Feasibility Assessment of a Carbon Credit Program in Punta Cabullones
Project Sponsor: Glorimar Toledo Soto – Para La Naturaleza Biodiversity and Conservation Project Coordinator
Team Members: Yashvi Gosalia, Jessica Hart, Sahen Juneja, Hildey McCorkell
Project Advisors: Professor Melissa Belz, Professor John-Michael Davis
Project Files:
Abstract
Para La Naturaleza (PLN), an environmental nonprofit, plans to start a carbon crediting program to fund their projects throughout Puerto Rico. Our project conducted a feasibility assessment for PLN using a planned mangrove reforestation project in the Punta Cabullones Natural Protected Area as a case study. We investigated best practices from mangrove monitoring plans, determined the steps to become carbon credit certified, and estimated the organizational and economic feasibility of participating in carbon crediting. Though there are some concerns with Verra and the market as a whole, we determined the steps to create and maintain a carbon crediting project and concluded that the program is profitable.
Executive Summary
Para la Naturaleza (PLN) is an environmental organization that is working towards their goal of protecting 33% of ecologically valuable land in Puerto Rico by 2033. Carbon crediting is a supporting incentive for organizations to sequester carbon and help fund their projects. PLN wants to implement a carbon crediting program with Verra, the world’s largest distributor of carbon credits. The goal of this project was to evaluate the carbon-sequestering potential of a mangrove reforestation plan at Punta Cabullones Natural Protected Area and assess the economic benefits of participating in a carbon credit program. This was accomplished through the following objectives:
1. Investigate best practices to monitor health and carbon sequestering ability of mangrove forests.
2. Determine the requirements to establish and manage a carbon credit certified area.
3. Evaluate carbon credit availability and profitability for the mangrove forest in Punta
Cabullones.
Background
Globally, humans emit approximately 40 billion tonnes of carbon per year, increasing the concentration of carbon in the atmosphere by 50% since the Industrial Revolution (Fang et al., 2011; Ritchie & Roser, 2024). This increase is causing global issues such as global warming, ocean acidification, and more severe natural disasters (Lindsey, 2023; US EPA, 2016). These effects especially harm islands in the Caribbean. As a small island in the Caribbean, Puerto Rico takes the brunt of stronger hurricanes, and many coastal communities are at risk of being submerged from sea level rise. Due to the worsening debt crisis, Puerto Rico has limited resources to prepare for and respond to climate related disasters.
Carbon sequestration can mitigate carbon emissions and slow the progression of climate change. Carbon sequestration is the removal of carbon from the atmosphere through technological or environmental capturing methods. Nature-based Solutions are a popular emerging carbon sequestration method in which organizations facilitate the growth of environments to increase nature’s carbon sequestering potential, along with its other environmental benefits.
Mangroves are a promising Nature-based Solution. They provide a variety of ecological benefits, such as preventing soil erosion, mitigating the effects of sea level rise, acting as a storm buffer against hurricanes, and providing habitats for thousands of species. Mangroves sequester carbon at a higher rate than other tree species, making their reforestation a promising carbon sequestering opportunity. Despite the benefits that mangroves provide, they are at risk from climate change and human deforestation, increasing the importance of conservation and reforestation efforts.
One Natural Protected Area that has been identified as a potential asset for a carbon crediting program is a wetland in the south called Punta Cabullones (Figure A). PLN is currently seeking to implement a carbon crediting program in Punta Cabullones based on their 2021 La Esperanza / Punta Cabullones Reforestation Plan, which plants a significant number of mangroves. Carbon credits are a method for organizations to generate funding through reducing carbon in the atmosphere. For every tonne of carbon dioxide sequestered or prevented from being emitted, an accredited organization generates one carbon credit (Ollendyke, 2023). This credit can then be sold to carbon emitting companies for them to become ‘carbon neutral’ (Figure B).
Figure A: Map of Punta Cabullones (2021 La Esperanza / Punta Cabullones Reforestation Plan)
Figure B: The carbon credit process (NEWGEN)
Methodology
Our methodology consisted of conducting interviews with experts, reviewing the Verra carbon crediting system, and calculating the benefits of implementing the 2021 Reforestation Plan. To understand experts’ perspective, we conducted twelve semi structured interviews with PLN staff members, other environmental professionals, and former Verra staff. Our group asked questions about mangrove monitoring practices, assessment of mangrove health, and the use of remote sensing or other applications to track mangrove progress. The team gained perspective on the monitoring process by visiting La Parguera, a similar PLN Natural Protected Area that has mangrove growth, and taking the same measurements that volunteers would use to measure mangrove health and condition (Figure C). We also interviewed the same twelve experts about the requirements to certify an area to generate carbon credits, and the challenges that commonly arise in the process as well as mangrove’s use in carbon sequestration programs. We thoroughly reviewed Verra’s website to determine program resources, validation and verification, and calculations.
Figure C: Mangrove monitoring at La Parguera
We calculated the profitability of implementing the Reforestation Plan by first determining the sequestration rate through multiplying the sequestration rate per area by the hectares of land being reforested. We calculated the profitability of carbon credits from Punta Cabullones by using the projected carbon sequestration rate and converting it into average annual carbon credits, multiplying the price per carbon credit, and subtracting the estimated costs. We compiled data from the Reforestation Plan and the PLN-Site-Based-Project-Feasibility tool spreadsheet.
Results
Our research found that implementing the 2021 La Esperanza / Punta Cabullones Reforestation plan would be beneficial to PLN in terms of generating a profit and sequestering carbon. Out of the 40 active Verra methods, we found VM0033 Tidal Wetlands and Seagrass Restoration to be most relevant to Punta Cabullones for starting a carbon crediting program. The main requirements outlined in Verra’s methodology are establishing a baseline, setting up a consistent monitoring schedule, and getting audited. We developed the following four steps to meet Verra’s guidelines for any PLN projects while using Punta Cabullones as a case study:
1. Assess the Benefits of Implementing Carbon Crediting
2. Establish a Project with Verra
3. Evaluate and Adapt Monitoring Standards
4. Conduct Verification for Carbon Credits
Punta Cabullones has the potential to sequester 990 tonnes of carbon yearly through reforestation. Additionally, PLN is projected to profit an estimated $15,500 annually by participating in the Verra carbon offsetting program. The predicted costs, as estimated by the PLN-Site-Based-Project-Feasibility-Tool, for implementing the Reforestation Plan as a Verified Carbon Standard (VCS) project will be on average $27,000 annually. Although the price of carbon credits fluctuates with the market between about $40 – $80 per carbon credit, using an average price for blue carbon of $45 per credit, PLN will earn an average revenue of $42,500 annually over the 20-year project period.
PLN is in the process of becoming an accredited VCS organization. Once accredited, they can establish projects with Verra, which requires creating a detailed project description, including baseline carbon sequestration calculations to evaluate project progress. In addition, projects must select the most appropriate Verra Methodology for the given environment. Wetland Restoration and Conservation aligns best with the mangrove reforestation of Punta Cabullones. Therefore, we identified Verra’s VM0033 Tidal Wetlands and Seagrass Restoration as the most relevant methodology for Punta Cabullones. After project design is complete, it is eligible for validation, the first audit, in which the project design and carbon removal estimates are evaluated to ensure they follow VCS standards and use reasonable assumptions and methods.
PLN does not currently conduct monitoring in Punta Cabullones due to its remoteness and occasional inaccessibility. To successfully implement the Reforestation Plan and earn carbon credits, PLN will have to establish a more rigorous monitoring program, which will help them meet the internal goal of an 80% survival rate. Interviews with various experts indicated that the most helpful tools for successful monitoring are the application Survey123 and permanent parcels, which are sample plots of the overall environment. Monitoring at frequent intervals immediately after planting allows for replanting to occur as needed. After significant time has passed, frequency can decrease to optimize the use of resources.
Five years after the implementation of the Reforestation Plan, the project will be eligible for verification, the process by which PLN can be awarded carbon credits upon proof of significant carbon sequestration. The selected Verra Methodology describes specific process details, beginning with internal evaluations, followed by an audit conducted by a third-party auditor. After the first audit, verification can occur at any frequency that PLN desires as long as significant change can be documented. Verification typically occurs every five years and should be no more frequent than once per year. Finally, carbon credits do not need to be sold all at once, allowing organizations to sell credits during favorable market fluctuations, and induce revenue as needed without conducting verification again.
Considerations for a Carbon Credit Project
As with any new project, it is important to consider all the factors that may affect the implementation and success of the program. With this feasibility assessment of a carbon credit program in Punta Cabullones, there are many aspects to analyze in terms of the calculations done, Verra’s recent controversies, and drawbacks within the carbon credit market as a whole.
The calculations for Punta Cabullones suffer from unpredictable input metrics. Values such as the inflation rate, price of carbon credits, survival rate of trees, and others are difficult to determine with certainty. Some input metrics are highly variable depending on whether PLN uses volunteers or paid employees to implement the carbon crediting program. Using volunteers, the price of supervising staff, transportation, and potential stipends would alter the cost. Additionally, if a disaster occurs, the health of the newly reforested mangroves may be affected, decreasing the amount of carbon they may be able to sequester. Fewer carbon credits would be generated, and projects may suffer a financial loss. The cost of carbon credits also depends on who is buying them and what they are willing to pay for it, which can alter the price per carbon credit by almost $40 across various types. Though these calculations are rough estimates, they offer a general assessment to guide PLN’s decision to participate in a carbon credit program.
Another important factor to consider is the organizational size. Verra is designed to work with larger projects that will earn a substantial quantity of carbon credits, thus justifying the high annual subscription costs. Simply maintaining a Verra project, regardless of size, can cost over $17,500 initially, and $5,000 each year. Projects comprising 1,500 hectares or more are generally more successful, and the cost of carbon credit programs are non-linear relative to size, such that smaller projects cost much more than larger ones on a per hectare basis. Combining several similar locations and projects into one has the potential to save money, but must be done carefully, as it also has the potential to create an overly complicated project.
Many experts have also noted that there may be aspects of greenwashing within the carbon credit market. The main issues that arise with companies buying carbon credits include double counting credits, using credits in lieu of reducing emissions, and credits not representing actual carbon emissions being removed (Galey, 2022; Raji, 2023; Romm & Schendler, 2023). Some sources also argue that carbon credits do not always represent a tonne of carbon removed from the atmosphere. In 2023, The Guardian, an independent British paper, published an article claiming that Verra overestimated potential deforestation, thus inflating the carbon value of the issued credits. Although Verra refuted these claims and the specific program targeted is irrelevant to this project, it is important to keep in mind the implications of this controversy.
Conclusion
We showed that, through the Verra VCS program, PLN could cover the costs of implementing the reforestation program and additionally make an estimated average annual profit of $15,500 over 20 years, helping to fund other PLN projects. Despite the controversy around carbon crediting, the positive impacts for an environmental organization such as PLN outweigh potential risks. As carbon crediting in Punta Cabullones is shown to be favorable through this study, a further investigation of the benefits of carbon crediting for other reforestation plans is warranted.