped 2021) Project 1463: India West Bengal AR-AM0014 ARR; Mangrove 4,675 51,249 Sunderbans (India) (2019) reforestation (119,139 issued in Mangrove 2018) Restoration 1493: Mangrove Indonesia AR-AM0014 ARR; Mangrove 1,000 124,706 Restoration and (Registered) reforestation (125,391 issued in Coastal Greenbelt 2019) Protection in the East Coast of Aceh and North Sumatra Province Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 121 Methodology Annual emission and year of Size reductions / ID: Project Name Country registration Activities (hectares) removals (tCO2eq) 1760: The Haidar Senegal AR-AMS0003 ARR; Mangrove 2,000 30,170 el Ali Mangrove (Under reforestation Initiative (HEAMI) development) 1764: Reforestation Myanmar AR-AM0014 ARR/WRC; 2,100 184,006 and Restoration of (Ayeyarwaddy (2018) Mangrove (59,299 issued in Degraded Mangrove Division) reforestation 2020) Lands 2088: Mangrove Myanmar AR-AM0014 ARR/WRC; 2,100 (4,500 403,831 Restoration and (Ayeyarwaddy (Registration Mangrove in PD) Sustainable Division) requested) reforestation Development in Myanmar 2250: Delta Blue Pakistan VM0033 (2021) ARR/WRC; 350,000 2,407,629 Carbon - 1 Mangrove (224,997 in reforestation PD) 2290: Blue Carbon Colombia VM0007 (2021) Mangrove 7,561 31,310 Project Gulf of conservation Morrosquillo “Vida Manglar” 2330: Protection Colombia VM0015 (Under REDD; Mangrove 64,000 460,000 of mangroves validation) conservation and community developmental activities in the biodiversity hotspot of Colombia 2343: Zhanjiang China AR-AM0014 ARR; Mangrove 380 4,020 Mangrove (Guangdong (2021) reforestation (6,534 verified in Afforestation Project Province) 2021) 2360: Virginia Coast Virginia, USA VM0033 (Under WRC; Seagrass 66,452 1349 Reserve Seagrass development) restoration restoration Project 2395: OKI REDD+ Indonesia AR-AM0014; Mangrove 23,500 181,986 Project (South Sumatra) VM0007; AR- conservation and ACM0003 (2019) reforestation 2406: Senegal Senegal VM0007 (Under ARR/REDD/ 42 2,547 and West Africa development) WRC; Mangrove Mangrove restoration and Programme conservation Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 122 Methodology Annual emission and year of Size reductions / ID: Project Name Country registration Activities (hectares) removals (tCO2eq) 2518: Carbon Mexico VM0007 (Under Mangrove 49,387 3,123,836 Sequestration in development) reforestation and Mangroves of the conservation South – Central Coastal Zone of the State of Sinaloa 2568: Hainan China AR-AM0014 ARR; Mangrove 192 75,796 Lingshui Mangrove (Registration reforestation Blue Carbon Project requested) 2792: Mangrove Myanmar AR-AM0014 ARR; Mangrove 1,003 77,130 Restoration and (Ayeyarwaddy (Under reforestation Sustainable Division) development) Development in Myanmar 2842: Restoring Mexico VM0033 (Under ARR/WRC; 32,914 868,302 Mangroves in development) Mangrove Mexico’s Blue reforestation Carbon ecosystems 2500: Bonos del Yucatan, Mexico VM0033 (Under ARR/WRC; 5,060 48,518 Jaguar Azul development) Mangrove reforestation 2834: Mangrove Senegal AR-AM0014 ARR/WRC; 7,020 95,470 Restoration Project (Under validation) Mangrove with Sine Saloum reforestation and Casamance Communities 3142: Blue Forest Mozambique VM0007 (Under ARR/REDD; 183,000 2,965,555 and Mozambique: development) Mangrove Building Africa’s conservation and Largest Mangrove reforestation Restoration Project 3357: Climate Sri Lanka AM0014 (Under Mangrove 1,000 65,000 Resilient and development) afforestation Community Driven Mangrove Afforestation Project Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 123 II. Plan Vivo Plan Vivo, a boutique international standard tailored to focus more heavily on the positive social impact of carbon projects, as well as to accommodate smaller projects, has three wetland projects in its portfolio. Table 9 Existing wetland carbon projects (Plan Vivo) Methodology Annual emission and year of Size reductions / Project Name Country registration Activities (hectares) removals (tCO2eq) Mikoko Pamoja Kenya Plan Vivo Avoided 125 9,880 (project-specific deforestation and (by 2021) calculation) forest restoration; reforestation and forest protection; restoration of eroded beach area Tahiry Honko Madagascar Plan Vivo Mangrove 1,400 1,375 (project-specific) conservation and (none yet issued) restoration Vanga Blue Forest Kenya Plan Vivo 460 5,000 (project-specific) (none yet issued) Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 124 III. American Carbon Registry and Climate Action Reserve In North America, both the American Carbon Registry (ACR) and the Climate Action Reserve (CAR) have coastal wetland projects in their pipeline. American Carbon Registry Table 10 Existing wetland carbon projects (American Carbon Registry) Methodology Annual emission and year of Size reductions / ID: Project Name Country registration Activities (hectares) removals (tCO2eq) ACR410 United States The Restoration Restoring 693 6,500 of California palustrine Deltaic and emergent Coastal Wetlands, wetlands on Version 1.1 Sherman and Twitchell Islands, similar to those that existed in the early part of the last century ACR430 United States Restoration of Raising water 44,920 16,000 Pocosin Wetlands levels in drained (over 20 years) wetlands Three cancelled projects: ACR 364 (Restoration of Coastal Wetland Forest in Louisiana); ACR 397 (Forested Wetland Assimilation in the Mississippi Delta); and ACR414 (Quimby Island / Western Delta Wetlands Restoration) Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 125 Climate Action Reserve Table 11 Existing wetland carbon projects (Climate Action Reserve) Methodology Annual emission and year of Size reductions / ID: Project Name Country registration Activities (hectares) removals (tCO2eq) CAR1428 Mexico Mexico Forest Mangrove 692 6,000 Protocol restoration (mangrove (estimate) (version 1.5) element) CAR1429 Mexico Mexico Forest Mangrove 1,200 Not known Protocol restoration (version 1.5) IV. Blue Carbon credit schemes (Japan) Table 12 Existing wetland carbon projects (Japan) Methodology Annual emission and year of Size reductions / Project Name Country registration Activities (hectares) removals (tCO2eq) Yokahama Blue Japan IPCC and Kuwae Fossil fuel Not known to Not known to Carbon Project et al. (2019) reduction by authors authors fishing boats, management of eelgrass beds, wakame kelp Fukuoka City Japan IPCC and Kuwae Eelgrass beds Not known to Not known to et al. (2019) authors authors Offset Crediting Japan IPCC and Kuwae Eelgrass and 10.6 ha. Demonstration by the et al. (2019) Sargassum beds Japanese National Government (J-Blue Credit): Yokohama Bay Side Marina Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 126 A P P E N DIC E S Appendix 5: Methodological Details (Blue Carbon) Blue Carbon methodologies—notably Verra’s VM0033 methodology (an updated version was released in and VM007—are not unlike methodologies developed 2021) vastly expanded the scope of Blue Carbon for forestry projects. They apply the same, or similar, interventions available under the earlier (Clean considerations for the assessment of baseline scenarios, Development Mechanism-recognized) Blue Carbon carbon stocks in biomass, and leakage emissions methodology for afforestation and reforestation of from activity shifting. This includes (for conservation mangroves. With VM0033, a wide set of activities— projects) the fundamental consideration that a project including removal of tidal barriers to re-wet degraded developer must demonstrate a real, immediate, and marshlands; improvement of water quality to site-specific threat of deforestation or degradation. increase seagrass habitats; sustainable use of For restoration projects, it means that the project must dredged materials; and re-introduction of native plant be implemented on degraded tidal wetlands, or mud communities in tidal wetlands—have become eligible flats, or shallow open water, in which establishment of to generate VCUs, thereby generating a new source wetland ecologic conditions is not expected to occur in of funding. the absence of the project activity (see Table 2). VM007 (“REDD+ Methodological Framework”) However, specific components are distinctly different received an update (1.6) in 2020, expanding its set when assessing other carbon pools—notably soil— as of modules on the quantification of GHG-emission well as dynamics such as the effects of sea-level rise reductions and removals to include tidal wetlands at (as the tidal zone may shift landward), ecological risk of deforestation or degradation. The modules in leakage (changes to adjacent areas due to hydrological question are:1 connectivity), carbon stocks in tidal wetland soils, and methane emissions. • VMD0050: Estimation of baseline carbon stock changes and GHG emissions in tidal wetland In 2015, the Methodology for Tidal Wetland and restoration and conservation projects Seagrass Restoration (VM0033) became the first • VMD0051: Methods for monitoring carbon stock globally applicable greenhouse gas-accounting changes and GHG emissions in tidal wetland methodology for coastal wetland restoration, allowing restoration and conservation project activities tidal wetland restoration projects—specifically • VMD0052: Demonstration of additionality of mangroves, salt marshes, and seagrasses—to generate tidal wetland restoration and conservation VCS carbon credits (Verified Carbon Units or “VCUs”) project activities. based on any effective restoration activity. The new 1 Accessible here. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 127 While most Blue Carbon projects to date operate The methodologies address the key technical 2 under the older CDM methodology (AR-AM0014), parameters—including on additionality, permanence, all projects listed after 2022 must utilize VM0033 and leakage: or VM007 or—in the future—the consolidated tidal wetland conservation and restoration methodology (under development). BOX 29 Concept of additionality3 A carbon finance concept is the ambition is put in doubt, and any claimed that the additionality in about principle of additionality. It allows offsetting function really increases 85 percent of CDM projects across a carbon finance to come in only for the overall emissions balance. range of sectors—excluding the land- interventions that would not have Second, it addresses the need for use sector—was in doubt (Cames et al occurred in the absence of carbon efficient resource allocation. Carbon 2016). The study ascribes this to the market incentives—in other words, finance should be a means to an end. wide availability and cost-efficiency of that they were not the most likely Allocating it to interventions that relevant low-carbon technologies as or profitable option and there have no need creates an inefficient an alternative. were barriers to implementation. windfall for the recipient and leaves The underlying rationale behind legitimate beneficiaries with less cash The question of additionality becomes the additionality principle is to distribute. particularly acute—and contentious— twofold.4 First, it is an expression of when the mitigation activity involves environmental integrity, specifically While the motivation is clear, the commercial usage such as industrial in the context of carbon crediting issue in practice is one of the most processes; renewable energy (offsetting). If an intervention that contentious ones for carbon markets. generation; and energy efficiency would be realized in the normal A 2016 study for the flagship crediting measures; but, also, sustainable course of action is accounted for standard of the Kyoto Protocol, the agriculture and sustainable as a mitigation effort, the latter’s Clean Development Mechanism (CDM), forest management. BLUE CARBON RELEVANCE For interventions on habitat technology, and capacity- building) for forest as much as for wetland conservation and restoration, the are typically too high to make these restoration. These include that project risk of non-additionality—if it exists approaches viable without carbon or developers must provide evidence at all—is much lower. While there other finance. VM0033 and VM007 that land was not cleared to generate are approaches on the commercial deem conservation and restoration carbon credits. This condition is and sustainable use of mangrove, activities as additional (positive list) deemed met if clearing happened salt marsh and seagrass products, (Verra 2021a). Note, however, that 10 years or more before the project the barriers (on investment/finance, special eligibility criteria apply— start date. 3 Cf. Streck 2020; for ecological leakage cf. VCS Module VMD0044: Estimation of emissions from ecological leakage (LK-ECO). 4 World Bank 2016, “Carbon Credit and Additionality. Past, Present, and Future” (PMR Technical Paper). 2 AR-AM0014: Afforestation and reforestation of degraded mangrove habitats (version 1.0 of 2011; version 2.0 of 2012; and version 3.0 of 2013, at https://cdm.unfccc.int/methodologies/DB/KMH6O8T6RL3P5XKNBQE2N359QG7KOE. Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 128 BOX 30 Concept of leakage5 Leakage refers to the scenario that intervention leads to a significant commercial degradation agents an activity within the intervention increase of GHG emissions outside the (commercial agriculture, aquaculture, boundary triggers greenhouse gas intervention boundaries. or commercial logging). The risk of (GHG) emissions on lands outside of this form of (“secondary”) leakage is the intervention boundary. Leakage must be monitored and particularly high where markets for controlled by mitigating (in lieu of forest land and wetland commodities Two common forms are activity- simply displacing) the drivers of (for instance, shrimp or palm oil) are shifting leakage and market-leakage. degradation. With respect to the inelastic, and when compensatory Activity-shifting leakage occurs when risk of activity-shifting leakage, technology that would allow for activities inside the project boundary primary (in particular community- sustainable intensification or (for example, land conversion) driven) degradation calls for both development opportunities is absent. relocate outside of the boundary. alternative resource strategies Market leakage occurs when project (such as more efficient cookstoves Jurisdictional programs permit activities affect an established market or solar energy sourcing to remove improved monitoring and accounting for goods (such as farmed products) the incentive for the degradation for leakage (throughout the and cause the substitution or agent to harvest biomass) and subnational region or the whole replacement of that good elsewhere. close integration of communities in country, though not beyond). They Land-based projects can also come the project (providing alternative also offer policy-level interventions with the risk of ecological leakage livelihoods). More complicated are to address market leakage, which where, due to the hydrological instances where degradation is project-level interventions typically connectivity with adjacent areas, the market-driven and involves larger struggle to suppress. BLUE CARBON RELEVANCE The applicability conditions of (or else relevant emissions cannot be Restoration and Conservation (WRC)) VM0033 and VM007 (tidal wetlands) accounted for in the baseline) or the projects, evidence required that land are structured to ensure that the land use can continue with the project was not cleared to generate carbon different types of leakage must not (for example, reed or hay harvesting). credits—deemed met if clearing occur. To prevent leakage, the project happened 10 years or more before the must be free of any land use that could For Afforestation, Reforestation and project start date. be displaced outside the project area Revegetation (ARR) and Wetland 5 Compare Streck (2020); for ecological leakage compare VCS Module VMD0044: Estimation of emissions from ecological leakage (LK-ECO). Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 129 BOX 31 Ensuring permanence Emissions into the atmosphere and will not be used as “offsets” (aiming storage in one-year intervals); or (the land-based carbon removals are at carbon neutrality) and they are not most common approach among carbon not commensurate. While there is destined to have a trading (long-term standards and the one applied by certainty that greenhouse gas (GHG) commodity) value. Verra/VCS), backed by a buffer pool. emissions add to the amount of GHG in the atmosphere for centuries, there Second, the non-permanence issue The Verra buffer pool is open to is no such certainty for removals. can be addressed through continued AFOLU projects that meet the The carbon stock they are building and comprehensive accounting. eligibility conditions as per the VCS may last forever undisturbed. Yet, if This strategy is tailored primarily Non-Permanence Risk Tool. Among disturbed, the sequestered carbon to jurisdictional approaches (both the conditions is that a project can easily get lost into the atmosphere LULUCF-focused and economy- developer can demonstrate project (risk of reversal). wide) but may also be applied to longevity of at least 30 years. Once project-level interventions in cases the eligibility is met, the risk must be There are different strategies used by in which the accounting capacity is quantified as a share of credits issued policy makers and voluntary-carbon- strong and granular enough to record (often 20 percent) and defined in the market stakeholders.6 First, the intervention-level changes. When a project documentation. Every project installation of separate carbon country—notably under its Nationally developer must then transfer, from markets for credits considered Determined Contributions (NDCs— every credit issuance, the specific permanent and those coming with commits to comprehensive emission- share into a collateral or “buffer” the risk of non-permanence. This is reduction targets, while permitting account. The buffer guarantees that a choice made, for instance, by the the use of credits (for results that the portion of credits issued and EU policy makers, who distinguish go beyond the target), future carbon forwarded to the project developer emissions trading systems for stock losses will show in the NDC can be treated as permanent. Should energy- and industry-based emissions accounts, and the country remains the project for which “permanent” (European Emissions Trading System liable to over-compensate in the credits have been issued, be and the Effort Sharing Framework), future. Jurisdictional approaches also subsequently affected by a reversal on the one hand, and a cap-and-trade come with the benefit that the risk of event, an equivalent number of units system for land use, land-use change, selective reversals can be statistically will be released and retired from the and forestry (LULUCF), on the other managed (accounted for). standard’s buffer account. hand. The approach may also be used by voluntary carbon markets. Third, a technique used primarily In practice, buffers have Credit suppliers and credit buyers, by project-based carbon standards, demonstrated robust collateralization. then, would be transparent about credits from activities with a risk of Indeed, Verra’s VCS buffer system has the risk of reversal and recognize reversal can be issued as time-bound proved remarkedly resistant. By late non-equivalence with permanent (the Clean Development Mechanism 2022, the buffer held more than credit types. Removal credits are used temporary Certified Emission 60 million credits, collateralizing some still recognized for their (at least Reductions); fragmented (the Climate 190 projects.7 A single cancellation initial) mitigation results and their Action Reserve, for instance, allows has been registered (for less than contribution to advancing on the 2050 “ton/year” accounting, a metric that 50,000 credits) so far; the registry mitigation pathways. However, they traces the climatic benefit of carbon shows a few more instances, where 6 Compare Carbon Credit Quality Initiative, at https://carboncreditquality.org/resources.html. 7 Cf. Verra Registry 2022: https://registry.verra.org/app/search/VCS/Buffer (accessed on 14 August 2022). Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 130 buffer credits have been put on hold, markets. Under this option, credit their contribution to advancing on the pending investigation. suppliers and credit buyers are 2050 mitigation pathways. However, transparent about the risk of reversal they will not be used as “offsets” The fourth strategy shares similarities and recognize non-equivalence with (aiming at carbon neutrality) and they with the regulator-focused strategy of permanent credit types. Removal are not destined to have a trading designing separate trading systems credits are still recognized for their—at (long-term commodity) value. but is tailored to voluntary carbon least initial—mitigation results and BLUE CARBON RELEVANCE The common risks of non-permanence from natural and anthropogenic sources mostly apply to Blue Carbon projects. In addition, sea-level rise presents risks of its own, and every project under VM0033 must calculate the impact from sea-level rise for the project as well as mitigation strategies. The claim of GHG emission reductions restricted if conversion to open water is expected before t=100A. Beyond applying relevant risk tools and set-asides, isolated single- category Blue Carbon restoration or conservation projects in the coastal zone are likely to face a significant risk of failure, if they do not explore landscape-scale interventions, including the entire sub- to supra-tidal sequence, and set out strategies for a landward shift of coastal ecosystems (Needelman et al. 2018). Unlocking Blue Carbon Development CHAPTER ToC EX.S 1 2 3 4 5 AP APPENDICES 131 References and Bibliography Akiwumi, P. (2022). Climate finance for SIDS is shockingly Conservation International. (N.D.) “Blue Carbon: Integrating low: Why this needs to change. UNCTAD. 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