Biodiversity co-benefits in carbon markets: evidence from voluntary offset projects

Centre for Endowment Asset Management (CEAM)
Centre for Endowment Asset Management (CEAM)

Overview

The rapid expansion of global carbon markets is creating new pathways for financing nature-based solutions, yet little empirical evidence exists on whether carbon offset projects deliver meaningful biodiversity benefits. The study ‘Biodiversity Co-Benefits in Carbon Markets: Evidence from Carbon Offset Projects’ addresses this gap by linking thousands of carbon projects to high-resolution biodiversity indicators. It delivers the first large-scale, data-driven assessment of how carbon mitigation efforts interact with local ecosystems and species conservation. The findings reveal that well-designed nature-based solutions can generate substantial biodiversity gains, an insight increasingly important for investors seeking high-quality, nature-positive climate investments.

An interview with Douglas Almond and Zoey Zhou.

Authors

Zoey Yiyuan Zhou

Columbia Climate School, Columbia University

Douglas Almond

Department of Economics and International and Public Affairs, Columbia University

Project aims

The core objective of the project is to quantify the biodiversity co-benefits associated with carbon offset projects across multiple countries and habitat types. To do this, the study is structured around 4 main aims:

1

Global mapping of carbon offset projects

Build a comprehensive global dataset of carbon offset projects, spanning REDD+, afforestation/reforestation, improved forest management and non-forest nature-based solutions.

2

Integration of biodiversity indicators

Combine biodiversity metrics, such as species richness, habitat loss and threat status, using sources including the Biodiversity Habitat Index and species occurrence databases.

3

Impact of offset projects on biodiversity

Evaluate whether carbon offset projects protect or restore biodiversity, controlling for ecological, geographic and project-level characteristics.

4

Identifying high co-benefit project types

Determine which project types deliver the strongest biodiversity co-benefits and draw implications for the integrity of carbon markets.

By doing so, the study addresses a fundamental question for policymakers and investors: Can carbon markets simultaneously deliver climate mitigation and biodiversity conservation?

Key insights

1

Carbon offset projects generate measurable biodiversity co-benefits

Across project types, the study finds statistically significant improvements in biodiversity indicators in and around carbon project areas. Projects tend to slow habitat loss, strengthen ecological integrity and preserve species richness relative to similar non-project locations. These findings counter concerns that carbon-only focus overlooks ecological outcomes.

2

Projects in biodiversity hotspots produce the largest ecological gains

The strongest effects appear in regions with:

  • high baseline species richness
  • rapid historical habitat degradation
  • greater concentration of threatened species

These include tropical forests in Latin America, Southeast Asia and parts of Africa. In these hotspots, nature-based carbon projects act as an important buffer against escalating biodiversity loss.

3

Forest-based projects outperform technology-based offsets

Nature-based climate solutions, such as deforestation avoidance, afforestation and forest management, deliver substantially higher biodiversity co-benefits than industrial or energy offset projects. Forest ecosystems offer both carbon storage and habitat protection, making them uniquely positioned to deliver dual climate–biodiversity returns.

4

Project design and governance matter greatly

Higher co-benefits are associated with:

  • projects that incorporate community land stewardship
  • strong monitoring and verification practices
  • clear land-tenure arrangements
  • longer project durations

These factors improve ecological outcomes and ensure that biodiversity benefits are durable rather than short-lived.

5

Biodiversity gains are often undervalued in carbon markets

The research highlights a mismatch between ecological performance and market pricing. Buyers generally pay for carbon outcomes but do not systematically reward biodiversity co-benefits, despite their potential to enhance climate resilience and long-term project success. This creates a market inefficiency and an opportunity.

Why this matters for investors

Biodiversity co-benefits increase carbon credit quality

Investors in carbon markets face growing scrutiny over additionality, permanence and environmental integrity. Projects that deliver verified biodiversity gains offer lower ecological and reputational risk, improving long-term credit value.

Nature-positive investment demand is rising

Policy initiatives such as the Kunming–Montreal Global Biodiversity Framework and the Taskforce on Nature-related Financial Disclosures (TNFD) are accelerating financial sector interest in biodiversity. This research provides a quantitative foundation for assessing which offsets align with emerging nature-positive standards.

Co-benefits improve climate resilience

Ecosystems rich in biodiversity store carbon more reliably and recover faster from shocks such as droughts, pests and wildfires. Biodiversity therefore strengthens the permanence of carbon sequestration, a core determinant of offset quality.

Investors can use biodiversity metrics for due diligence

The study’s integrated dataset demonstrates that biodiversity indicators can be systematically applied to project evaluation. Investors can screen for:

  • high species richness
  • low habitat degradation
  • high ecological integrity
  • threatened species protection

These metrics help distinguish low-quality offsets from high-impact projects that deliver multiple environmental returns.

Co-benefits create premium pricing opportunities

The market currently undervalues biodiversity-rich offsets. As co-benefits become monetised through premium labels, biodiversity credits, or bundled nature-positive products, investors positioned early may achieve superior returns.

Conclusion

This study provides the first large-scale evidence that well-designed carbon offset projects can deliver meaningful biodiversity gains, particularly in high-richness, high-threat ecosystems. By integrating global carbon project data with robust biodiversity metrics, the research shows that nature-based solutions consistently outperform technology-based offsets and that strong governance further enhances ecological outcomes. For investors, these insights highlight that biodiversity co-benefits are both measurable and undervalued, offering a pathway to higher-quality credits, improved climate resilience and emerging premium opportunities in nature-positive carbon markets.

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