The Untapped Potential for Voluntary Carbon Markets in the Water Sector
Globally, the water sector emits more than 2 billion tons of CO₂e annually, which corresponds to 5% of total global emissions. This is more than double the yearly emissions of the aviation and maritime sectors combined.
Additionally, there are 1.6 billion people who don’t have access to safe drinking water, and 2.8 billion people who don’t have access to safe sanitation3. The number of people who lack access to safe water and sanitation increases every day due to climate change, rapid urbanization, and lack of finance in the water sector.
Castalia and The University of Colorado collaborated on a research project to assess how voluntary carbon markets can help in reducing emissions from the water sector while contributing to the achievement of SDG 6, ‘safe water and sanitation for all’. The work was commissioned by The Sustainable Markets Initiative, WaterAid’s Resilient Water Accelerator, HSBC, VCMI, and Gold Standard.
As part of the study, we assessed the potential of emissions reduction in various water sub-sectors. According to our findings, if we maximize the use of voluntary carbon markets in the sub-sectors with the highest verifiable potential for emissions reductions, we could achieve over 445 million tons of CO₂e emissions reduction annually. This could yield $1.7 billion in carbon revenues annually, potentially mobilizing an additional $10.6 billion over the next 10 years for water sector investment.
In 2021, the global voluntary carbon market transacted 500 million tons of CO₂e. Materializing the full potential for voluntary carbon credits from water services could almost double the size of the global voluntary carbon market.
Using voluntary carbon markets for water also has co-benefits such as increasing access to water, boosting water sector resilience, improving sanitation, and preserving aquatic ecosystems.
To encourage the collaboration of relevant stakeholders to support WaterAid’s Resilient Water Accelerator Initiative, Castalia’s Chief Executive, David Ehrhardt, presented the potential of voluntary carbon markets to reduce emissions in the water sector during the COP 28.
You can access Castalia’s COP 28 presentation here: Voluntary-Carbon-Markets-for-the-Water-Sector
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