Executive Summary
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Sri Lanka currently has no registered mangrove carbon projects in the Voluntary Carbon Market (VCM). The Climate Resilient & Community-Driven Mangrove Afforestation Programme was the first initiative to seek accreditation under Verra's Verified Carbon Standard (VCS), but its registration was denied due to incomplete and incorrect information, leaving the project "On Hold." However, Sri Lanka does have experience with nature-based carbon projects; one afforestation, reforestation, and agroforestry project has successfully been validated under the Plan Vivo standard. This situation highlights the challenges and
opportunities for developing high-integrity blue carbon projects in the country.
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At present, Sri Lanka lacks clear and specific requirements for nature-based carbon credit projects that trade on the Voluntary Carbon Market (VCM). While some projects, such as the mangrove afforestation program, have relied on memorandums of understanding (MoUs) to secure government approval, no standardized regulations exist. The Sri Lanka Carbon Crediting Scheme (SLCCS), a voluntary program for companies, also does not provide specific guidelines for VCM trading. Project developers are not required to obtain government authorization, register their projects in a national carbon registry, establish benefit-sharing agreements, or adhere to specific legal requirements for Indigenous Peoples and Local Communities, such as Free, Prior, and Informed Consent (FPIC). Additionally, there is no mandate for implementing Measuring, Reporting, and Verification (MRV) processes. Although Sri Lanka does not have a functioning national carbon registry, a 2018 World Bank grant aimed at designing such a system indicates the government's interest in developing one.
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Sri Lanka is the first country in the world to legally protect all its mangrove forests, having implemented the National Policy on Conservation and Sustainable Utilization of Mangrove Ecosystems in 2015. Under this policy, all mangrove ecosystems are considered state property, regardless of land ownership, reinforcing the country's strong commitment to conservation. The State Land Ordinance grants leaseholds for state mangroves, prioritizing conservation over commercial activities in the approval process. Community leaseholds for managing mangroves are not clearly defined, although participation in conservation programs is encouraged. Some communities possess legally valid land documents known as "Oppuwa" but cannot exploit mangroves for private gain. Moreover, there is no clear framework for defining, securing, or transferring carbon rights in mangrove forests, creating uncertainty for potential participation in the carbon market. The involvement of multiple government agencies in overseeing different aspects of mangrove management complicates the permitting processes.

Overall, Sri Lanka has unfavorable enabling conditions for blue carbon projects. There is a lack of precise requirements for authorization processes, benefit-sharing agreements, MRV, and other relevant project requirements, along with ambiguous regulations regarding carbon rights in mangroves.

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