Risks of non-delivery and reversals

1. What is a Risk Buffer?

Plan Vivo projects must issue a proportion of climate benefits in a risk buffer, which will remain unsold and guarantees the integrity of a Plan Vivo project in the face of risks to permanence or potential reversals of emission reductions. The risk buffer of each project is proportional to the level of risk that the project is exposed to. For more information, please see the Plan Vivo Non-Permanence Buffer.

2. Why are Risk Buffers Required?

Changing land use practices, natural disasters and other threats pose the risk of reversing the climate benefits achieved by Plan Vivo projects. Projects must consider these risks when developing interventions and implement mitigation measures where possible. However, such measures are unlikely to sufficiently remove all risks. Therefore, appropriate risk buffers should also be developed to insure against the potential of non-delivery or reversal of climate benefits.

3. Determining a Risk Buffer

The Plan Vivo Standard does not require a specific approach to determining a risk buffer. It is strongly recommended, however, that all projects provide a description of the risk of reversals in their project area associated with specific risk factors across five categories – Social, Economic, Environmental, Technical and Administration. The project must use an approach such as this to justify its risk buffer allocation.

Risk factor category	Risks to consider
Social	Land tenure and/or rights to climate benefits are disputed Political or social instability Community support for the project is not maintained
Economic	Insufficient finance to support project activities Alternative land uses become more attractive to the local community External parties carry out activities that reverse climate benefits
Environmental	Fire Pest and disease attacks Extreme weather or geological events
Technical	Project activities fail to deliver expected climate benefits Project activities fail to deliver expected livelihood benefits Technical capacity to implement project activities is not maintained
Administrative	Capacity of the project coordinator to support the project is not maintained

The project can then describe actions it will take to mitigate these risks and assign a risk level for each category, between the value of 1 (very low) and 10 (very high). From this, a non-permanence risk buffer percentage can be chosen, by adding the risk level scores for each of the five risk categories to create a risk buffer value between 10% and 50%. For projects that issue Plan Vivo certificates in advance of verification, a more conservative buffer is required against the risk of non-delivery of climate benefits for which certificates have already been issued.

The minimum risk buffer for Plan Vivo projects is 10%, and in most cases the risk buffer will be 20% or higher. The appropriateness of the suggested risk buffer will be assessed by the Technical Advisory Committee and external reviewers during the PDD review. If insufficient information or justification for the proposed risk buffer is provided in the PDD, the project may be requested to add further information or to apply the Assessing Risk and Setting the Risk Buffer Approved Approach.

For greater detail, and to see the full approved approach, please see the Assessing Risk and Setting the Risk Buffer Approved Approach.

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