High economic costs of reduced carbon sinks and declining biome stability in Central American forests

Tropical forests provide vital global ecosystem services such as carbon sequestration for climate regulation and habitats for unique biodiversity. Yet, climate change impacts and their economic implications remain underexplored. This study derives monetary estimates for climate change effects on climate regulation and habitat services in Central American forests by modelling net ecosystem exchange (climate regulation) and biome stability (habitat) from 1985 to 2100 and valuing them using the social cost of carbon and benefit transfer. Results project ecosystem service declines in 24–62% of the region, with associated economic costs of $51–314 billion per year until 2100. Declines particularly affect montane and dry forests and have strong economic implications for lower-middle income countries in Central America (losses up to 335% of GDP). Economic losses are mostly higher for habitat services than for climate regulation, highlighting the need to look beyond CO2 sequestration and to avoid false incentives from carbon markets.

Lukas Baumbach, Thomas Hickler, Rasoul Yousefpour, Marc Hanewinkel