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Carbon Market Opportunities for Private Forest Landowners

The global climate is changing, in large part, because human activity is releasing large amounts of greenhouse gases – carbon dioxide in particular – into the atmosphere. Trees absorb carbon dioxide (CO2) from the atmosphere during photosynthesis. They fix, or “sequester,” the carbon in their foliage, branches, trunk, and roots, and release the oxygen back into the air. A standing forest is a carbon “bank” that accumulates interest in the form of carbon as it grows.

In the United States, a private forest land owner can become engaged in this global effort – and generate additional revenue – by enrolling in the voluntary carbon market. The Chicago Climate Exchange (CCX) trades verified increases in forest carbon (carbon credits) for emission allowances. Interested private forest owners can enroll in the CCX through their choice of aggregators. Those who want to stay engaged with what is happening in the carbon marketplace can use a wide range of online resources.

Background on Climate Change
Forests Sequester Carbon
Other Forest Benefits
Trading Forest Carbon
Opportunity for Private Forest Owners

Background on Climate Change

The global climate is changing, in large part because human activities are releasing large amounts of greenhouse gases – carbon dioxide (CO2) in particular – into the atmosphere. These gases trap heat in the atmosphere, contributing to higher global temperatures, changes in precipitation, sea-level rise, and more frequent extreme weather events. The effects of climate change will continue to have profound impacts on human health, natural habitats, and agriculture.

Forests Sequester Carbon

Trees store, or “sequester,” carbon in the soil and in their biomass (trunks, branches, foliage, and roots) through the process of photosynthesis. A standing forest can be thought of as a carbon “sink” or bank that accumulates interest in the form of more carbon as it grows. Younger forests sequester carbon more rapidly, and older forests contain greater amounts of carbon. Forests also release carbon, however, through natural biological processes or when they are disturbed (i.e., through harvesting, fire, and natural or climate-induced death and decay). The clearing, degradation, and ultimate conversion of forests to nonforest use actually accounts for approximately 20 percent of annual human-caused greenhouse gas emissions worldwide (IPCC 2007). Employing sustainable forest management practices can help reduce carbon atmospheric carbon concentrations and increase forests’ ability to sequester carbon.

What seems like a relatively straightforward concept – keeping forests intact as a way to mitigate climate change – becomes slightly more complicated when we realize that forests provide a portfolio of climate change mitigation solutions. At the same time that trees store carbon as they grow, sustainably produced timber can also be a very environmentally friendly building material, and wood-based bioenergy and biofuels can be used as an alternative to fossil fuels. Whereas the production of steel and concrete generates significant greenhouse gas emissions, forest products continue to store carbon even after harvest. Therefore, it is of utmost importance to keep forests as forests (and prevent conversion to nonforest use). A next step would be to determine whether a particular forest is best suited to long-term protection, sustainable harvest for wood products, bioenergy production, or some other alternative or combination.

Other Forest Benefits

Healthy forest ecosystems are ecological life-support systems. Forests provide a full suite of goods and services that are vital to human health and livelihood – natural assets called ecosystem services. These natural assets are typically difficult to measure and quantify, and are therefore undervalued or not valued in many traditional economic systems.

Trading Forest Carbon

Society is beginning to take action to curb global climate change, and carbon sequestration by forests is becoming an economically valued ecosystem service. Within the United States, the voluntary carbon market has grown substantially as governments, corporations, and individuals seek first to reduce – and then to offset – their own carbon footprint. The voluntary market can play a significant role in climate change mitigation. The market can provide funding for projects and activities that decrease or remove carbon dioxide emissions from the atmosphere. At the same time, the market can increase public awareness of and engagement with efforts to combat climate change.

Opportunity for Private Forest Owners

According to recent estimates by the U.S. Forest Service, the United States lost approximately 2,700 acres of forest land to development each day between 1992 and 1997 (Stein and others 2005). Much of the nation’s forestland (more than 400 million acres) is privately owned. The voluntary carbon market can provide incentives for private forest landowners to keep their forests as forests over the long-term. If you are a private forest landowner interested in participating in the voluntary carbon market, check out the frequently asked questions and additional resources to learn more.