What happens if an offsets project inadvertently leads to an increase in greenhouse gas emissions elsewhere in the economy?
Leakage is the shifting of emitting activities to locations not included in the measured area of an offsets project or program. This can result in a smaller net reduction in overall emissions than expected. Accounting for leakage in an offsets program helps maintain the environmental integrity of the program and the market value of the offset.[16] Leakage usually occurs when an offset project reduces the supply of a good, displacing its production—and its associated greenhouse gas emissions—to another location. Leakage is likely to be a problem where an offset project reduces the land available for producing another market commodity, such as crops or timber. For example, when a landowner decides to generate offsets by switching to longer timber rotations, one possible effect is that the supply of timber could be reduced, leading to new timber harvest outside of the project area to satisfy unmet demand. This leakage would diminish or even eliminate any net gains in sequestration achieve
