Landowner Incentives to Increase Forest Net Carbon Stores

July 31, 2005

This is the final column in a series of three Tree Tips columns on forests and carbon storage. This column explores the answer to the following question: What mechanisms encourage landowners to minimize forest loss, increase forested areas and temper forest harvest?

A market for ecosystem services, such as clean air, clean water and carbon storage is inevitable. The Chicago Climate Exchange (CCX) is one such infrastructure. CCX members agree to reduce their overall carbon dioxide emissions by 1 percent per year. Members who reduce their emissions by more than 1% per year can sell the difference as "carbon credits" to other members who pay a price to pollute.

Businesses based in the US have little incentive to join the voluntary cap and trade market, as they are not required to reduce emissions. Consequently, domestic prices remain as low as $4/ton of carbon. In Europe however companies required to reduce emissions per the, now in effect, Kyoto protocol are trading and carbon dioxide emissions credits have increased to $32/ton of carbon. European markets do not presently include the forest sector. However, it is feasible that, in the future, landowners could join the market by selling the carbon stored in their forest as an ecosystem service to companies that don't meet the carbon emissions reduction targets.

Apart from the slow pace the federal government is taking, within a couple of years, the State of California may adopt a market-based cap and trade strategy to implement Governor Schwarzenegger's greenhouse gas reduction goals for the State, within which the forest sector may be included.

The value per ton of carbon would need to reach $20 for landowners to be economically enticed to participate in the carbon market. If the value per ton of carbon reached $100, storing carbon would directly compete with returns from development and short rotation timber harvest.

Other economic mechanisms include consumer preference for forest products from well-managed forests (e.g. Forest Stewardship Council certified), land use laws (e.g. urban growth boundaries), education, performance-based regulation, global fair trade laws and a vibrant timber industry infrastructure (loggers, truckers, mills etc.).

Less difficult to convert into economic terms are aesthetics and the deep connection to the land that many landowners exhibit which also inspires a well-managed forest that supports carbon storage and associated values.

A portion of this production was gleaned from Forest Carbon in the United States: Opportunities and Options for Private Lands a publication offered by The Pacific Forest Trust, a 08-01-05 article entitled Free Market, Cleaner Air written by Marianne Lavelle, Michelle Passero of the Pacific Forest Trust and a 08-01-05 article entitled Morgan Stanley, Citadel Chase Profit in Pollution-Rights Trade by Adam Levy.

I intend this column to be a public service. Therefore, if you have any questions or topics you want me to cover, please email me at thembi@mcn.org.

Thembi Borras is a Registered Professional Forester living and working in Mendocino County, CA USA.