3.2 Carbon leakage


The land manager shall confirm any intention to change or intensify the use of land elsewhere on the holding as a consequence of the Forest creation. If leakage (land use change/intensification outside the project boundary but within the country) is proposed, then projects shall carry out an assessment to determine whether this will result in GHG emissions. If significant GHG emissions occur, they shall be quantified for the duration of the project and accounted for in ‘net carbon sequestration’ (See Section 3.4). Otherwise, leakage is assumed to be ‘No change over time’.

Means of Validation

  • Statement in Project Design Document of intention by the land owner to replace the previous land use or activity elsewhere.
  • Leakage assessment in Project Design Document.
  • Mapping or field observation of current land uses and the likelihood of displacement of activities.
  • Further calculations of leakage.

Means of Verification

  • Confirmation in the Project Progress Report of current assessment of level of leakage from the project.


Leakage is GHG emissions outside the project boundary as a result of the project (e.g. displacement of agricultural activities might result in deforestation or intensification of use of non-wooded land elsewhere). Leakage is significant if it results in GHG emissions of magnitude ≥5% of the project carbon sequestration over the duration of the project.

Carbon pools included:

  • Tree above and below ground biomass
  • Litter and deadwood
  • Non-tree above and below ground biomass
  • Soil
  • GHG emissions to manage the land which has changed use


The likelihood of carbon leakage

"Leakage" in carbon sequestration projects refers to changes in land use outside the project area that may occur as a result of the project. This does not mean carbon emissions from the project itself, such as from seedling transport, site preparation or fertilizer use, as those emissions are calculated in the project's net sequestration.

The traditional example of carbon leakage is of a project involving forest protection, i.e. to reduce or prohibit logging. This does not change the fact that there is a demand for forest products, and then it is likely that trees will just be felled in another place to fulfil it. Thereby, the net benefit of forest protection is small or non-existent in terms of carbon sequestration due to increased emissions elsewhere (leakage).

Icelandic Forest Carbon projects only deal with new afforestation for now, so the logging prohibition example is not relevant. The only thing that could cause leakage during afforestation in Iceland is due to displacement of grazing pressure, i.e. if grazing that was in the forestry area before moves to another area and causes more CO2 emissions there than before. However, this does not apply to sheep grazing, as it is spread over very large free-range areas, and therefore the protection of small areas for forestry has no effect on grazing pressure on the many times larger ranges. However, large animals (horses and cattle) are usually grazed inside fences, so it is possible that carbon leakage may occur if, for instance, a horse pasture is taken for forestry and the horses are moved to another place, where the grazing load then increases from what it was before. Only in such cases is it necessary to consider possible leakage.

We can also possibly talk about leaks on another scale, for example, if certain state forestry projects were to be reduced on the grounds that they could now be financed with donations from the private sector. Then the private contributions would not be the pure addition that was intended, and therefore the reduction on the part of the state would have to be calculated as leakage. It is therefore essential that the state does not reduce its support for forestry due to increased funding from other sources.