In the Project Overview section, project sizes were carefully selected to ensure real-world feasibility and enable meaningful comparisons across different projects. These sizes were determined based on their carbon equivalency and representativeness, allowing for straightforward “apples-to-apples” comparisons across various activities and ecosystem types. The table below outlines the project sizes for each activity and ecosystem:

The tool estimates carbon emission reductions compared to a baseline and calculates related carbon credits. Reductions can be estimated using three Tiers:

• Tier 1: Global defaults, such as IPCC sequestration rates.
• Tier 2: Country-level data from literature research.
• Tier 3: Project-specific values requiring advanced datasets and monitoring. (Users can provide tier 3 data in the Custom Project function of the tool.)

Blue carbon credits can play a supporting role in sustaining coastal ecosystem projects. Though carbon finance will not typically cover all expenses, it is suggested that carbon finance could play a critical role in supporting longer term operational costs, such as monitoring, maintenance, and community benefits.

The model assumes a default premium price of $30/ton for carbon offset credits, reflecting the limited availability of blue carbon credits and many co benefits provided by blue carbon projects. Users can customize this price and calculate the operational (OPEX) breakeven price using the tool. While additional revenue streams will likely be needed, the model focuses specifically on carbon credit revenues.

Additional details below for calculating credible emission benefits (carbon credits) per year, distinguishing between restoration and conservation projects.

Note: The cumulative avoided loss for the Soil Organic Carbon considers the assumed release duration over time (e.g., if we have assumed the soil organic carbon is released over 10 years, then only the cumulative avoided loss of the last 10 years is counted)

The following formula calculates the annual carbon benefits, credits, and revenues for restoration projects. The sequestration rate varies significantly based on the ecosystem type, geographic location, and selected Tier. The restored area represents the extent of land already restored in year t. In cases involving planting, the equation incorporates the planting success rate to ensure accurate calculations. The buffer accounts for uncertainties, leakage, and non-permanence risks associated with the project, with a default value set at 20%.

Project setup cost (Capital Expenditures, CAPEX):

• Feasibility analysis: The production of a feasibility assessment, evaluating GHG mitigation potential and financial and non-financial considerations (e.g., legal, social).
• Conservation planning and administration: Activities involved in the project start-up phase, such as project management, vendor coordination, fundraising, research, and travel.
• Data collection/field costs: The expenses associated with onsite and field sampling to gather necessary data for baseline and monitoring (e.g., carbon stock, vegetation and soil characteristics, hydrological data).
• Community representation work: Efforts aimed at supporting a free, prior and informed consent process with communities who are involved with or may be impacted by the project. This can include assessing community needs, conducting stakeholder surveys and trainings, providing education about blue carbon market projects, and supporting a community-led design.
• Blue carbon project planning and administration: The preparation of the project design document (PD), which may include contracted services.
• Cost of establishing carbon rights: Legal expenses related to clarifying carbon rights, establishing conservation and community agreements, and packaging carbon benefits for legally valid sales.
• Validation: The fee or price associated with the validation of the PD (e.g., by an approved third-party).
• Conservation activity: The implementation costs for conservation, such as adding signage to designate the area as conservation land. These costs have been included in other cost buckets (e.g., community representation work, and long-term project operation and admin)
• Implementation labor: Only applicable to restoration. The costs associated with labor and materials required for rehabilitating the degraded area (hydrology, planting or hybrid). Note: Certain countries, ecosystems and activity types don't have implementation labor estimates.

Ongoing project cost (Operational Expenditures, OPEX):

• Monitoring: The expenses related to individuals moving throughout the project site to prevent degradation and report necessary actions/changes.
• Maintenance: Only applicable to restoration. The costs associated with the physical upkeep of the original implementation, such as pest control, removing blockages, and rebuilding small portions.
• Landowner/community benefit share: Approximated as a percent (%) of the carbon credit revenues for the landowner/community residing where the project takes place. Best practice is to use the benefit share to meet the community's socio-economic and financial priorities, per the benefit sharing agreement. This benefit share may be used to compensate for alternative livelihoods and/or opportunity cost, which can be realized through goods, services, infrastructure, and/or cash.
• Baseline reassessment: The costs associated with a third-party assessment to ensure the initial GHG emission/reduction estimates are accurate and remain so over time. Most standards require baseline reassessment every 6 or 10 years.
• Measuring, reporting, and verification (MRV): The costs associated with measuring, reporting, and verifying GHG emissions that occur post-implementation to enable carbon benefit sales through a third party.
• Long-term project operation and administration: The expenses related to project oversight, vendor coordination, community engagement, stakeholder management, etc., during the ongoing operating years of the project.
• Carbon standard fees: Administrative fees charged by the carbon standard (e.g., Verra).

Financing cost:

• Financing cost: The time, effort, and cost associated with securing financing for the set-up phase of the project.

Sources used to calculate cost components can be found in Sources.

The below table provides the assumptions and methodologies used to estimate the cost components of a blue carbon project.

• Pre-development phase: Involves activities such as assessing the project’s feasibility, designing, funding it, and scoping it, and initiating its development. The duration of this phase can range from 1 to 10 years, as the feasibility and scoping of a project can vary significantly due to numerous factors
• Conservation/ restoration phase: the conservation/ restoration activities are implemented, and maintained or expanded. The project must undergo monitoring and verification by a third party for carbon credits to be issued and sold. Most carbon standards require a project to be managed for at least 20 years, however, baselines must be reassessed at least every 10 years. A long-term financial strategy should also be developed to enable viability of the project beyond carbon finance. beyond carbon finance.

To develop a high-quality blue carbon project, community engagement is crucial across all stages of the lifecycle.

• Carbon revenues to cover: Users have the flexibility to determine whether the carbon revenue should cover only OPEX or both CAPEX and OPEX. This feature allows developers flexibility whether they expect to receive grants or philanthropic funding to cover a portion of the costs. As the start-up and implementation (CAPEX) costs are generally high for blue carbon projects, it is recommended this is funded by other sources and that carbon revenues are used to support OPEX cost only.

For conservation projects only

For conservation projects, we include avoided loss (100% of aboveground biomass at time of disturbance and a proportion of soil organic carbon emitted over time) and forgone sequestration. Methane and nitrous oxide are not included in default values but can be included in project-specific inputs.

• Loss rate used: Users have the option to choose between the national average ecosystem loss rate or input a project-specific ecosystem loss rate. Note, there’s only a national average available for mangroves, whilst salt marsh and seagrass will provide you with a default global average ecosystem loss rate. If a project-specific loss rate is preferred, it can be entered in the cell provided below. Even though default loss rates don’t include background recovery rates, it is possible to include this in project-specific loss rates.
• Emission factor used: Users have the flexibility to select emission factors from one of 3 tiers:
  • Tier 1 utilizes global default emission factors, which is a yearly estimate per hectare
  • Tier 2 utilizes country-level values from literary research. AGB and SOC are modelled separately for these emissions. Note: only mangroves have Tier 2 default values.
  • The Tier 3 emission factor is a project-specific value that needs to be provided by the user in the cells below. This value can be entered either as a single input (following the same approach as Tier 1) or as separate values for AGB and SOC (following the same approach as Tier 2)
    • Methane (CH4) and nitrous oxide (N2O) emissions are not currently included in the default emission factor values of the model (please refer to the “Limitations of the tool” section for further details). However, it is possible to incorporate CH4 and N2O emissions if the user possesses project-specific data.

For restoration projects only

For restoration projects, we include sequestration rate (growth rate and carbon accumulation rate in soils). We do not include the avoided loss of soil organic carbon from degraded soils, nor do we account for methane or nitrous oxide in the default values. These can be included, however, as project-specific inputs if you have sufficient data.

• Sequestration rate used: Users can again choose sequestration rates from one of the three tiers: (1) a global sequestration rate provided by the IPCC, (2) opt for country-specific sequestration rates, or (3) enter project-specific sequestration rates in the designated cell below. Note: only mangroves have Tier 2 default values.
• Methane (CH4) and nitrous oxide (N2O) emissions are not currently included in the default sequestration rate values of the model (please refer to the “Limitations of the tool” section for further details). However, it is possible to incorporate CH4 and N2O emissions if the user possesses project-specific data. In such cases, the emissions should be converted to their respective CO2e before being entered. For instance, if a project removes 0.71 CO2 but introduces 0.14 tCO2e of CH4 and 0.12 tCO2e of N2O, the net sequestration value would be 0.45 tCO2e.
• We assume that all soil organic carbon has been lost post-disturbance. As such, we do not include emissions reductions from avoided loss of soil organic carbon. If the user has this data available, it can be included in the project-specific sequestration rates as described above.
• Planting success rate: This rate is the rate or percentage of successfully established vegetation or trees in a reforestation or afforestation project

While these assumptions have default settings, users can overwrite them. Here, we further elaborate on a few key assumptions:

Discount rate: The model currently utilizes a fixed discount rate of 4%. However, this value can be adjusted to incorporate country-specific premiums or other relevant circumstances.

Carbon price: The assumed increase in carbon price (%) does not include inflation, as the model does not account for inflation or cost increases in its calculations.

Restoration rate: Make sure to adapt the restoration rate depending on what is feasibly restorable per year. Then adapt the project size according to this rate and the duration of the restoration activity. For example, if the reasonable restoration rate is 50 ha / year and you will restore for five years, your project size will be 250 ha total.

Buffer: When considering carbon credits, it is crucial to account for non-permanence, leakage, and uncertainty, which are significant factors. These factors are encompassed within the "buffer" assumption in the Blue Carbon Cost Tool, where the default value is set at 20%.

While modeling specific scenarios, it is valuable to undertake the exercise of calculating non-permanence, leakage, and uncertainty.

• Non-permanence: Verra offers the VCS Non-permanence risk tool, which can be employed to estimate non-permanence. This tool considers various risks, including internal factors (e.g., project management, project longevity), natural elements (e.g., extreme weather events), and external influences (e.g., land tenure, political aspects).
• Leakage: Estimating leakage can be challenging. However, it may be minimal if the project satisfies specific conditions, for example the project area having been abandoned or previous commercial activities having been unprofitable. Additionally, inclusion of leakage mitigation activities (e.g., ecosystem services payments) within the project can further reduce leakage potential.
• Uncertainty: The (Verra VCS) allowable uncertainty is 20% at 90% confidence level (or 30% of Net Emissions Reductions at 95% confidence level). In cases where the uncertainty falls below these thresholds, no deduction for uncertainty would be applicable. More guidance can be found in Verra’s Tidal wetlands and seagrass restoration methodology. In cases where uncertainty falls above this threshold, you must deduct an amount equal to the amount that exceeds uncertainty. For example, if uncertainty is 28% at a 90% confidence level, you must deduct an additional 8% from your emissions reductions. When using the tool, this amount should be added to the buffer (in addition to non-permanence and leakage amounts).

On top of economic feasibility and abatement potential, qualitative, non-economic scores are also included in this Project Overview. These can vary depending on the country and/or the ecosystem. These individual non-economic scores, in addition to the economic feasibility and abatement potential, are then weighted to an overall score per project. These scores provide additional information to evaluate projects.

Appendix: Qualitative scorecard for more details behind assumptions and sources used to calculate these.

Methodology and sources used for the non-economic qualitative metrics:

The current version of the Blue Carbon Cost Tool has certain limitations, which could be addressed in future iterations:

• Limited data availability: Due to the limited availability of real-time cost data, the model heavily relies on initial cost data and assumptions. Therefore, the provided estimations should be considered as initial high-level approximations. If you have additional data that can improve the accuracy of the model, please use the data intake form to submit your data.
• Limited scope: Currently, the model includes data from only 9 countries or regions and focuses on mangroves, seagrass, and salt marsh ecosystems. Future editions could expand the scope by including more countries or regions, and additional ecosystems, enhancing the tool's comprehensiveness.
• Exclusion of Methane Emissions: Methane emissions from microbial activity, biomass burning, and fossil fuel use are excluded from the default values due to various assumptions. However, users can adjust project-specific parameters to include these emissions if relevant.
• Exclusion of Nitrous Oxide Emissions: Similarly, nitrous oxide emissions from denitrification, burning, or fossil fuel use are excluded in default calculations but can be incorporated by users through specific adjustments.
• Limited flexibility on “pre-development” phase length: The model currently allows flexibility in the timeline of the "Conservation/Restoration" phase. However, there is limited flexibility in the length of the "pre-development" phase, which is fixed at 4 years. Future editions of the model could incorporate more flexibility in the pre-development phase length.
• Exclusion of Inflation and other cost Increases: The model does not currently account for inflation or other cost increases. Including these factors in future iterations would enhance the accuracy of the model's cost estimations.

This section provides the assumptions and methodologies used to estimate the cost components of a blue carbon project. For more detailed description, please download the full methodology.