Blockchain-Based Solutions Offer Hope for Amazon Rainforest Conservation and Carbon Markets

The Amazon rainforest is at a critical juncture, as 34% of the forest is currently in the process of transforming into a savannah, according to a recent study by the Coordinating Body of Indigenous Organizations of the Amazon Basin (COICA) and Stand.earth. Despite numerous efforts to curb global deforestation, forest conservationists, brands, and consumers remain frustrated with the lack of progress. However, one potential solution is the rapid growth in voluntary carbon markets, which have increased amid corporate net-zero commitments. Forestry projects account for 38% of all tradable carbon credits, which are issued for reforestation and other forest-linked projects that generate emissions savings. Collectively, these credits could save approximately 41.5 million tonnes of carbon dioxide equivalent, according to a study by researchers at Cambridge University.

However, the carbon market has long been plagued by problems such as double-counting, impermanence, and leakage. The market lacks confidence in its real-world impact, and forest-based communities, especially those without land rights, are often left out. As a result, an array of tech-based solutions that rely on blockchain technology are now emerging to address these problems. Blockchain essentially works as a digitized accounting ledger, and it can be used to store highly specific data such as the number and location of newly planted trees or project-related emissions savings. This data can be registered, stored, and shared quickly and transparently, with almost zero chance of adulteration.

For instance, the Open Forest Protocol is an open-source blockchain-based platform that measures, verifies, and funds forest projects worldwide. Michael Kelly, the co-founder of the platform, explains that “with blockchain, we can create a system whereby the measurement data is collected by the locals on the ground, reported on-chain and permanently kept on-chain, and then validated on-chain, with the decision also being permanently recorded.” This system ensures that buyers have greater confidence in the credits they purchase and that these credits directly link to impacts on the ground. Moreover, the data embedded in these credits can be used to communicate a compelling story to consumers and other interested parties.

Several tech startups, such as Veritree, Universal Carbon, Carbon Credit Token, and ForestCoin, are using blockchain technology to create fungible or non-fungible tokens that embed project impact data within them. These tokens can be sold to raise revenues for conservation efforts. Veridium Labs, a tech startup that has been working with IBM and others, has developed an updatable token called Verde that can be integrated into corporate supply chains. The token can be continually updated with real-time impact information, getting around the problem of credits going out of date after their initial issuance. Veridium Labs envisions corporations transacting in Verde with their raw material suppliers, thereby retaining geolocated impact data right through to the final manufacturing process. Although the technology sounds revolutionary, its mass uptake is pitted with challenges, such as blockchain’s high energy requirements. The energy needs of a mass uptake of blockchain solutions would likely add to the climate problems they were set up to address. Additionally, concerns center on the centralization of blockchain credit schemes, which are often created by developed-world firms for developed-world purchasers. The involvement of forest-based communities, most of which are based in emerging or under-developed markets, is held open to question. Even under a more decentralized model, local communities without land rights are particularly vulnerable to being side-lined by blockchain solutions.