Evaluating the Economic and Environmental Efficacy of Global Carbon Offset Markets: Perspectives from the Global South

Abstract

As climate change intensifies, governments and corporations are turning to carbon offset markets and nature-based solutions to meet emission targets. Yet critics argue these mechanisms allow wealthy nations and firms to “buy their way out” of real reductions, while creating new inequities for developing economies. This paper evaluates the economic and environmental effectiveness of carbon offset markets as a tool for reducing global emissions. By analyzing market design flaws including additionality, leakage, and permanence, this study demonstrates that baseline over-crediting and geographic emission shifting undermine market integrity. Furthermore, the economic dynamics of "carbon Dutch disease" and "green grabbing" expose developing resource-rich nations to severe macroeconomic vulnerabilities. This paper argues that carbon offsets must not substitute for direct domestic decarbonization. It concludes by proposing a framework of structural policies—including an International Baseline Registry under Article 6.4 of the Paris Agreement, a tiered additionality rating system, and localized developmental safeguards—to transition offsets into a credible, secondary pillar reserved strictly for residual emissions.