The current Holocene Extinction marks the fastest rate of species loss in human history. In the absence of effective public policies, market-based approaches and carbon offsets in particular may generate valuable biodiversity co-benefits. This study provides the first comprehensive evidence on how voluntary carbon offsets — which regularly promote biodiversity benefits to investors — impact habitat quality. We compile the largest extant dataset of voluntary carbon offset projects and merge these to finely-resolved data on local ecosystems derived from satellite measures of habitat integrity. Contrary to asserted co-benefits, we find carbon offset projects are associated with a 3.7% increase in habitat disturbance, as measured by the Human Influence Index (HII). Analyzing land-use data, we show that carbon projects spurred conversion of biodiverse habitats—particularly shrublands and less-dense forest ecosystems—into pasture and simplified landscapes, and thereby ecological trade-offs. We examine impact heterogeneity by ecosystem condition, certifications, stated co-benefits, protected area overlap, registry, and rating status, but still find no evidence of improved habitats. Nor do alternative habitat measures, the Bioclimate Ecosystem Resilience Index and the Biodiversity Habitat Index, show improvement following offset projects.
