Editing IPCC:AR6/WGIII/Chapter-7 (section)

==== 7.6.2.4 Mitigation Effectiveness: Additionality, Permanence and Leakage ====

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Additionality, permanence and leakage have been widely discussed in the forestry and agricultural mitigation literature ( [[#Murray--2007|Murray et al. 2007]] ), including in AR5 ( [[IPCC:Wg3:Chapter:Chapter-11#11.3.2|Section 11.3.2]] of the AR5WGIII report) and earlier assessment reports. Since the earlier assessment reports, new studies have emerged to provide new insights on the effect of these issues on the credibility of forest and agricultural mitigation. This assessment also provides additional context not considered in earlier assessments.

Typically, carbon registries will require that project developers show additionality by illustrating that the project is not undertaken as a result of a legal requirement, and that the project achieves carbon reductions above and beyond a business as usual. The protocols developed by the California Air Resources Board to ensure permanence and additionality are strong standards and may even limit participation (e.g., [[#Ruseva--2017|Ruseva et al. 2017]] ). The business as usual is defined as past management actions by the same entity that can be verified. Additionality can thus be observed in the future as a difference from historical actions. This approach has been used by several countries in their UNFCCC Biennial Update reports to establish reductions in carbon emissions from avoided deforestation (e.g., Brazil and Indonesia).

However, alternative statistical approaches have been deployed in the literature to assess additionality with a quasi-experimental method that rely on developing a counterfactual (e.g., [[#Andam--2008|Andam et al. 2008]] ; [[#Blackman--2015|Blackman 2015]] ; [[#Sills--2015|Sills et al. 2015]] ; [[#Fortmann--2017|Fortmann et al. 2017]] ; [[#Roopsind--2019|Roopsind et al. 2019]] ). In several studies, additionality in avoided deforestation was established after the project had been developed by comparing land-use change in treated plots where the policy or programme was in effect with land-use change in similar untreated plot. Alternatively, synthetic matching statistically compares trends in a treated region (i.e., a region with a policy) to trends in a region without the policy, and has been applied in a region in Brazil (e.g., [[#Sills--2015|Sills et al. 2015]] ), and at the country level in Guyana ( [[#Roopsind--2019|Roopsind et al. 2019]] ). While these analyses establish that many projects to reduce deforestation have overcome hurdles related to additionality ( ''high confidence'' ), there has not been a systematic assessment of the elements of project or programme design that lead to high levels of additionality. Such assessment could help developers design projects to better meet additionality criteria.

The same experimental methods have been applied to analyse additionality of the adoption of soil conservation and nutrient management practices in agriculture. [[#Claassen--2018|Claassen et al. (2018)]] find that programmes to promote soil conservation are around 50% additional across the USA (i.e., 50% of the land enrolled in soil conservation programmes would not have been enrolled if not for the programme), while [[#Woodward--2016|Woodward et al. (2016)]] find that adoption of conservation tillage is rarely additional. [[#Claassen--2018|Claassen et al. (2018)]] find that payments for nutrient management plans are nearly 100% additional, although there is little evidence that farmers reduce nutrient inputs when they adopt plans. It is not clear if the same policy approaches would lead to additionality in other regions.

Permanence focuses on the potential for carbon sequestered in offsets to be released in the future due to natural or anthropogenic disturbances. Most offset registries have strong permanence requirements, although they vary in their specific requirements. The Verified Carbon Standard (VCS) from the Verra programme requires a pool of additional carbon credits that provides a buffer against inadvertent losses. The Climate Action Reserve (CAR) protocol for forests requires carbon to remain on the site for 100 years. The carbon on the site will be verified at pre-determined intervals over the life of the project. If carbon is diminished on a given site, the credits for the site have to be relinquished and the project developer has to use credits from their reserve fund (either other projects or purchased credits) to make up for the loss. Estimates of leakage in forestry projects in AR5 suggest that it can range from 10% to over 90% in the USA ( [[#Murray--2004|Murray et al. 2004]] ), and 20–50% in the tropics (Sohngen and Brown 2004) for forest set-asides and reduced harvesting. Carbon offset protocols have made a variety of assumptions. The Climate Action Reserve (CAR) assumes it is 20% in the USA. One of the voluntary protocols (Verra) uses specific information about the location of the project to calculate a location specific leakage factor.

More recent literature has developed explicit estimates of leakage based on statistical analysis of carbon projects or programs. The literature suggests that there are two economic pathways for leakage (e.g., ( [[#Roopsind--2019|Roopsind et al. 2019]] ), either through a shift in output price that occurs when outputs are affected by the policy or programme implementation, as described in ( [[#Wear--2004|Wear and Murray 2004]] ; [[#Murray--2004|Murray et al. 2004]] ; Sohngen and Brown 2004; [[#Gan--2007|Gan and McCarl 2007]] ), or through a shift in input prices and markets, such as for labour or capital, as analysed in ( [[#Andam--2008|Andam et al. 2008]] ; [[#Alix-Garcia--2012|Alix-Garcia et al. 2012]] ; Honey-Rosés et al. 2011; [[#Fortmann--2017|Fortmann et al. 2017]] ). Estimates of leakage through product markets (e.g., timber prices) have suggested leakage of up to 90% (Sohngen and Brown 2004; [[#Murray--2004|Murray et al. 2004]] ; [[#Gan--2007|Gan and McCarl 2007]] ; Kallio et al. 2018), while studies that consider shifts in input markets are considerably smaller. The analysis of leakage for the Guyana programme by [[#Roopsind--2019|Roopsind et al. (2019)]] revealed no statistically significant leakage in Suriname. A key design feature for any programme to reduce leakage is to increase incentives for complementary mitigation policies to be implemented in areas where leakage may occur. Efforts to continue to draw more forests into carbon policy initiatives will reduce leakage over time [[#Roopsind--2019|Roopsind et al. (2019)]] , suggesting that if NDCs continue to encompass a broader selection of policies, measures and forests over time, leakage will decline.

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