akar.earthLeakage: Definition
What is leakage in carbon projects? Activity-shifting and market leakage explained, how standards deduct it, and how it shows up in Indonesian projects.
Leakage is the increase in greenhouse gas emissions outside a project’s boundary that is caused by the project itself. If protecting one forest pushes loggers or farmers to clear another, the climate benefit “leaks” away and must be deducted from credits.
Why it matters
Leakage is one of the three classic integrity risks, with additionality and permanence. Ignoring it overstates the real climate benefit. It is a particular concern for REDD+ and for ARR on land that was producing food or grazing.
Types and how they are measured
- Activity-shifting leakage: the baseline agents of deforestation (for example smallholders or a concession) move to nearby land. Projects monitor a leakage belt around the boundary with satellite data and attribute extra loss there to the project.
- Market leakage: reduced timber or crop supply raises prices, and production increases elsewhere. Methodologies usually apply default deduction factors.
- ARR displacement: planting trees on cropland or grazing land can push those activities onto forest. Methodologies require a displacement assessment and deductions if needed.
Jurisdictional REDD+ reduces leakage within a province or country, because shifts inside the jurisdiction are captured in its own accounting. See leakage accounting for methodology rules.
Indonesia angle
In Indonesia, leakage analysis starts with the drivers of deforestation: oil palm and pulpwood expansion, smallholder farming, mining and fire. A REDD+ project that blocks a plantation permit may see the company develop elsewhere. ARR on smallholder land must show that farmers keep producing food, for example through agroforestry with coffee, cocoa or fruit trees rather than replacing crops entirely.
Common mistakes
- Assuming zero leakage because the land was “degraded” without checking current use.
- Drawing a leakage belt that excludes the most likely displacement areas.
- Treating livelihood programmes as automatic proof that no displacement occurred.
Related terms
See baseline scenario, nesting and jurisdictional REDD+, or browse the carbon standards hub.
Frequently asked questions
What are the main types of leakage?
Activity-shifting leakage, where the same people move their activity elsewhere, and market leakage, where reduced supply raises prices and triggers production somewhere else.
How is leakage handled in credit calculations?
Methodologies estimate it with monitoring of a leakage belt or with default deduction rates, and subtract it from the project's net benefit before credits are issued.