Do Forest Carbon Offset Projects Bring Biodiversity Conservation Co-Benefits? An Examination Based on Ecosystem Service Value

Abstract

In the context of worsening climate change and biodiversity loss, forest carbon offset projects are viewed as important nature-based solutions to mitigate these trends. However, there is limited evidence on whether these projects provide net benefits for biodiversity conservation. This study uses a staggered difference-in-differences model with balanced panel data from 128 counties in Sichuan Province, China, spanning from 2000 to 2020, to examine whether these projects bring biodiversity conservation co-benefits. The results show that the implementation of forest carbon offset projects leads to a 55.1% decrease in the ecosystem service value of forest biodiversity, with the negative impact particularly pronounced in areas facing agricultural land use and livestock pressures. The dynamic effect tests indicate that the benefits of biodiversity conservation generally begin to decline significantly 5 years after project implementation. Additional analyses show that although projects certified under biodiversity conservation standards also exhibit negative effects, the magnitude of decline is substantially smaller compared to uncertified projects, and certified projects achieve greater carbon stock gains. Heterogeneity analysis demonstrates that projects employing native tree species show significant positive effects. Moreover, spatial econometric results demonstrate significant negative spillover effects within an 80 km radius surrounding the project sites, with the effect attenuating over distance. To maximize the potential of forest carbon offset projects in addressing both climate change and biodiversity loss, it is important to mitigate the negative impacts on biodiversity within and beyond project boundaries and to enhance the continuous monitoring of projects that have been certified for biodiversity conservation.