The ongoing Holocene Extinction marks the fastest rate of species loss in human history. In the absence of effective public policies, nature-based solutions implemented through market mechanisms-most notably carbon offsets-have emerged as a rapidly growing asset class that often promote biodiversity co-benefits for investors. This study provides the first systematic evidence on how voluntary carbon offsets impact habitat quality. We compile the largest extant dataset of voluntary carbon offset projects and link them to high-resolution satellite-derived measures of habitat integrity in local ecosystems. 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). Land-use analyses show that these projects tend to accelerate the conversion of biodiverse shrublands and less-dense forests into pastures and simplified landscapes, implying reduced habitat integrity and ecological trade-offs. We examine impact heterogeneity by ecosystem condition, certifications, stated co-benefits, protected area overlap, registry, and rating coverage, but still find no evidence of improved habitats. Nor do alternative habitat measures, the Bioclimate Ecosystem Resilience Index and the Biodiversity Habitat Index, show measurable improvement following offset projects. We conclude that voluntary carbon markets have ecological performance gaps and information frictions relevant to both investors and offset market governance.
