The role of emerging markets in the VCM.

Not all countries are created equal when it comes to the voluntary carbon market (VCM) according to Abatable’s 2024 VCM Attractiveness Index.

The index ranks countries according to their current voluntary carbon market conditions and their potential to play a significant role in the future of carbon markets. To determine rankings, the index is framed around three pillars that analyze countries’ investment landscapes, their readiness to engage with national and international carbon markets, and the opportunities available to improve their environmental and social conditions.

One key trend highlighted within the report is the focus on emerging markets for the VCM. The 2024 report found Latin America, Africa, and key parts of Asia are poised to be the most attractive for the VCM with countries from these regions representing the majority of the top 20 based on overall score, the opportunity for climate, nature, and people, and their readiness for the global climate market.

Latin America specifically was labeled as the powerhouse of opportunity in the VCM landscape with biodiversity and natural resources as well as participating in the voluntary and compliance carbon markets topping the list of benefits. Columbia was named the top country in the list with Peru, Brazil, Guyana and Paraguay also in the top. The region spans a wide variety of ecosystems, including tropical and subtropical rainforests, cloud forests, wetlands, savannas, deserts, and marine ecosystems. This diversity contributes to its high species richness with analysts estimating that approximately 40-50% of the world’s biodiversity is found within Latin America in regions including the Amazon Rainforest, the Andean mountains, and the Mesoamerican Barrier Reef System which is the second-largest coral reef system in the world.?

African countries also play a large role in the VCM and have shown sustained improvement in 2024’s results. Guyana, Gambia, Lesotho, and Chad in Africa and Southeast Asia’s East Timor top the list of countries showing the biggest improvement over 2023 results and Abatable states increased engagement with Article 6, the entry of new project developers, and an increased supply of in-demand credits as the reason for the shift.

Topping the list of Asian countries is Cambodia, which scored high on its forestry initiatives engagement level and within the climate, nature and people opportunity pillar. Other Asian countries that scored at the top of the index include Bangladesh, Thailand, and Indonesia.

Read the full report.

Invert Insights.

?? Emerging markets contain much of the world’s biodiversity, especially in regions such as tropical rainforests, coral reefs, and freshwater systems. Protecting biodiversity in these countries is essential for the health of the planet and the well-being of their economies. Their rich ecosystems play a vital role in global efforts to combat climate change, maintain ecosystem services, and support sustainable development.

??? Emerging markets are more vulnerable to climate change due to their geographic exposure to climate risks, dependence on climate-sensitive sectors like agriculture, limited financial and technological resources, and socio-economic challenges such as poverty and inequality. These vulnerabilities often exacerbate the impacts of climate change, making it harder for emerging economies to cope and recover. Addressing these vulnerabilities requires significant international cooperation, investment in adaptation and resilience, and sustainable development practices tailored to these regions.

?? High integrity nature-based projects are built around more than just the protection and conservation of nature. Supporting emerging markets allows carbon investors to support biodiversity, empower local communities around the world, and achieve more of the sustainable development goals set out by the United Nations. Learn more about how Invert is investing in emerging markets like Mexico.

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