Market-based solutions for sustainable development: Lessons from the Delta Blue Carbon project in Pakistan

Under the banner of ‘blue growth’, widespread commodification of nature is advocated as a ‘sustainable’ response to restoring coastal habitats. Blue carbon  is carbon captured by the ocean and coastal ecosystems and blue carbon projects are mainly focused on restoring marine and coastal habitats. They are gaining traction with both policymakers and green investors. Amongst all coastal habitats, mangroves represent the highest blue carbon value and can capture 10 times more carbon than traditional trees. The potential of blue carbon to sequester carbon and avoid emissions is estimated to be approximately 3% of world’s annual greenhouse gas emissions. Within the wider concept of ‘selling nature to save it’, valuation processes that account for the carbon sequestration abilities of coastal habitats are being aggressively pushed as necessary mechanisms to counter climate change, regardless of the on-ground socioecological consequences for communities.

For a country like Pakistan – the fifth most populous in the world, with one-third of the population living below the poverty line and now amongst the top ten countries most vulnerable to climate change – such nature-based solutions that help remove carbon and allow habitats to regenerate, appear to be a win-win solution.

The Delta Blue Carbon project in Pakistan

Mangroves represent the world’s most effective natural carbon sinks and can take in up to five times more carbon than upland tropical forests. By financially connecting these ecosystems through the role they play in the global carbon cycle i.e., through commodification of nature, carbon credits are now a widely used market-based solution to fund restoration of blue carbon habitats that include coastal and marine ecosystems.  

The Indus River delta in Pakistan, where the river flows into the Arabian Sea, is home to the largest desert-climate mangrove forest in the world. The delta has witnessed increasing destruction over the past decades due to the absence of freshwater, overharvesting and soil pollution impacting coastal ecosystems.

To revive the Indus Delta, the Delta Blue Carbon (DBC) was launched in Sindh, Pakistan in 2015 as one of the world’s most expansive certified mangrove forest restoration projects. It operates as a public private partnership between the provincial government and Indus Delta Capital, a private carbon developer. The 60-year project covers 350,000 hectares of mangroves and aims to preserve biodiversity, improve economic lives of local communities and sequester 124 million tonnes of carbon. By the end of 2020, 75,000 hectares of mangrove forests and coastal wetlands had already been restored through new plantations. Moreover, reforestation is expected to generate 21,000 full-time jobs by involving community members in a range of natural-resource management activities. Co-benefits generated through community participation and embedding the programme in local structures remain critical determinants of the success of DBC.

Building upon community participation and local structures and knowledge

DBC takes a more systematic, large-scale, and participative approach than previous grassroots efforts towards reviving mangroves habitats. The focus is not only on conserving mangrove forests but also restoring ecosystems through structured community engagement. The first phase of the project covers 60 villages and 42,000 people and will be creating jobs for local communities in activities ranging from protecting existing mangrove forests to nursery maintenance, planting, community and infrastructure development, and survey and data collection. DBC also plans to improve learning facilities and access to schooling in addition to offering training courses on crab farming, agriculture, forestry, and livestock management. Through a three-year Mangrove Stewardship Agreements (MSAs) with the communities, local people become custodians of specified pieces of land. DBC plans to launch similar MSAs with the fishing communities in subsequent phases of the project that will bring in 38 more villages. Moreover, through agreements with local community leaders through village development committees, two reverse osmosis plants have also been set-up to provide clean drinking water to around 49,000 people.

Evidence shows that the highest-quality blue carbon projects address community needs and prioritise their sustained engagement throughout. Governance under DBC has been participatory from the start, incorporating and reinforcing traditional structures and practices of participating villages. Since communities have been engaged in mangrove forestation for generations, plantation drives are highly compatible with existing land use patterns and livelihood practices. The species introduced by the project are also all native, and indicators for good performing plantations have been developed after incorporating feedback from the communities. The villagers have retained their customary rights to government land while the tenure remains with the provincial government.

DBC also works very closely with the provincial government including the Sindh Forestry Department to build on their knowledge, especially in deciding where and how to plant. Sindh government had declared the forests in the delta region as protected areas back in 2010. Due to similar efforts, mangrove cover along the coastline increased from 46,000 hectares to 200,000 hectares between 1999 and 2001, making Pakistan the only Southeast Asian country to bring about such an improvement. As the government already had experience in small-scale plantations, this institutional knowledge enabled DBC to avoid the frequent missteps that hold back restoration projects worldwide.

The replication of such initiatives in other locations, however, could be limited by the need to build long-term relationships with local people which is essential to making such initiatives successful. It took DBC developers almost 15 years before they were able to sell in the carbon market during which time they continuously engaged with local communities to ensure they understood and owned the initiative and its potential gains. These timelines might put similar projects at odds with the timescales of the government along with business targets and funding cycles.

Complexities of carbon accounting

Restoration is expensive and in addition to the contributions made by the provincial government, more was needed and that’s where carbon markets came in. However, these markets are effective only when carbon fetches a good price and the amount of carbon removed from the atmosphere by these ecosystems is accurately predicted. The first tranche of 250,000 metric tonnes of carbon credits from DBC have now been sold, through Climate Impact X, a global market place for carbon credits, at a price of US$ 27.80 per tonne. Generally, mangrove carbon credits get a better price vis-à-vis other forms of nature-based credits as they achieve targets that go beyond storing carbon like countering floods, maintaining mangrove and ocean biodiversity, removing pollutants and ensuring food security for locals. Of the total bid volume for DBC credits, 30% was priced at US$ 35 per tonne or more, 27% higher than the auction reserve price (US$27.50 per tonne), showing buyers were willing to pay a premium for what were perceived as high-quality credits.

Another key feature of high-quality carbon offsets is demonstration of permanence and additionality. An example of this would be for emissions reduction to go beyond business as usual and not have occurred in the absence of the project. Showing additionality is difficult in part because blue ecosystem carbon pools do not easily fall into existing carbon accounting and verification mechanisms and isolating it from its surrounding context can be complicated. Because of these challenges, sequestered carbon is also referred to as an “abstract homogenous entity”. There is also a tendency to undervalue carbon in the soil. As high as 80% of it can be assumed to be from elsewhere - swept from land or carried by rivers - and not from local restored plantation. Even though soil under forests restored under DBC does not get deposits from elsewhere, this deduction is still made.

DBC views commodification of carbon primarily to fund restoration of the ‘dying’ Indus delta. Overall, DBC’s approach towards sustainability is centred around enabling communities and their future generations to live in an ecologically sound and unpolluted environment by maintaining a controlled, replenishable use of resources. An excessive emphasis on effective functioning of carbon markets runs the risk of reducing the problem to a technical issue without due regard to creating conditions for improving people’s quality of life and ignoring questions of effectiveness, justice and fairness.  

Pushing on the neo-liberal agenda in climate change

The whole paradigm of carbon markets is based on connecting economic growth to protecting nature and social equity, at the heart of which lies the prevailing logic of neoliberal capitalism. A key critique of carbon markets is that “green market mechanisms” reinforce commodification of nature. Actions like selling fossil fuel are responsible for accelerating climate change in the first place while carbon credits don’t reduce planet-warming emissions.

The process of capitalising nature in fact ends up reinforcing high income countries’ claims on the world’s natural assets and blunting disputes with low- and middle-income countries involving climate change mitigation efforts. While blue carbon offset projects can easily be implemented anywhere where such eco-systems are present, most are located within low- and middle-income countries. Moreover, several aspects of the current discourse on climate change politics perpetuates ideals of neo-colonialism - such as when richer countries spend money and advise countries in poorer on how to maintain their land.

As Pakistan becomes a carbon sink for the world, carbon credits from its habitats are sold mainly to organisations representing high-income countries such as Trafigura, Respira International, DBS Bank, Singapore Exchange (SGX Group), Microsoft, and Standard Chartered Bank potentially providing them an alternative to cutting down emissions without taking real climate action. Hence, it is important to separate objectives of carbon removal and emission reductions.  

Pathways to sustainability

Any sustainable approach to valuing nature must recognise the spectrum of elements that comprise whole ecosystems. Carbon credits are just one product in a developing market of products to value such ecosystems. DBC has demonstrated elements that go beyond carbon sequestration as reasons for its success.

How well does DBC work as a market-based solution?

DBC works well as a nature-based climate solution because it incorporates livelihood prospects and involves members of the local community in all stages of planning and implementation as well as preserves existing land-use practices. Failure to account for such gains can nonetheless impact the narrative around carbon markets and their ability to fetch a good price. However, in a world obsessed with market fundamentals, there is a tendency to ignore the ecological limits of this planet for generating such benefits. Perhaps what is really needed is a genuine counter movement to such growth-oriented fundamentals.

‘Degrowth’ presents an alternative set of practices within an economy of care and commons. Proponents of degrowth propose policy changes such as carbon taxes, removal of subsides, and behavioural changes to address the root cause of climate change. Moreover, truly progressive acts to address climate change should not be driven by fear of technical compliance. Instead of viewing climate as an object to control, a caring approach can be adopted towards drivers of climate change. Such an approach can be founded on values, not science-based technical claims and be more forgiving of uncertainties associated with measuring carbon. A more sustainable approach is to shift the values of the community from merely being consumers to becoming conservers and letting that - not capitalism - drive restoration. And while carbon sequestration is valuable, other services like livelihood provision and coastal protection should be driving the protection of coastal ecosystems.