Non-Permanence Risk Buffer Reserve
The Natural Forest Standard is operated to ensure the permanent integrity of additional carbon benefits. The permanence of carbon benefits is assured by the maintenance of a pooled buffer reserve of credits, to cover against the risk of potential future losses or reversals.
The NFS Risk Buffer Policy outlines the NFS approach to defining permanence and identifies permanence to be Project Duration plus 20 years; as the NFS requires a project to have a minimum duration of 20 years permanence is set at a minimum of 40 years, and the Risk Buffer held on the NFS Registry is maintained for the duration of this permanence timeframe, covering the multi-decadal timescale required.
Risk Buffer Deductions
The appropriate proportion of risk buffer credits will be deducted at source upon the issuance of NCCs on the NFS Registry and held in a reserve account to guarantee the integrity of the Natural Forest Standard and issued Natural Capital Credits.
The purpose of the NFS Risk Buffer Reserve mechanism is to provide assurance for the permanence of verified and issued Natural Capital Credits. The mechanism is required to ensure that any credits issued to areas of forest that unintentionally get deforested can be replaced from the pooled Risk Buffer Reserve.
The integrity of the NFS and the issued NCCs is ensured by setting appropriate levels of reserves that must be maintained across the portfolio of NFS projects. This safeguard is in place to cover the non-permanence risk that is applicable to NFS projects whilst provide a balance between the needs of the project being able to generate sufficient cash flows to address the deforestation pressures, and purchasers of the NCCs to have assurance that the conservation and project benefits are permanent.
The NFS requires projects to continuously monitor and maintain the project area, and provide annual reports including quantification of emissions for each crediting period. A contribution of 10% of issued credits is deducted from all issuances, with all contributions subject to review, based on ongoing project performance.
The relevance and appropriateness of specific measures to deliver permanence varies between project locations, so the NFS is not prescriptive about the specific measures to be implemented. The NFS provides some general guidance on how permanence can be addressed and how risk assessors may evaluate the adequacy of the measures adopted.