As the world grapples with climate change, Asia is at a crossroads. With a rapidly developing economy and vast ecological wealth, the region faces tough challenges in balancing economic growth and environmental sustainability.
Nature-based solutions (NBS) that protect and restore natural ecosystems such as forests and mangroves offer a promising path forward. But can these solutions really flourish without robust carbon markets and, importantly, strong regional cooperation in Southeast Asia?
NBS boasts the unique benefit of providing a natural way to mitigate climate change. For example, forests act as carbon sinks, absorbing and storing carbon dioxide from the atmosphere. Mangroves provide important coastal protection, and wetlands filter pollutants and regulate water flow.
Investing in NBS allows Asian countries and companies to not only reduce emissions, but also strengthen biodiversity, improve water security, and improve the livelihoods of local communities.
Carbon markets, where companies can offset their emissions by purchasing carbon credits generated from NBS projects, can incentivize investment in these natural solutions. Although Europe and the United States remain the largest regions where most carbon trading takes place, many foreign companies are leveraging efforts to facilitate the voluntary buying and selling of carbon credits to tap into the region's growing market share. It is looking to Asia to attract investment.
However, despite the market structure currently comprising a variety of private and public systems, question marks remain over the region's ability to expand carbon markets.
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A revitalized Asian carbon market would create financial rewards for protecting and restoring ecosystems, attracting investment, and expanding NBS projects such as afforestation, regenerative agriculture, and mangrove protection. This can unlock huge potential. Southeast Asia alone is estimated to hold 30 percent of the world's carbon offset potential from NBS by 2050.
