- Keeton, William
University of Vermont
Voluntary and compliance carbon markets have the potential to dramatically enhance the long-term sustainability of working forests and rural communities in the U.S. Northeast. Our multidisciplinary research project evaluated the potential for financially viable forest carbon projects, generation and selling offsets into existing markets, as well as demand from potential buyers for a regionally branded offset credit. The project’s twin goals of understanding supply and demand required different methods but provided a comprehensive picture of the potential for generating carbon offsets in the northern forest region, and adding value to the sale of these through regional branding. Using forest inventory data from 25 non-industrial, privately owned properties, combined with intensive interviews with potential buyers, we found high potential for both supply and demand for northern forest carbon credits, but there are important limitations to both. There are pronounced economies of scale that render financially feasible mostly those carbon projects conducted on medium to larger sized properties (e.g. >1,000 acres) and/or with initial carbon stocking (i.e. timber volume) higher than regional averages. As carbon markets develop, for instance through the addition of project aggregation mechanisms in compliance markets, opportunities for smaller landowners may improve. Choice of silvicultural approach and policy choices markets will face in the future are also important considerations, potentially affecting cash flows and returns on investment. Buyers expressed interest but also reservations with the idea of locally or regionally branded carbon credits. Of greatest concern were price points, holistic integration with other sustainability values, and departure from existing market systems rapidly gaining traction. For northern forest branding to work, the credits would need to be acknowledged by and registered with credible systems such as the California compliance market or international voluntary market standards. Working with these systems will be critical for developing locally branded credits, gaining legitimacy, and providing a price premium that would maximize benefits to forest landowners in the northern forest region.