Equitable design of blue carbon finance for mangrove-related livelihoods and China’s role
Alice Bian and Yanxi Zhou provide insights into blue carbon trading in China, and what could be learned from the existing framework of Reduced Emissions from Deforestation and Forest Degradation for the co-design of a mangrove-based blue carbon market.
There is a significant shortfall in funding to protect and restore mangroves. Credit markets are increasingly important forms of financing for investments in coastal ecosystems. Several established carbon accounting methodologies exist, along with a growing pipeline of revenue-generating projects through the sale of blue carbon credits. China is one country that is exploring the potential of blue carbon, particularly from mangrove ecosystems, in tackling climate change.
What are blue carbon credits and markets?
Coastal blue carbon ecosystems are powerful carbon sinks. The carbon sequestration potential of these ecosystems facilitates the growth of the blue carbon market. The blue carbon marketis a financial trading system that validates and certifies the CO2 captured and stored within coastal ecosystems, such as mangroves, salt marshes and seagrasses, as tradable credits.
Voluntary carbon markets (VCMs), where companies are engaged to purchase carbon credits to offset their emissions, are currently the main trading channels for blue carbon credits. The protection and restoration of blue carbon ecosystems can contribute to net abatement of greenhouse gas emissions. However, there are no robust scientific approaches to account for allochthonous carbon, the organic carbon sequestered outside the blue carbon project boundary, when calculating additionality.
Blue carbon projects account for only 1% of carbon credit transactions on the voluntary market. Between 2014 and 2025, nearly 7 million blue carbon credits were issued, with a weighted average price of US$27 per blue carbon credit. As of October 2025, 81 global blue carbon projects were operating, 10 of which were issuing credits in VCMs. Notably, mangroves account for almost 99% of all credits issued, with the common crediting standards including Verra’s Verified Carbon Standard. Carbon credits are mostly transferred from lower-income countries in Asia and Africa to higher-income countries, primarily the US and European countries, below their real value. About 20% of credits are bought by resellers for speculation, who subsequently resell these at higher prices than those allocated to project developers.
The state of blue carbon trading in China
Blue carbon credits in China are traded within the national VCM launched in 2012 through the China Certified Emission Reduction (CCER) scheme, under which verified emissions reductions are issued as credits and sold to offset emissions. The development of blue carbon trading in China has evolved through three stages. The first stage (2012–2017) covered exploration of the blue carbon concept and scientific research. The second stage (2017–2023) coincided with the suspension of the CCER with pilot sites in coastal provinces. Since 2023, blue carbon has been officially incorporated into the national voluntary emissions reduction framework.
In February 2023, the first blue carbon credit auction in China, primarily for algae, was successfully held in Ningbo city, concluding at a price of CNY106 (approximately US$15) per tonne, more than twice the starting price and approximately double the prevailing national carbon market quota price at the time. In March 2026, the Xiapu Mangrove Project became China’s first registered blue carbon CCER project, with a crediting period of 40 years and 32,466 tonnes of CO₂-equivalent in projected reductions.
While a blue carbon market can provide economic incentives for coastal ecosystems, regulations around property rights, accounting standards and the participation of trading entities remain insufficient. Current approaches for blue carbon crediting, which quantify carbon stocks and greenhouse gas fluxes, still face major uncertainties and costs for community implementation. This reduces the reliability and credibility of carbon credits. A key barrier is data limitations that affect the additionality of carbon reduction, as domestic carbon accounting is not yet aligned with international standards.
China has also strengthened its international climate diplomacy in ocean governance. It explicitly embedded blue carbon into its 21st Century Maritime Silk Road Blue Carbon Programme as early as 2017. President Xi called for the creation of the International Mangrove Center, which was established in Shenzhen in 2024. This marked mangroves becoming a key part of the Chinese government’s collaboration with Southeast Asia on climate and health.
Article 6 of the Paris Agreement enables international cooperation to tackle climate change and unlock financial support for developing countries; this supports the significant potential to promote international cooperation on carbon markets. Chinese scientists and policymakers are increasingly focusing on the co-benefits for human health and livelihoods of developing high-quality blue carbon credits, which can improve public acceptance of mangrove restoration projects in local communities, while contributing to realising the real value of mangrove ecosystems. An increased understanding of the co-benefits beyond carbon sequestration can enhance international cooperation in the co-design of blue carbon markets that take into account the equitable distribution of revenue from carbon credits, ensuring a fair share goes to local communities and vulnerable populations.
What can be learned from the experience of REDD+?
To support China’s ambition and engagement, there are some important lessons to be learned from the Reduced Emissions from Deforestation and Forest Degradation (REDD+) programme covering terrestrial forests. These could inform the design of equitable carbon markets for coastal mangroves.
Forests play a vital role in rural livelihoods and food security. The REDD+ framework is a climate change mitigation strategy for forest policies, implemented under the United Nations Climate Convention, that explicitly takes account of both deforestation and forest degradation, both of which are important elements of forest loss. The REDD+ framework was formally adopted at the UN climate conference COP16 in 2010 as a payment-for-ecosystem-services system. It was intended to incentiviselower-income countries to reduce deforestation and forest degradation.
The Paris Agreement marked a shift for REDD+ activities from a project-based approach to national frameworks, including forest-related carbon trading in countries’ climate change mitigation targets. This is also known as jurisdictional REDD+, with finance largely mobilised through VCMs. REDD+ projects account for about a quarter of all credits in the VCMs.
REDD+ is controversial, however, and has significant implementation challenges. Most REDD+ projects are focused on climate change mitigation through avoided deforestation, with certified projects for voluntary market credits. These REDD+ projects were planned to provide over 2% of the potential emissions reduction contributions from tropical and subtropical forests.
The complexities of forest governance and forest use show that REDD+ is not a low-cost intervention for climate change mitigation and poverty reduction. As evidenced in Tanzania, the effectiveness of REDD+ is undermined if community-based forest management approaches and conservation payments do not take explicit account of which individuals or villagers caused forest loss. There is limited evidence there, too, as to whether it improved local livelihoods and wellbeing.
Incentivising behavioural change among a wide range of actors, such as loggers, farmers and governments, has been shown to be vital for effective REDD+ policies to address the different drivers of deforestation and degradation.
What do the economics of REDD+ imply for improving the design of regulations for blue carbon credits?
The successful implementation of REDD+ involves addressing key issues around the additionality, leakage, permanence, monitoring, reporting and verification (MRV) of removed or avoided emissions, and benefits-sharing for communities. What does this show for the blue carbon market?
Additionality: Blue carbon projects must demonstrate that carbon sequestration would not occur without conservation and restoration financed by carbon credits, by establishing robust baselines of carbon stocks and deforestation trends against which emissions reductions can be measured.
Leakage: Addressing the location of leakage is important. In the case of REDD+, leakage occurs when additional deforestation, forest degradation or carbon emissions occur outside the REDD+ project jurisdiction, such as when harvesters relocate to other forests. In the case of mangroves, a better understanding of the socioeconomic and ecological characteristics linked to drivers of mangrove loss could inform economic decisions on the location of restoration projects, and prioritise management efforts across the full marinescape.
Permanence: As REDD+ payments are at the project level, long-term forest protection through effective policies and enforcement is crucial. Focus on the expansion of alternative livelihood projects can be a critical part of creating positive incentives for protecting and restoring forests, while reducing degradation. For mangroves too, creatinglong-term incentives is critical for rewarding villagers for their restoration and enhancements. In the Philippines, for example, it has been important to create mangrove-based income-generating opportunities to harvest honey, and eco-tourism jobs to benefit Indigenous communities through the co-management of mangrove resources within marine protected areas; this has received public acceptance.
MRV: Quantifying avoided emissions is challenging. Simple methods that could be adopted include measuring the difference in carbon stocks held by a mangrove forest, and measuring the difference between carbon sequestration and carbon emitted. For example, the Tropical Forest Forever Facility (TFFF) pays countries maintaining forest cover measured in forest stocks, whereas REDD+ payments are measured in avoided emissions. Remote sensing and satellite imagery, combined with on-the-ground field data collection, can support high-quality carbon accounting. For mangroves, airborne and satellite LiDAR now enable cost-effective, high-resolution mapping of canopy height and above-ground carbon stocks across large areas.
Benefit-sharing mechanisms: An equitable distribution of the costs and benefits for the most vulnerable, who bear significant burdens from REDD+ policies, is of particular importance in the mangrove context too. Participatory approaches can effectively reduce the negative impacts of policy interventions of mangrove-based marine protected areas on local communities at an individual level. This can ensure that sufficient incentives are provided to realise the value of mangrove resources for coastal resilience to climate change, climate change mitigation, and improved food security and livelihoods.
The authors thank Liz Robinson for her review of this commentary.