Recommendations for Cost-Benefit Analyses in Projects with Carbon Benefits from Trees

This technical note provides practical recommendations for conducting rigorous cost-benefit analyses in projects that generate carbon benefits through forest conservation, regeneration, and agroforestry systems. Designed primarily for Inter-American Development Bank (IDB) stakeholders but applicable to similar institutions, it addresses a critical gap in the literature by offering the first comprehensive guidelines for determining the value of carbon benefits from forest-related development projects, in both ex-ante and ex-post analyses. The paper emphasizes the importance of establishing attributable project impacts through rigorous evaluation methods, selecting context-appropriate carbon content estimates, and incorporating sustainability assumptions into benefit calculations. It also includes references to key data sources that can be used as inputs in cost-benefit analyses and provides guidance on selecting appropriate carbon prices and discount rates.