Global study reveals wealth redistribution from blue-carbon ecosystems

By Dr Wilfried Rickels, Kiel Institute for the World Economy & Prof Martin Quaas, Leipzig University | July 20, 2021

Carbon “sinks”, such as forests or the ocean, play a crucial role in absorbing atmospheric CO2 and thereby reducing the damages caused by climate change and the emissions that drive it.

However, neither the impacts of global warming nor the carbon sequestration in sinks are equally distributed across the globe.

In our new study, published in Nature Climate Change, we map the “blue carbon” uptake from marine and coastal ecosystems around the world to highlight how natural sinks and climate change redistribute wealth around the globe.

Our findings show that Australia, Indonesia and Cuba contribute the largest blue-carbon net “wealth” to the rest of the world. However, only a handful of countries have enough blue carbon potential to offset their entire carbon footprint.

Pricing carbon

Climate policy instruments, such as emissions trading schemes, are intended to coordinate mitigation activities by providing a price signal for CO2 emissions. Companies can then compare the price of CO2 with the cost of avoiding CO2 emissions to decide which emissions can be beneficially reduced.

The price signal on carbon markets depends on the underlying ambition of the policy target. This can be seen from the current price rally in the European emission trading system in expectation of a more ambitious reduction target for 2030.

Unlike a company participating in a market, carbon sinks do not react to price signals. Instead, their carbon uptake is determined by factors such as the levels of CO2 in the atmosphere, ecological processes and feedbacks, and human intervention. Still, this kind of “service” reduces climate damages and, therefore, has implications for wealth.

Such services provided by nature are an integral part of what is known as the “inclusive wealth framework”. Inclusive wealth is defined as the aggregate of all natural and human-made capital stocks, valued with their “shadow price” – that is, the estimated financial value that a commodity or service provides for societal welfare, rather than a market price.

These shadow prices are affected by factors such as the scarcity of resources and the expectations about future management of human-made and natural capital stocks.

Blue-carbon wealth

Climate change reduces inclusive wealth and, therefore, CO2 emissions are like a “negative investment” into inclusive wealth.

The appropriate shadow price to assess this negative investment is the “social cost of carbon” (SCC). The SCC is an estimate of the economic damages that would result from emitting one additional tonne of CO2 into the atmosphere at any point in time. It takes into account both the benefits and drawbacks of CO2 emissions, but it is an overall “cost” because there are more negative impacts of climate change than positive.

The SCC is a global measure, obtained from adding up national damage estimates from the social cost of carbon of individual countries (CSCC). Recent studies have integrated climate models and economic models to estimate the CSCC for all countries in the world.

In the same way as CO2 emissions are a “negative investment” into inclusive wealth, ecosystems that take up CO2 from the atmosphere enhance inclusive wealth. In our study, we focus specifically on the carbon sequestration of coastal ecosystems, such as mangroves, salt marshes and seagrass meadows – known collectively as “blue carbon”.

These coastal ecosystems sequester and store carbon at significantly higher rates than forests per unit area.

Each tonne of CO2 taken up by these coastal ecosystems increases global inclusive wealth by an amount equal to the SCC and can be considered as a “blue-carbon wealth contribution”. As the CSCC differs across the globe, the effect of country-specific inclusive wealth is different and, as the CO2 uptake of coastal ecosystems varies globally, these processes redistribute blue-carbon wealth between countries. This wealth redistribution from blue-carbon ecosystems has now been quantified at the global scale.

Our team has now calculated blue-carbon sequestration potential at the national level. This process combines data on the areas covered by mangroves, salt marshes and seagrass meadows in each country’s exclusive economic zone (EEZ), and average annual carbon sequestration rates for each ecosystem type.

You can see these estimates in the map below, which shows annual carbon sequestration potential around the world. The shading indicates the size of the potential, from low (yellow) to high (dark blue).

Overall, there is a global potential for 24.0m tonnes of carbon sequestration per year for mangroves, 13.4m tonnes for salt marshes and 43.9m tonnes for seagrasses. This gives a grand total of 81.2m tonnes of carbon sequestration per year, which is broadly equivalent to the annual emissions by France or Poland.

a map of annual carbon sequestration
Global map of average annual blue-carbon sequestration potentials by country. The shading indicates the size of the potential, from low (yellow) to high (dark blue), in millions of tonnes of carbon per year.
Image: Bertram et al. (2021).

Net contribution

With these estimates of blue-carbon sequestration and country-specific climate damages, we are then able to calculate the wealth contribution and redistribution from blue carbon. This reflects the fact that carbon sequestration in one country reduces climate damages in other countries, and vice versa.

These estimates can then be summarised in a “net” position, which indicates whether a country provides – in net terms – blue-carbon wealth to other countries or whether it receives – in net terms – blue-carbon wealth from others.

For example, the coast of Australia – which contains about a quarter of the global salt marsh area, and 13% and 7% of global seagrass and mangroves areas, respectively – has the largest coastal blue-carbon sequestration potential (10.6m tonnes of carbon per year). This equates to a wealth contribution of US$25.0bn – obtained by multiplying their carbon sequestration with the global estimate for the SCC.

However, Australia only sees a small portion of this benefit as the reduction of climate damages is global. Therefore, using Australia’s CSCC (US$7.5 per tonne of CO2), we estimate its domestic contribution to blue-carbon wealth from avoided climate damages of US$291m per year.

Consequently, the remaining benefits arising from blue-carbon sequestration in Australia take place abroad and amount to US$24.7bn per year – estimated by multiplying Australia’s blue-carbon sequestration with the sum of CSCC of all other countries.

At the same time, Australia also benefits from the carbon sequestration abroad, which we estimate at US$1.9bn per year.

Clearly, the outbound contribution exceeds the inbound receipt so that Australia provides a net outbound contribution to blue-carbon wealth of US$22.8bn per year to the rest of the world.

The results for Australia are driven by a relatively large coastal blue-carbon sequestration and a relative low estimate for the domestic marginal climate impacts. Accordingly, the three countries with the largest CSCC – the US, India and China – are also the countries which benefit the most from carbon sequestration taking place at home and abroad.

The rest of the Top 10 net “recipient” countries from blue-carbon wealth are shown by the red and orange bars in the chart below. The blue and green bars indicate the Top 10 “donor” countries – after Australia comes Indonesia, Cuba and Russia.

a chart showing 10 largest donor countries of blue-carbon wealth
The 10 largest donor (blue and green bars) and recipient (red and orange) countries of blue-carbon wealth. Image: Bertram et al. (2021).

Other sinks and emissions

It should be noted that our calculations and the example of Australia cover blue-carbon sequestration only.

Factoring in energy and industrial emissions, Australia has a negative outbound wealth contribution of -US$235.6bn per year. However, Australia also experiences a negative contribution to wealth from net carbon emissions abroad of -US$254.5bn. This implies that, in net terms, the wealth reduction from abroad exceeds Australia’s global carbon wealth reduction by US$18.9bn.

Including blue-carbon ecosystems and energy and industrial carbon emissions, only Guinea-Bissau, Belize, Vanuatu, Sierra Leone, Solomon Islands, Guinea, Comoros, Samoa, Madagascar and Papua New Guinea have a positive net blue wealth outbound contribution. In other words, these are the only countries whose blue-carbon sequestration exceeds their emissions.

The next frontier in this line of research is to extend the natural capital approach to include all kinds of carbon emissions and all kinds of carbon sinks, such as the ocean, peatlands, soils and forests.

Furthermore, our study also emphasises that CO2 storage is only a small part of positive impacts of coastal ecosystems for humans. Coastal ecosystems are an essential component of marine ecosystems and are, therefore, particularly important for marine biodiversity and for fisheries. At the same time, they contribute to flood and coastal protection and are, therefore, important for adaptation to climate change.

is Director, Global Commons and Climate Policy research centre at the Kiel Institute for the World Economy. is Head of Biodiversity Economics research group at the German Centre for Integrative Biodiversity Research (iDiv), Halle-Jena-Leipzig and at Leipzig University. This article first appeared in Carbon Brief.

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