Glossary

Definitions of terms used throughout the site are posted here in alphabetized order.

Additionality

Additionality is an essential requirement for carbon offset projects. Strong additionality requirements ensure that credits are not rewarded to activities that would have happened anyway. Hence, additionality is intended to ensure that offsets are created by activities that are above and beyond common practice, or the “business as usual” scenario. So, a reduction activity that is mandated by law or is common practice in a given region would not qualify as additional. Generally, the various protocols that exist delineate specific tests for additionality that require a carbon offset project to overcome existing barriers to implementation (such as financial or technological barriers that would normally prevent the project from occurring).

Capital

Capital refers to a stock of materials (or information) that exists a point in time. Each form of capital stock generates, either autonomously or in conjunction with services from other capital stocks, a flow of services that may be used to transform materials, or the spatial configuration of materials to enhance the welfare to humans. The human use of this flow of services may or may not leave the original capital stock intact. Capital stock takes different identifiable forms, most notably in physical forms including natural capital, such as trees, minerals, ecosystems, the atmosphere and so on; manufactured capital, such as machines and buildings; and the human capital of physical bodies. In addition, capital stocks can take intangible forms, especially as information such as that stored in computers, and in individual human brains, as well as that stored in species and ecosystems. (Costanza et al. 1997.)

Co-benefits

Co-benefits describe the positive social and environmental impacts that carbon offset projects can have beyond GHG reductions. Social co-benefits refer to direct or indirect benefits that are incurred by local communities, such as indigenous groups deriving financial or employment benefits from projects. Indirect social benefits can include things like local communities benefiting from living in healthier ecosystems that provide more ecosystem goods and services to those communities (such as fresh water and fishing). Ecological co-benefits are often derived from biogas installations replacing manure lagoons, which reduces water toxicity from fecal matter in runoff.

Ecological Economics

Ecological economics is a transdisciplinary field of study that is different from more mainstream environmental economics in that it sees economic systems as being embedded within and dependent upon natural ecological ones, and seeks to reintegrate externalized natural capital into economics. Ecological economists typically argue that neoclassical economics has ignored and devalued the role of the environment in its calculations on economic growth and progress.

Ecosystem Functions

Refers to the habitat, biological or system properties or processes of ecosystems.

Ecosystem Goods

Ecosystem goods (such as food) represent the natural resource benefits human populations derive, directly or indirectly, from ecosystem functions.

Ecosystem Infrastructure

A minimum level of ecosystem infrastructure is required for an ecosystem to be able to function, and thereby produce Ecosystem Services (ES). Ecosystem Infrastructure is usually left out of ES valuation, but many authors suggest that it should be included in valuation schemes.

Ecosystem Services

ES consist of the flows of value to human societies as a result of the condition of ecosystem structure, process/function and extent of natural capital in the following areas:

  1. Provisioning Services—These are the products derived from nature including food (i.e. fish, game), water, (i.e. drinking, irrigation), raw materials (i.e. timber, fibre, fertilizer), genetic resources (i.e. medicinal), medicinal resources (i.e. biochemical products), ornamental resources (i.e. pet trade, fashion, artisan material)
  2. Regulating Services—These are the benefits obtained from the regulation of the physical, chemical and biological processes between organisms and their environments. These include the regulation of air quality, climate, erosion, pollination, biological regulation (i.e. seed dispersal), extreme event moderation, waste treatment (i.e. water purification), and soil fertility maintenance.
  3. Habitat Services—There are two services directly linked to habitat which are the habitat for species (such as nurseries for migratory species), and as gene-pool ‘protectors’. The latter refers to the necessity to maintain natural habitat to allow natural selection to take place, which is the basis for the diversity of life on Earth, and to protect existing gene pools at healthy levels.
  4. Cultural Services—These are the non-material benefits people obtain from ecosystems through spiritual enrichment, cognitive development, reflection, recreation, inspiration, and aesthetic experiences. For example, these include recreation, ecotourism, spiritual and aesthetic values, sense of place, social relations (such as differing between fishing and agrarian communities), cultural heritage, First Nations values and cultural practices, education and knowledge systems.

–  TEEB Chapter 1

Externalities

Externalities are common in virtually every area of economic activity. They are defined as third party (or spill-over) effects arising from the production and/or consumption of goods and services for which no appropriate compensation is paid.

Externalities can cause market failure if the price mechanism does not take into account the full social costs and social benefits of production and consumption.

The study of externalities by economists has become extensive in recent years – not least because of concerns about the link between the economy and the environment. tutor2u

Fungibility

This is a property of how exchangeable under different market systems a good or commodity (with a given unit)  is. For instance, carbon offsets that are higher quality are usually more fungible, and therefore more tradeable across different market systems.

Leakage

Leakage is the positive or negative impacts of a carbon offset project on the surrounding area (usually the term is used in the negative sense). Leakage happens due to market, behavioural or physical feedbacks from a project’s implementation which cause some of all of a project’s projected benefits/offsets to be lost.  The number of leakage points and risk of leakage reduce a project’s credibility and charisma.

Natural Capital

Natural capital is the land, air, water, living organisms and all formations of the Earth’s biosphere that provide us with ecosystem goods and services imperative for survival and well-being. Furthermore, it is the basis for all human economic activity.

Unfortunately, traditional measures to gauge economic performance, such as produced and human capitals, neglected natural capital leading to a depletion of natural environments and the loss of valuable ecosystem services. IISD

Polluter Pays Principle (PPP)

An environmental law or policy principle requiring polluters to bear the costs of pollution. This principle helps to determine who must pay for pollution prevention and cleanup costs. The polluter—not society or the government.

The idea behind the principle is basically that the entity that is profiting from the polluting system must pay. Otherwise they are unfairly benefiting while costs are externalized to others to bear. In essence, governments that receive taxes from polluting entities could also be said to hold some burden of this cost. This helps to explain why the polluter pays principle applications varies regionally. In the EU the burden of payment lies more heavily with the polluting entity, while in the United States, pollution costs are more subsidized by government. However, “the OECD emphasizes the necessity for removal of subsidies which would prevent polluters to bear the costs of pollution which they caused, urging then those costs be internalized into the prices of goods and services: the PPP should … not be accompanied by subsidies that would create significant distortions in international trade and investment. This is normally referred to as weak or standard PPP.” EofE

Stacking

The development of wide variety of incentives and kinds of payments for ecosystem services has led to land managers and project developers asking whether they can recieve multiple ecosystem services payments for services from a single land parcel or activity. This receiving multiple kinds of offset credits from a single activity (such as carbon, water and biodiversity offsets from a conservation project) is known as stacking. While stacking has benefits like offering extra incentives for conservation or reforestation activities that might not happen under only one kind of offset program, it also has implications for additionality and double counting which has led to stacking being a debated topic upon which current policy is limited. Those who oppose allowing stacking refer to it as ‘double dipping’, and in order to ensure that additionality for each kind of offset is maintained, rigorous policy and protocols need to be developed that address the issues of stacking.

Validation

Validation is when a third party (usually a technical or engineering firm registered with the expertise to validate) checks to ensure that an offset project adheres to a given protocol methodology. Validation is done during the approval process of a carbon offset project.

Verification

Verification is when a third party (usually a registered verifier) checks whether a carbon offset project has produced the carbon offsets it claimed it would produce. Robust offset project guidelines ensure that, until offsets are verified, they cannot be issued, registered and sold. Verification is done after a carbon offset project has started and is part of the process of having registered third parties ensure transparently that any kind of offset is real and properly quantified.

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