Economic Co-Benefits of Nature-Based Carbon Removal Projects in the Brazilian Amazon

Abstract

Mombak is a Brazil-based carbon removal startup with a mission to reforest the Amazon through the conversion of unproductive, low-yield farmland back into rainforest. Their business model relies heavily on the sale of carbon credits on the voluntary carbon market (VCM) to multi-national companies with net-zero targets. While carbon removal projects generally garner a price premium on the VCM as compared to carbon reduction projects, price levels among all offsets remain stubbornly low due both to lack of government policy intervention as well as the nascent and inefficient nature of the VCM. Nature-based solutions, as Mombak offers, additionally generate co-benefits which are of economic value to communities locally and abroad. Through a review of the most relevant economic valuation studies on the Amazon rainforest, this analysis seeks to answer what value added a Mombak carbon credit may generate beyond just its ability to sequester carbon. Our findings demonstrate that the value to society of a Mombak carbon credit far exceeds what is reflected by the VCM today and suggest that a price premium for a Mombak generated carbon credit is more than justified.