Carbon credits often sound simple. A company emits carbon, and pays to protect a forest. The forest absorbs carbon. The balance looks restored.
This idea has shaped the voluntary-carbon market for years. It has directed money into tropical forests and helped companies claim climate responsibility.
But a new analysis shows that this story does not hold up as neatly as many believed. The gap between what was promised and what actually happened is far larger than expected.
Doubts on carbon credits
Researchers led by the University of Cambridge studied 44 early REDD+ forest projects. These projects form the backbone of forest carbon credits worldwide.
They asked a direct question. Did these projects reduce deforestation as much as they claimed?
The answer was mixed. Some projects helped forests. But overall, the numbers used to issue credits were far too optimistic.
Why forests still matter
Tropical forests play a major role in climate control. Cutting them releases large amounts of carbon. Protecting them is one of the fastest ways to slow global warming.
Yet funding for forest protection falls short. Experts estimate a yearly gap of about 216 billion US dollars.
Carbon markets were meant to close this gap. They connect private money with conservation efforts. When trust in these credits weakens, the entire system struggles.
Recent market losses show this clearly. Confidence has dropped, and the value of credits has taken a hit.
Carbon credits far exceed reality
The study found a striking mismatch. Projects claimed about 10.7 times more avoided deforestation than independent analysis could support.
In simple terms, for every eleven credits sold, only one matched a real reduction in forest loss.
Most projects delivered only a fraction of what they promised. This means buyers often believed they were offsetting far more emissions than they actually were.
Not all projects failed
The picture is not entirely negative. Out of 44 projects, 36 did reduce deforestation compared to expected trends. Some showed clear benefits on the ground.
A few even exceeded their own targets. Projects in Madagascar and Peru protected more forest than they claimed.
This shows an important point. The issue lies more in how results were measured than in whether projects worked at all.
“A key take-home message is that ‘bad credits’ do not necessarily mean ‘bad projects’. Many projects have successfully slowed deforestation, even if more credits were sold than are justified,” said Professor Julia Jones at Bangor University.
Data argument falls apart
Some defenders argued that researchers underestimated forest loss because they used global satellite data.
The claim was simple. Global datasets miss smaller changes, so they make projects look less effective.
The study tested this idea. It compared global data with project-reported numbers.
The result surprised many. The global data actually showed slightly more deforestation, not less. This means the gap cannot be explained by data choice alone.
Flawed comparison areas
The deeper issue lies in how projects estimate what would have happened without intervention.
Each project creates a comparison area. This area represents a world without protection. If the comparison loses more forest, the project claims success.
But these areas were not neutral. They were often easier to access, closer to roads, and more exposed to deforestation pressures.
Safer project locations
Meanwhile, project zones were often located in safer, remote regions.
This creates a bias. The comparison area naturally loses more forest, making the project appear more effective than it truly is.
“We found that many REDD+ projects were at far lower risk of deforestation than anticipated by project-led evaluations,” said Dr. Tom Swinfield, first author of the study.
“Credits were issued based on predictions that these forests were at imminent risk of deforestation, but in reality this risk was often lower.”
Models add more bias
Beyond comparison areas, projects also rely on predictive models.
These models estimate future deforestation based on trends and assumptions. Different methods produce different results.
Developers often chose methods that predicted higher forest loss. Higher predicted loss leads to more credits.
This creates a clear incentive problem. The same group benefits from higher estimates and controls the modelling process.
New rules bring change
The carbon market has started to adapt. New methods shift from project-level estimates to larger regional or national baselines. These are called jurisdictional approaches.
They reduce the ability to select favorable comparison areas. Independent groups now handle more of the analysis.
This is a step forward. But challenges remain. These systems still depend on predicting future trends, which can change quickly due to policy, economics, or climate events.
A stronger solution
Researchers suggest a more reliable approach. Credits should be issued after results are measured, not predicted. This is known as ex post accounting.
It compares real outcomes with carefully matched control areas. This reduces guesswork and improves accuracy.
Such methods already exist. They may issue fewer credits, but those credits would better reflect real impact.
“It’s vital that future forest carbon credits accurately represent their benefits for these schemes to be a meaningful solution to deforestation,” Swinfield said.
Higher prices for carbon credits
More accurate accounting comes with a cost. If fewer credits are issued, each one must carry a higher price to support conservation work.
Cheap credits often relied on inflated estimates. Correcting this means paying closer to the true cost of protecting forests.
This shift may challenge buyers, but it strengthens long term credibility.
Forest finance is still needed
Despite the flaws, the idea of funding forest protection through carbon markets remains important.
Many projects have delivered real benefits. Forests still need large and steady funding.
“This study confirms concerns widespread over-crediting in the carbon market,” Swinfield said.
“But despite the challenges, carbon markets remain one of the few mechanisms we have to protect tropical forests while giving organisations and individuals the chance to compensate for their emissions.”
A better path forward
The lesson is not to abandon carbon markets. It is to improve them.
Better verification, careful comparison methods, and honest pricing can make a difference. Buyers must also accept that real impact costs more.
“The over-crediting scandal in the voluntary-carbon market has left many with the unhelpful impression that anything to do with funding tropical forest conservation through carbon finance is a bit dodgy,” said Jones.
“It is important to set the record straight, as forest conservation is so vital to tackling climate change.”
The study is published in the journal Nature Communications.
NOTE – This article was originally published in Earth and can be viewed here
