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Forest offsets and the California compliance market: Bringing an abstract ecosystem good to market

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Improved Forest Management (IFM) projects under the California cap-and-trade market allow production of new, non-traditional commodities: forest carbon offsets. Earlier analyses have considered forest offsets generated through tree planting in the Global South, as vehicles for sustainable development. However, the California IFM program is testing offset production in new geographic and forest management contexts: with offsets produced and consumed within the US on working (timber producing) forests. With data drawn from California IFM project design documents and in-depth interviews with carbon project developers, this study traces the development, sale, and maintenance of forest offsets, in order to map access to benefits along the commodity chain. Results reveal that the cost and complexity of rendering biological services ‘real’ for market legitimacy are reducing benefits to marginal landowners, who lack needed capital, knowledge, and technology to bring offsets to market. An important insight of this study is that the state has maintained power over program participation and offset supply through control of the forest offset methodology, creating a production process largely mediated by the state, adding risk and uncertainty to market participation. Findings provide an empirical example of neoliberal nature and offer broader lessons on governance and benefit distribution for ecosystem service commodity chains.
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Forest offsets and the California compliance market: Bringing an abstract
ecosystem good to market
Erin Clover Kelly, Marissa Bongiovanni Schmitz
Humboldt State University, 1 Harpst Street, Arcata, CA 95521, USA
article info
Article history:
Received 10 March 2016
Received in revised form 8 June 2016
Accepted 17 June 2016
Keywords:
Forest offsets
Ecosystem services
Carbon markets
Cap-and-trade
Commodity chain analysis
Access theory
abstract
Improved Forest Management (IFM) projects under the California cap-and-trade market allow production
of new, non-traditional commodities: forest carbon offsets. Earlier analyses have considered forest offsets
generated through tree planting in the Global South, as vehicles for sustainable development. However,
the California IFM program is testing offset production in new geographic and forest management con-
texts: with offsets produced and consumed within the US on working (timber producing) forests. With
data drawn from California IFM project design documents and in-depth interviews with carbon project
developers, this study traces the development, sale, and maintenance of forest offsets, in order to map
access to benefits along the commodity chain. Results reveal that the cost and complexity of rendering
biological services ‘real’ for market legitimacy are reducing benefits to marginal landowners, who lack
needed capital, knowledge, and technology to bring offsets to market. An important insight of this study
is that the state has maintained power over program participation and offset supply through control of
the forest offset methodology, creating a production process largely mediated by the state, adding risk
and uncertainty to market participation. Findings provide an empirical example of neoliberal nature
and offer broader lessons on governance and benefit distribution for ecosystem service commodity
chains.
Ó2016 The Authors. Published by Elsevier Ltd. This is an open access article underthe CC BY license (http://
creativecommons.org/licenses/by/4.0/).
1. Introduction
Atmospheric greenhouse gas (GHG) reduction markets are gen-
erating production of new and unusual goods called forest carbon
offsets. Previous analyses have explored their creation in small,
nascent markets in the Global South, through vehicles for sustain-
able development like the Clean Development Mechanism (CDM)
(Brown and Corbera, 2003; Corbera and Brown, 2010). However,
the 2012 launch of a regulatory cap-and-trade market in California
expands their production into untested geographic and forest man-
agement contexts. This is done through an improved forest man-
agement (IFM) protocol, which incentivizes offset production on
forests that are generally subject to commercial timber harvest.
Three years into cap-and-trade market operation, it is now possible
to assess California regulatory IFM market participation. We
employ both a commodity chain analytic framework and Ribot
and Peluso’s ‘theory of access’ to trace the development, sale, and
maintenance of forest offsets, to test who benefits and how from
new carbon-based revenue streams (Ribot, 1998; Ribot and
Peluso, 2003). With data collected through review of California reg-
ulatory IFM project design documents (PDDs) and in-depth inter-
views with carbon project developers, we ask: how are forest
offset production and benefit flows operating in a managed forest
context in the Global North?
We draw several findings from this research. First, IFM projects
under California’s cap-and-trade market must address the chal-
lenge of rendering intangible goods ‘real’ for market legitimacy,
echoing production hurdles in the Global South (Brown and
Corbera, 2003). In California, legitimacy is achieved through costly
and technically complex forest carbon inventory and verification,
limiting participation of small-scale and economically marginal
landowners and creating opportunities for technical experts and
project financiers, who provide needed capital, knowledge, and
technology to bring offsets to market. Second, because California’s
IFM program was designed to accommodate working forests, mar-
ket participants must often negotiate parallel commodity chains—
those of forest offsets and traditional timber products—altering the
actors and dynamics involved in offset production and creating a
calculus between potentially competing revenue streams. Third, a
significant insight from this study is that the state has maintained
power over project design and offset sale through control of the
http://dx.doi.org/10.1016/j.geoforum.2016.06.021
0016-7185/Ó2016 The Authors. Published by Elsevier Ltd.
This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
Corresponding author at: University of Minnesota, 115 Green Hall, 1530
Cleveland Avenue North, Saint Paul, MN 55108, USA.
E-mail addresses: eck107@humboldt.edu (E.C. Kelly), marissa@umn.edu
(M.B. Schmitz).
Geoforum 75 (2016) 99–109
Contents lists available at ScienceDirect
Geoforum
journal homepage: www.elsevier.com/locate/geoforum
forest offset methodology, resulting in a production process largely
mediated by the state and dependent on legislative acts, adding
risk and uncertainty to market participation.
This manuscript begins by considering forest carbon sequestra-
tion literature, both in the Global South and in California. We then
review commodity chain analysis as a framework for investigating
access to market benefits. Next we present the results of this
research, including documentation of market participants in Cali-
fornia’s forest offset commodity chain, as well as detailed descrip-
tions of the steps and relationships involved in offset production.
This leads to a discussion of how and by whom benefits are
accessed from California’s carbon offset market. We conclude with
broader lessons about commodification of abstract ecosystem
goods.
1.1. Forest carbon production in the Global South
Early forest carbon markets were promoted as vehicles for sus-
tainable development and tropical deforestation reduction, and
involved offsets produced in the Global South, purchased by actors
in the Global North. A prominent example is the Clean Develop-
ment Mechanism (CDM), developed in response to the 1997 inter-
national climate mitigation treaty signed at Kyoto, which allows
Northern countries to offset GHG emissions by financing offset
projects in the Global South. Under CDM, forest landowners are
paid to sequester carbon through afforestation and reforestation
(i.e. tree planting). A later carbon governance mechanism, Reduced
Emissions through Deforestation and Forest Degradation (REDD),
was developed through United Nations Framework Convention
on Climate Change talks in 2005, and expanded to REDD+ at the
Bali negotiations of 2007. Under REDD+, payments flow from North
to South in order to reduce forest harvesting and improve forest
management.
Research of forest carbon production in the Global South has
included the politics of negotiating program methodologies
(Boyd et al., 2008), policy-related barriers to participation
(Thomas et al., 2010), and the complexity and risk of forest carbon
project development (Lecocq and Ambrosi, 2007). This literature
has frequently centered on market access. For example, Corbera
and Brown pointed-out that participating landowners are made
dependent on third-party experts who render biological services
tradable in markets through rigorous measurement and verifica-
tion (2003, 2010). Economic geographers have critically analyzed
the commodification of ecosystem services (ES) more broadly, con-
sidering both the challenges and consequences of fitting ES into the
logics of neoliberal markets. Castree articulates six preconditions
for converting ES into tradable goods: privatization, alienability,
individuation, abstraction, valuation, and displacement (Castree,
2003). These denote separations that enable ES—such as seques-
tered carbon, biodiversity, or water—to be quantified, tracked,
and ultimately sold-off as ‘‘credits,” which serve as their market
proxies. With forest carbon, separation is achieved through inven-
tory, verification, and registration, steps which measure and sub-
jectively validate offsets for market sale. Because these processes
authenticate offsets as commodities, researchers have described
them as ‘‘legitimizing institutions” (Corbera and Brown, 2010, p.
280) and as ‘‘power tools of carbon finance” (Bumpus, 2011, p. iv).
Yet transforming carbon into saleable goods has profound eco-
logical and social consequences. Knox-Hayes argues that ES com-
modification can exert pressure on ecosystems for accelerated
production, leading to programs that are ecologically ‘‘ineffective
or potentially counterproductive” (2013, p. 118). Others have high-
lighted the re-casting of global forest governance through carbon
programs, which is accomplished by altering property rights and
tenure regimes in favor of certain actors, allowing financers, multi-
national corporations, and conservation NGOs to exert control over
land management decisions while undermining local authority
(Cabello and Gilbertson, 2012). For example, Cavanagh and Ben-
jaminsen found that NGO-funded reforestation efforts on national
parkland in Uganda led to violent evictions of forest residents
(2014). Also explicit are equity concerns, in particular for Indige-
nous Peoples whose customary tenure rights may be insecure
and whose means of livelihood may be targeted as the source of
forest degradation (Dressler et al., 2012; Naughton-Treves and
Day, 2012). Local practitioners and implementers of REDD+ have
sought to account for community and Indigenous groups’ voices,
to establish tenure rights and more equitable distribution of forest
benefits (see case studies in Naughton-Treves and Day, 2012). Glo-
bal REDD+ policies have also attempted to decentralize some ele-
ments of decision-making and to create community-level
responsiveness, often mediated by policies at national or subna-
tional levels (Angelsen et al., 2014; Ituarte-Lima et al., 2014).
The California market provides an opportunity to examine off-
sets produced and sold in a very different context—on managed
forests within the US, under a regulated market, with different
challenges, and presumably fewer uncertainties around land
tenure and access rights than CDM and REDD.
1.2. California regulatory cap-and-trade market: creating new revenue
streams for forest managers
While forest carbon markets in the Global South were estab-
lished largely to facilitate sustainable economic development, Cal-
ifornia’s regulatory forest offset market embodies different aims,
namely the production of offsets sufficient in quantity and rigor
to facilitate cap-and-trade market functioning. California’s now
nationally-expanded forest offset program is directed by an inno-
vative IFM protocol, which was negotiated between politically
powerful land trusts aiming to reduce private forestland fragmen-
tation, and large commercial landowners who prioritized offset
production on industrial timberlands (Schmitz and Kelly, 2016).
This methodology creates a new potential revenue stream for
working forests by allowing active timber harvest on project prop-
erties with partial crediting for carbon stored in durable wood
products. Yet it also promotes production of ecological co-
benefits, such as wildlife habitat, watershed improvement, and pri-
vate land conservation, through provisions that encourage ‘natural’
and sustainable forest management. By establishing the rules for
program participation and prescribing a uniform carbon account-
ing framework (or performance standard) across all market
entrants, the IFM protocol provides a backbone to the forest offset
production process.
Yet landowner willingness to participate in California’s
regulatory forest offset market has until now been highly
unknown. Research suggested that compared to predecessor
voluntary forest carbon programs, California’s regulatory IFM
protocol may have a conservativeness, costliness, and prescrip-
tiveness unfavorable to average landowners (Galik and Mobley,
2009; Galik et al., 2012; Gunn et al., 2011; Remucal et al.,
2013; Russell-Roy et al., 2014). Caldwell et al. state that for this
market: ‘‘carbon projects are not viable for all landowners and
impose significant constraints on land-use” (2013, p. 60).
Numerous feasibility studies indeed suggested small-scale
landowners were unlikely to meet rigorous requirements for
accounting, monitoring, and permanence (Charnley et al., 2010;
Fischer and Charnley, 2011; Fletcher et al., 2009; Markowski-
Lindsay et al., 2011; Miller et al., 2012; Thompson and Hansen,
2012; Wade and Moseley, 2011).
However, California’s IFM protocol has compatibilities with
more traditional timber management strategies, suggesting carbon
and wood product production may supplement each other in
specific situations, for instance commercialization of less
100 E.C. Kelly, M.B. Schmitz / Geoforum 75 (2016) 99–109
marketable timber types and forest tracts and stabilization of
return on investment during economic downturns (Jenkins,
2013; Caldwell et al., 2014). Others have described carbon
revenue as an innovative conservation funding source for larger
land trusts (Brown, 2014; Kay, 2015). This suggests that
while small-scale landowners may lack access to the regulatory
forest offset market, carbon-based income could be integrated
alongside more traditional timber revenue streams among
larger landowners, both for and non-profit. We test this by
analyzing early trends in landowner engagement with the IFM
protocol in Section 2.1.
1.3. Commodity chain analysis
Commodity chain analysis (CCA) offers a lens for researching
forest carbon markets, centering on relationships of power and
access to market benefits. It arises from the work of world system
theorists, who articulated the production and consumption of
global goods to highlight the machinations of global capitalism
and differential benefits among actors involved in the commodity
chain (Gereffi and Korzeniewicz, 1994; Hopkins and Wallerstein,
1986). CCA and related frameworks—including commodity
network analysis, the filiere approach, and global value chain
analysis—encompass a range of analytic tactics and theoretical
assumptions. We employ CCA as a methodology to generate a
detailed, descriptive analysis which traces ‘‘the whole range of
activities from production to consumption and the linkages that
bind them” (Raikes et al., 2000, p. 4). This allows one to ‘unveil’
commodity chain dynamics potentially shaped by wide-ranging
formal and informal rules (or ‘‘mechanisms”), including capital,
knowledge, technology, social relationships, identity, and access
to the political process (Ribot, 1998). CCA thus assumes that
rights to resources may not translate into access to benefits:
instead some with rights to resources may lack access to markets,
while others without formal resource claims may find ways of
benefiting (Ribot, 1998).
Researchers have found a wide range of applications for CCA,
including evaluation of policy alternatives and ‘‘making sense” of
complex commodities in their social and political context
(Jackson et al., 2006). For example, Cowlishaw et al. (2005)
evaluated a bushmeat market in Ghana in order to find possible
intervention points for conservationists concerned about species
depletion. Suykens (2010) considered the production of Beedi
cigarettes in India between the government and Maoist rebels
and implications for maintaining joint production regimes in
places of conflict. Through a CCA of matsutake mushrooms in
Yunnan, China, He investigated ways of re-distributing resources
along the commodity chain to improve benefit sharing (2010).
The growing scope of CCA literature has generated new
questions, including whether early distinctions between
‘producer-driven’ and ‘consumer-driven’ commodity chains are
still relevant and comprehensive characterizations of commodity
chain governance, i.e. the dominant force determining what is
produced and at what cost (Raikes et al., 2000). Raikes et al. ask
whether ‘‘other parties, for example governments and other
regulatory agencies [might not] also exercise substantial power”
(Raikes et al., 2000, p. 7). Similarly, Klooster investigates whether
forces external to the commodity chain, for example voluntary
certification schemes, might increasingly function as governance
tools by dictating standards that, though voluntary, become de
facto requirements for market entry through consumer demand
(2005). We apply CCA to forest carbon offsets—goods whose
demand, production requirements, and governance institutions
stem from regulatory requirements—to examine commodity
chain dynamics and functioning in the unorthodox context of
ecosystem service production.
1.4. Methods
1.4.1. Market database: identifying market actors
We employed mixed-method research design starting with pro-
ject design document (PDD) analysis for all listed IFM projects
(n = 147), to investigate the landowner and forest management
contexts of offset production. We began by examining carbon reg-
istry web-based databases, where PDDs are publicly available for
download. We read all PDDs and compiled an extensive list of pro-
ject attributes in Microsoft Excel, including landowner name, pro-
ject acreage and location, technicians and consultants employed,
and proposed project management activities. Projects were contin-
ually added through December 2015, as new projects entered the
market. From these data we produced descriptive statistics to sum-
marize early market participation. An unexpected component of
this study included documentation of a flood of new project list-
ings in October 2015 (n = 70), when the California Air Resources
Board (ARB) implemented consequential IFM protocol revisions,
followed by a lull in the market. We included this influx in our
analysis and consider what this reveals about commodity chain
governance in Section 3.3.
1.4.2. Interviews: describing the steps in the commodity chain
In-depth interviews with thirty-seven individuals—including
timberland managers, forest carbon project development special-
ists, and protocol design stakeholders—allow us to ground our
analysis in descriptive accounts of market participation (Table 1).
We selected individuals through purposive and snowball sampling,
using PDDs to identify actors participating in forest offset produc-
tion and then asking for referrals to additional participants. All but
one interview were conducted in-person; most took place at par-
ticipants’ offices. Interview guides were used throughout to ensure
certain topics were addressed, including the logistics of creating
projects under the California IFM protocol, as well as barriers and
opportunities to market entry. Some questions were broad, such
as ‘‘Can you describe how your forest carbon inventory was con-
ducted?” Or ‘‘What were the most challenging components of pro-
ject development?” Others probed specifics, especially related to
choice of project development specialists and costs. One challenge
was that participants at times withheld sensitive information, par-
ticularly related to project developer contract terms and fees. We
address this by comparing our findings to those of Kercher and
Keeton, who previously reported on cost and revenue data for
the California regulatory forest offset market (2015). Interviews
lasted one to two hours each and were audio recorded for full tran-
scription. Transcribed responses were organized and coded accord-
ing to the methods of Corbin and Strauss (2014). This involved
identifying patterns across participants, including common
themes, such as the cost and complexity of project development,
Table 1
Interviewee groups for the study.
Interviewee label Number of
participants
Participant breakdown
Timberland managers 11 NGOs n = 6
Forest industry: n = 3
Tribal: n = 2
Forest carbon project
development professionals
16 Consulting foresters: n = 7
Carbon developers: n = 6
Registry: n = 1
Verifier: n = 1
State: n = 1
Protocol development
stakeholders
10 Workgroup participants:
n=6
Stakeholders outside the
workgroup: n = 4
E.C. Kelly, M.B. Schmitz / Geoforum 75 (2016) 99–109 101
as well as important points of contrast, for example diverging per-
spectives on carbon developers.
2. Getting the good to market: ‘‘the road to credits is long and
uphill
The forest offset commodity chain reveals the steps and likely
actors involved in offset production, from feasibility to mainte-
nance of the carbon commodity (Fig. 1). An important distinction
is that forest offsets do not physically travel along the commodity
chain; instead, sequestered carbon is stored ‘on the stump,’ while
accounting claims are rendered into salable units via technically
rigorous authentication steps including inventory, verification,
and registration. This production process, which was described in
interviews as a ‘long and uphill road’ from inception to credit earn-
ings, is directed by IFM protocol requirements. Fig. 1 also includes
a tandem, wood products commodity chain, because the IFM pro-
tocol was intended to accommodate working forests, and most off-
set producers indicated they were harvesting timber.
2.1. Actors in the commodity chain
Forest landowners play important roles in the commodity chain
as offset producers. We identified 147 listed regulatory IFM pro-
jects totaling 5,278,703 forested acres across the US, as of Decem-
ber, 2015 (Table 2). Participating landowners include industrial
and nonindustrial private forest (NIPF, or ‘‘family”) owners, institu-
tional investors such as Timber Investment Management Organiza-
tions (TIMOs), large conservation landowners such as land trusts,
and tribes (Table 2). We separately categorize certain timberland
owners—including hunting clubs, a parish, a university research
forest, a sculpture garden, and a mountain residential commu-
nity—as ‘other,’ to document forest offset niche attraction among
atypical landowners. Many enrolled properties were well above
regional averages for forest carbon stocking, ranging from 171%
of average for tribal landowners to 111% of average for forest
industry (Table 2).
Most participating landowners, including all forest industry and
tribal projects, are harvesting timber. Only twelve projects are
explicitly no-harvest, and nine of these are conservation
landowner-owned. However, disclosure of timber harvest intent
is not required—those not overt about this are categorized as unde-
termined. In all, 127 of the 147 projects or 86% indicate they will
participate in both carbon and wood products commodity chains
Step 1: Willingness to enter
the market, feasibility tesng
Landowners, carbon
developers, consulng
foresters
Development of projects: can
be done by carbon developers
providing turn-key services
through sale of offsets
Step 2: Project design,
inventory, modeling
Landowners, carbon
developers and/or consulng
foresters
Step 3: Verificaon
Third-party carbon verifiers
Step 4: Registraon
Registry staff
Step 5: Markeng and sale of
offsets
Carbon developers and/or
brokers
Forest Carbon Commodity Chain
Step 6: Maintenance, inventories, verificaons
for 100 years past final offset issuance
Landowners, consulng foresters? Carbon
developers?
Verifiers
Step 1: Willingness to enter
the market
Landowners
Step 2: Project design,
inventory, permit compliance
Consulng foresters
Step 5: Retail Sales
Distributors, retailers
Step 4: Milling, processing
Primary and secondary mill
purchasers
Step 3: Timber Operaons
Loggers, truckers
Wood Products Commodity Chain
Fig. 1. Forest offset and wood products commodity chains.
Table 2
Listed regulatory IFM projects in California’s cap-and-trade program.
Landowner
type
IFM
projects
Total acres
enrolled
Median project
acreage
Average stocking
level relative to
regional average (%)
Land trust 26 232,416 5611 135
Forest
industry
27 1,088,276 14,622 111
Institutional
investor
46 1,937,227 24,595 133
NIPF 16 99,076 2779 155
Tribal 13 1,435,393 49,193 171
Other 19 486,315 5763 157
Total 147 5,278,703 13,706 135
102 E.C. Kelly, M.B. Schmitz / Geoforum 75 (2016) 99–109
(Table 3). Most projects employ selection timber harvest tech-
niques, though even-aged management (‘‘clearcutting”) also
occurs, and was indicated on PDDs for 40 projects, particularly
among forest industry.
Third-party professionals in the commodity chain include
those who have long been involved in forestry, as well as new-
comers who have recognized a new revenue stream in carbon
offsets. Consulting foresters generally operate in both the timber
market and the emerging carbon market, often work locally
near project properties, and operate on a fee basis. 23 of 147
IFM projects or 16% have been developed by consulting fores-
ters (Table 4). These projects are exclusively in the Pacific
Northwest, and particularly Northern California, where projects
are most numerous. Many consulting foresters have established
relationships with landowners—particularly NIPFs and tribes—
based on the more traditional timber management commodity
chain (see Fig. 1). Carbon developers do not generally have affil-
iation with traditional forest management (timber production).
Instead they use nationwide forest stocking level datasets and
geospatial technology to identify and solicit landowners—such
as TIMOs, NIPFs, and tribes—with higher-stocked forests. Carbon
developers frequently provide upfront financing and deliver
‘‘turn-key” services in exchange for equity shares in future off-
set sales.
1
Thus far over half of projects (55%) indicate they are
contracting with developers for full project development assis-
tance (Table 4).
Forest carbon verifiers are highly trained, specialized environ-
mental claims auditors, limited to several approved firms; how-
ever, heightened demand for verifier services has increased use
of geographically dispersed agents who undertake forest carbon
verification for contract. Registry staff operate non-profits that
oversee much of the project development process, approving pro-
ject registry listings, auditing verifications, and ultimately award-
ing and maintaining offsets as traceable goods via public
registries. ARB has delegated to registries substantial, though not
comprehensive, program implementation authority, which we dis-
cuss further in Section 2.5. Finally, carbon brokers facilitate the sale
of forest offsets to regulated (GHG-emitting) industries, services
important to some (though not all) offset producers in absence of
a formal credit exchange platform.
The novelty and complexity of carbon project development
means that most landowners will play only passive roles in project
development. In-house development among larger industrial and
conservation landowners, particularly California timber interests
and land trusts, is the exception (Table 4). Here, landowners have
high capacity and familiarity with California IFM protocols.
Average market participants instead depend on partnerships with
specialists who transmit knowledge of market opportunity, assess
project feasibility, and perform technical work to bring projects to
market.
Choice of specialist has implications for project financing, rev-
enue potential, and route to market, and we found varying charac-
terizations of the relative costs and benefits of alternative options.
Consulting foresters sometimes applied terms like ‘‘carbon cow-
boys” to developers. However, distinctions were typically made
between developers who emerged early in the market, purportedly
seeking to capitalize on new revenue opportunities with little
knowledge of forestry, and niche experts with knowledge of both
carbon offsetting and forestry. Consulting foresters voiced benefit
to partnerships with these latter actors, highlighting their produc-
tion of technically competent projects, comprehensive manage-
ment of a complex and prolonged development cycle, and
financing of steep up-front costs. One caveat was concern for over-
payment via equity sharing contracts, a sentiment noted by several
foresters. One explained this point in the context of a fluctuating
carbon price:
You can’t forecast what you’re signing-up for [with developer
contacts]. What does it mean to give up 30% of my carbon?
Well, two years ago it meant $7 carbon, now it’s $10.50. In six
months it might be $15. We would say if you can afford it,
you should not structure a deal that way, because it’s not to
your benefit.
[Interview 29, consulting forester]
Yet characterizations frequently centered on the merits of car-
bon developer partnerships, which resulted in pooling knowledge
and risk-sharing in a non-traditional marketplace, benefits seem-
ingly valued by small and large landowners alike. Explained one
forest industry actor:
The owner of the [forest] company, I’m sure, viewed this as an
emerging market, right? I mean, it’s still somewhat hard to
explain to guys who are used to nice packages of wood, labeled,
counted, and measureable, that I’m selling a product that’s
somewhat intangibly stored out there in the forest ... The idea
of taking a business model of a company whose view is, ‘I’m
selling you a thousand board feet,’ to ‘I’m selling you a ton
and a promise to keep it.’ [The owner] I don’t think, felt real con-
fident in doing this alone. So that’s where [the developer] came
into our discussions, and it’s been a useful partnership.
[Interview 18, forest industry]
The following sections explore the commodity steps and rela-
tionships more fully through access mapping as articulated by
Ribot, including (a) identifying actors involved in production, (b)
reviewing benefit distribution and costs and (c) discussing access
mechanisms (1998).
Table 3
Harvesting for timber: yes = harvesting, no = ‘forever wild’, undetermined = no cur-
rent timber harvest plan but potential future harvest.
Landowner type Harvesting timber Total
Yes No Undetermined
Land trust 17 9 0 26
Forest products 27 0 0 27
Institutional 44 1 1 46
NIPF 10 0 6 16
Tribal 13 0 0 13
Other 16 2 1 19
Total 127 12 8 147
Table 4
Use of professional carbon developers, consulting foresters, or in-house staff for
project design.
Landowner type Project design model Total
Developer Consultant In-house
Land trust 9 7 10 26
Forest products 3 0 24 27
Institutional 41 2 3 46
NIPF 7 7 2 16
Tribal 8 3 2 13
Other 13 4 2 19
Total 81 23 43 147
1
Equity-sharing involves contractual agreement to share carbon revenue for a set
duration. Terms are closely guarded and individually negotiated, however interviews
suggested five to ten year terms with 25–50% profit-sharing approximated typical
terms.
E.C. Kelly, M.B. Schmitz / Geoforum 75 (2016) 99–109 103
2.2. Step 1: assessing feasibility
Feasibility analyses may be conducted by carbon developers,
consulting foresters, or the landowners themselves. Many
landowner-developer partnerships begin when developers proac-
tively offer to conduct forest offset feasibility testing, often through
cold-calling lists of landowners aiming to gain access to their forest
inventories. In these cases, prospective projects are assessed
against very specific criteria—landowner ability to commit for
100 years past final offset issuance, willingness to comply with
protocol maintenance and monitoring requirements, and revenue
potential in excess of development costs (see also Kerchner and
Keeton, 2015). Participation is possible at any stocking level, how-
ever only those with higher stocking than regional average for
given forest types (known as ‘‘common practice”) earn upfront rev-
enue. According to developers, as few as 5–10% of investigated pro-
jects are profitable enough to justify development expenses, and
those that are may still be stymied by onerous program con-
straints, market uncertainty, and opportunity costs.
2
One consult-
ing forester explained his landowner’s reluctance to proceed, based
on these issues:
At the end of the day ...they said ‘‘What on earth are we getting
involved in this thing for? It just doesn’t pay us any money. And
we’re committing for a hundred years? And we’re submitting to
all this oversight and regulation and everything else?” So they
yanked their project. And that’s part and parcel to the process.
It’s not really comparable to cutting down the trees.
[Interview 24, consulting forester]
The point that timberland owners frequently have competing
economic opportunities with fewer risks and encumbrances than
carbon offset development was a common theme among partici-
pants. While the market was designed to accommodate timber
harvest, it creates opportunity costs, because offsets are growth-
based while harvest is extractive.
2.3. Step 2: project design and inventory
Project design involves fitting carbon projects to the require-
ments and accounting prescriptions established in the forest proto-
col, a document described as ‘‘very complex” and ‘‘demanding” by
foresters. This critical and costly step determines both quality and
quantity of salable offsets over project lifespans.
3
However ambigu-
ity of the protocol was said to complicate project development by
requiring compliance with a ‘‘moving target,” according to one con-
sulting forester (Interview 24, consulting forester). A practice of
interpreting the protocol ‘‘like case law,” in which discretionary deci-
sions made by registry and ARB staff repeatedly shifted program rule
interpretation, was said to introduce risk into the project develop-
ment process:
Landowners and project developers and technical consultants
make decisions about how to proceed and then ARB decides
to put out a guidance document that changes the way you
understood, and that everyone understood, what the protocols
and the regulations said. So you could find yourself making a
mistake.
[Interview 29, consulting forester]
Such interpretive decisions were said to have significant impact
on project viability and performance. This was particularly true
when decisions altered treatment of project-level stocking data,
as collected through boots-on-the-ground measurement. These
inventories are cornerstones of offset quantification and were
described as intensive and costly, needing higher levels of statisti-
cal confidence than inventories for other forest management con-
texts. Therefore, while both the carbon and timber management
commodity chains have inventory requirements, the carbon inven-
tory is more intensive. Explained one consulting forester:
[With timber inventories] the need to know with a level of
accuracy is less [because] an estimate of timber gets trued-up
when you take the logs to the mill. With carbon, what you’re
selling is your inventory. There’s not any solid thing that you’re
taking to anybody else. They’re buying the creditability of your
inventory.
[Interview 8, consulting forester]
Preexisting robust inventory data, which larger landowners
often maintain, was viewed as an asset for carbon development.
However, even larger landowners described insufficiencies here
and called meeting inventory confidence the ‘‘single biggest chal-
lenge” to project development (Interview 20, forest industry).
Smaller landowners, too, recounted having to redo inadequate
inventories, whether because of clarification of protocol require-
ments or because inexperienced developers underappreciated the
difficulties of passing verification. Technicians learned over time
that carbon inventories required more plots relative to timber
inventories, meaning increased costs upfront and over project life-
times, as plots are re-inventoried.
4
2.4. Step 3: project verification
Inventory verification is a critical stage in preparing offsets for
market, through which economically disinterested third-party ver-
ifiers review all aspects of project design, inventory, and quantifi-
cation, and attest to the validity of carbon sequestration claims.
Developers report costs between $30,000 and $60,000 for this pro-
cess, depending on project size and complexity, making verifica-
tion the costliest and therefore riskiest step, because it comes
before salable credits are awarded.
5
Successful verification is not
guaranteed, but hinges on the quality of project inventory data. Like
other aspects of project design, verification criteria and related costs
have evolved as field-testing led to protocol changes meant to
increase rigor. Explained one forester:
In [an early protocol] verification was more qualitative, you
know a review of inventory methodologies, and less quantita-
tive—so less going out to the forest and checking to see that
the measurements that were being reported were indeed accu-
rate. So now [passing verification] continues to be a big chal-
lenge for projects today.
[Interview 8, consulting forester]
More rigorous verification was often promoted by verifiers
themselves, based on personal experiences with early forest car-
bon verifications, in attempts to add accounting accuracy and
reduce gaming potential. Thus the IFM protocol reflects the influ-
ences of verifiers and other experts who pushed for increased con-
servativeness and stricter third-party oversight.
2
Project viability was said to be highly variable: a 500 acre property could be
profitable, while a 200,000 acre property might not be, depending on stocking level,
growth potential, and a given property’s ‘common practice’ metric.
3
Kercher and Keeton estimate project design cost at $29,000 (2015, p. 75).
4
Consulting foresters quoted inventory costs between $18,000 and $23,000, but
noted significant variation according to inventory design and intensity. Kercher and
Keeton list $15,000 for inventory cost (2015, p. 75).
5
Kercher and Keeton list $25,000 as the cost for initial verification; our results
suggest this reflects earlier prices of forest carbon verifications, before verifiers
‘‘realized what was involved” (Interview 29, consulting forester).
104 E.C. Kelly, M.B. Schmitz / Geoforum 75 (2016) 99–109
2.5. Steps 4 and 5: registration and market sale
With successful verification, projects are ‘‘registered,” i.e.
entered into public databases called registries. Registration func-
tions as a final authentication stamp, signaling offset availability
to potential buyers. A small but important distinction is that reg-
istries issue Registry Offset Credits (ROCs) which may be transacted
in the marketplace, but which must ultimately be replaced with Air
Resource Board Offset Credits (ARBOCs), the official instruments for
cap-and-trade market compliance. Developers indicated that most
offset purchasers view ROCs as quasi-credits, and prefer to transact
ARBOCs, which can take months for ARB issuance. Inability of reg-
istries to grant actual compliance instruments, though they were
delegated many other authorities in offset program implementa-
tion, was a source of frustration among developers, who viewed it
as an unnecessary impediment to market functioning.
Nonetheless foresters and developers described registration as a
rewarding finale to a development cycle that could take one to two
years with total costs between $200,000 and $500,000, because it
enabled market entry and first time revenue receipts.
6
However
the complexity and importance of terms negotiated at this step cre-
ated a host of challenges. One concern was that lack of a formal
exchange desk meant that landowners and consulting foresters were
ill-equipped to actually sell offsets. For some, this meant reliance on
new actors, carbon brokers, who bundle offsets together for emitters
via privately negotiated transactions for a fee. Others contracted
with carbon developers, who facilitate this step via their suite of ser-
vices. Explained one forester: ‘‘There’s no marketplace ... That’s why
I’m sort of wooing [carbon developers]: ‘Hey we might have some
credits we need to sell here. You guys might want to look for a
buyer’” (Interview 24, consulting forester). Foresters commented
too on developers’ roles marketing offsets in a competitive market-
place, by applying cachets like ‘‘wild carbon credits” and ‘‘charis-
matic forests,” to promote co-benefit potential among buyers.
Similarly, promotional narratives attributing forest offsets to partic-
ular types of landowners, particularly tribes and ‘‘family” forest
owners, were also employed in offset marketing. However, the
extent to which landowners required this service was unclear. One
industrial landowner indicated that his company already had a ‘‘high
profile” from Forest Stewardship Council (FSC) certification and
asked: ‘‘Why do we need to pay a guy to bang our drum? We prob-
ably don’t” (Interview 20, forest industry).
Strategy in market entry was a common theme among inter-
views. Most participants mentioned the importance of timing, i.e.
determining when to sell offsets amid fluctuating and poorly fore-
casted prices. This appeared especially true for initial sales, which
typically provide a tranche of credits upfront for carbon stocking in
excess of regional averages, which dwarfs future earnings poten-
tial.
7
The appeal of this windfall may cloud landowner judgment.
Explained one forester:
The biggest oversight [I’ve seen] is where the [landowner] just
can’t see past the dollar signs of market entry. They do the
math ...and say, ‘‘You could have 2.5 million credits coming
in the market at $11.50 and wow, that’s payday ...” Well, you
might sacrifice 20–30% of that payday if you go into the market
wrong, and you don’t get to go back and say, ‘‘No, no, give me
those credits back that I sold you for $7. I really want to sell
them to you for $10 now.”
[Interview 1, consulting forester]
Most agreed on the significance of offset generation in year-one,
mentioning both profitability and importance for meeting long-
term project costs. This is because, typically, the majority of offsets
are accounted for and purchased at the time of initial sale, though
expenses continue throughout project lifespans. Several foresters
noted implications for projects without full ownership of their
credits, such as those in equity-sharing agreements with develop-
ers. Explained one:
The bulk of your credit generation is coming in that first year.
You get that first year flush, and that’s your nest egg. You should
be taking that and investing that money, so that you can pay for
monitoring and all the stuff down the road .... If you’re losing
25% upfront ... that’s really tough for the life of that project.
[Interview 37, consulting forester]
Strategy is employed not only for timing and revenue consider-
ations, but also for distribution of risk and responsibility via cus-
tomizable purchase contracts. These specify accountability for
voluntary reversals (losses in forest stock due to over-harvest or
premature project termination) and invalidation (finding of regula-
tory violation or quantification error by ARB). Developers indicated
these agreements frequently assign risks to offset producers, as
opposed to offset purchasers, perhaps in an effort to mitigate buyer
risk from impermanence, i.e. the reality that forests are vulnerable
to threats such as fire and insect outbreaks against their carbon
stocks, widely viewed as an ‘‘Achilles Heel” of forest offset produc-
tion. The option to shorten offset invalidation windows through
double or triple verification, and the ability to underwrite offsets
with an innovative insurance product, offer ways to reduce risk.
However, landowners must weigh potential benefits of these
strategies, such as increased profit and reduced personal culpabil-
ity, against increased production costs.
2.6. Step 6: permanent maintenance
Maintaining forest offsets over project lifetimes is a long-term
responsibility that deserves added emphasis, for the IFM commod-
ity chain does not end with market transaction. Significant and
ongoing landowner commitments begin almost directly post offset
sale, including mandatory annual monitoring and reporting and
regular re-inventory and verification requirements, obligations
projected to cost between $250,000 and $500,000 net present
value over the life of the project. However, who will perform this
technical work and under what contractual arrangements is yet
undetermined. Consulting foresters speculated that smaller
landowners were particularly ill-equipped for, and perhaps ‘‘naïve”
about, ongoing technical requirements. Some discussed the role
carbon developers could play, though with ambivalence. Several
voiced concerns that landowners would be ‘‘left in the lurch” by
developers once contracts expired, while others viewed them as
obvious resources for long-term management, even if specific
models were uncertain. Explained one proponent:
[Developers] have based their businesses on providing these
services, so presumably they’ll be around for a while, whereas
I’m just sort of here doing it as a consultant. I’m not trying to
convince anybody I’m going to be their long-term carbon man-
ager ...I’m helping getting them going, but these things have to
be institutionalized some-how or another.
[Interview 24, consulting forester]
Maintenance of forest offsets is also the stage at which reversal
and invalidation risks will be felt most acutely. Indeed, wildfires in
the Pacific Northwest have already affected several developing IFM
projects, either fully or partially reducing stocking levels (registry
staff, personal communication). If/when reversals occur post credit
6
Kercher and Keeton estimate total project development costs of $105,000 (2015,
p. 75); this is notably low compared to our interviews.
7
Initial offset generation averages 57 offsets per acre (with some projects
exceeding 100 offsets per acre); while ongoing credit generation potential is
projected by developers to be far lower, at 0–3 credits per acre per year (http://
www.climateactionreserve.org/resources/presentations/, accessed April, 2015).
E.C. Kelly, M.B. Schmitz / Geoforum 75 (2016) 99–109 105
sale, lost carbon tons can be replaced with insurance pool credits,
generated through regular mandatory contributions by IFM
projects, provided reversals are deemed ‘involuntary.’ Reversals
stemming from landowner management decisions are also possi-
ble—due to overharvest, non-compliance with program require-
ments, or negligence—and can theoretically lead to landowner
personal responsibility. Interviewees referred to these penalties
as ‘‘substantial” and ‘‘concerning,” and stressed uncertainty in
how violations will be treated in practice. Questioned one: ‘‘If
you don’t do fire suppression, are you negligent if you have a fire?
Or if you don’t thin your stands and reduce your fuel load, are you
negligent or did you just not do something?” (Interview 29, con-
sulting forester). A high profile invalidation by ARB, early into mar-
ket operation, suggested also that this particular risk was more real
than rhetorical. Other aspects of future forest management are also
unclear. Interview data suggests most initial participants are eco-
nomically motivated actors who pair carbon sequestration revenue
with timber production, yet how these landowners may respond to
shifts in wood products markets or protocol revisions that impose
new baseline scenarios or forest management restrictions, is
unknown. Similar questions surround procedures for property
sales and landowner succession, both described as theoretically
allowed but ‘‘untested.” Cap-and-trade market uncertainty post
2020, after which regulatory demand ceases without renewal of
controversial legislation, adds perhaps the most conspicuous layer
of risk and uncertainty to the offset production process. According
to interviews, this factored prominently in landowner considera-
tions of which lands to enroll, favoring higher stocked forests earn-
ing windfalls of upfront credits over lower stocked forests whose
credit earnings were yet to come, and thus uncertain.
3. Discussion
The preceding section employed a commodity chain analytic
framework to identify the actors and steps involved in quantifica-
tion, sale, and permanent maintenance of forest offsets for
California’s cap-and-trade market. We now return to the research
questions, particularly: who is participating, how are benefits
accessed, and what does this reveal about ecosystem service
commodification?
3.1. Forest offset production on working timberlands
Predecessor regulatory forest carbon programs emphasized
GHG reduction via tree planting in the Global South, and resulted
mostly in small projects targeting sustainable development
(Bumpus and Liverman, 2008).
8
Advancements in REDD+ following
the Paris (2015) climate conference may expand these projects, but
thus far landowner market engagement has been low.
9
Using a dif-
ferent model, California’s regulatory market sought to make carbon
sequestration compatible with working forests, and to broaden pro-
gram participation beyond ‘boutique’ carbon producers, through a
performance standard baseline (Schmitz and Kelly, 2016). We
demonstrate here that these policy choices are indeed creating a
viable market with expanded utilization especially among conserva-
tion landowners, tribes, NIPFs (though limited to large properties in
California), forest products industry (predominantly in California),
and institutional investors such as TIMOs. Some of these participants
are unsurprising: for example, previous researchers anticipated that
carbon offsetting would fit naturally with the priorities, tools, and
skill-sets of conservation landowners (Brown, 2014; Kay, 2015).
However, participation of commercial timber interests—such as for-
est products industry and TIMOs, landowners possessing the acre-
age, technical capacity, and time horizons conducive to offset
generation—demonstrates a new model for carbon sequestration
based on intensive timber management and production of durable
wood products, which may challenge public perception of the pro-
gram. Future analyses will clarify implications for dual carbon and
wood products production. The two markets are compatible to an
extent, due to partial crediting for carbon stored in durable wood
products, the ability of carbon revenue to complement timber pro-
duction in specific situations (see Section 1.2), and because increas-
ing stocking levels over time is consistent with some timber
harvesters’ broader management objectives. Yet they also compete,
because timber is extractive while offsets are predominantly
growth-based. Participation in both commodity chains thus may
require balancing of management objectives. Future production
decisions will likely be driven by economics: high carbon prices
could decrease wood production over time, while more competitive
timber markets may alter commercial landowners’ willingness to
maintain carbon stocking commitments or to enter lands into the
market at all.
A comprehensive description of all landowner participants is
beyond the scope of this paper. However, these examples highlight
important early trends. Particularly we found participation largely
limited to landowners with the highest preexisting compatibility
with program rules, such as conservation landowners, and those
with large land bases whose forests are at least marginally above
common practice with intention to raise stocking levels, such as
forest industry. Smaller-scale landowners such as most NIPFs are
less likely to enter the market because of economies of scale—with
few acres and therefore little revenue, the costs of market entry
frequently outweigh the benefits. Thus it is unsurprising that early
participants are those whose carbon revenue is unlikely to require
management changes that reduce other revenue opportunities. The
early carbon market may therefore act more as a subsidy by
rewarding landowners for having managed above regional stan-
dards, and by providing revenue for conservation landowners
and tribes to secure properties, but it is unlikely to change land
management decisions per se. This is in part because uncertainty
in market demand and duration privileges participation among
highest-stocked properties, which can offset development costs
with a windfall of credits in year-one. Lower-stocked lands that
gradually earn revenue as forests grow may have significant cli-
mate benefit and profitability long-term; however, they have little
incentive to enter a market with regulatory uncertainty and sub-
stantial ongoing expenses. Many forest types, management con-
texts, geographic regions, and landowner demographics are
therefore absent from this market. Signs of market endurance
and carbon price competitiveness are two factors likely to expand
participation to currently non-viable projects, and those willing to
forgo traditional revenue streams for forest offset production.
3.2. Access mechanisms
Though diverse, forest offset production is still an exclusive
enterprise. Drawing on Ribot and Peluso’s ‘theory of access,’ we
find that relatively few landowners are benefiting from California’s
forest offset market, despite having rights to timber; yet others
without timber rights are finding ways to benefit (2003). We
now consider the mechanisms enabling and constraining access
to benefits from forest offset production.
3.2.1. Access mechanisms: knowledge, capital, technical capacity
Ecosystem services are inherently difficult to commercialize,
because they are intangible and do not physically travel along
8
Only 58 CDM Afforestation/Reforestation projects have been registered since
program inception in 2006 (https://cdm.unfccc.int/ accessed February, 2016).
9
Fletcher et al. suggest that while hundreds of REDD projects have been
implemented globally, only a ‘handful’ have been successfully incentivized though
markets, while the rest depend on state subsidy (2016).
106 E.C. Kelly, M.B. Schmitz / Geoforum 75 (2016) 99–109
commodity chains. This is expressly true of forest offsets, because
the actual commodities are locked-up in forests, while meticu-
lously measured accounting claims are sold at market. Researchers
elsewhere described the rigorous and costly accounting, reporting,
and verification steps needed to render ecosystem goods ‘real’ for
market consumers (Bumpus, 2011; Castree, 2003; Corbera and
Brown, 2010). Our results repeat these findings by documenting
participant experiences conforming with a technically complex
protocol, conducting inventories of unprecedented intensity, and
submitting to repeated third-party verifications. California’s regu-
latory market may involve new producers and land management
contexts; yet the need to legitimate intangible commodities is
unchanged. This authentication process is arguably of greater
importance in California’s market, where offsets must stand-up
as credible compliance instruments. This is explicit in the practice
of triple verifying accounting claims in order to overcome
invalidation risk, and in project developer distinctions between
California’s early voluntary forest offset market and the later
compliance market, which increased the accounting rigor required
for projects to ‘pass regulatory muster’ (see also Schmitz and
Kelly, 2016).
Rigorous, costly, and technically complex steps in forest offset
production raise the importance of knowledge, capital, and techni-
cal capacity as access mechanisms, creating participant depen-
dency on third-party experts who offer market insight,
development finance, and technology to bring offsets to market.
This constrains participation among average landowners, while
enabling it among specialized actors who have professionalized
the development process (see Ribot and Peluso, 2003, p. 170). Ser-
vice providers are numerous and involved at all points along the
commodity chain, including carbon developers, consulting fores-
ters, verifiers, registry staff, and brokers. Especially prominent are
carbon developers, who have thus far developed over half of all
projects and provided select services, such as marketing and sale
of credits, for significantly more. Involvement of developers in
some aspect of offset production is thus nearly universal. This phe-
nomenon may owe to the emerging nature of the market, which
reduces the likelihood that knowledge and technical capacity have
been transmitted to landowners themselves. We note that while
developers serve as key access facilitators, they also reduce benefit
flows to resource holders and may introduce property complexities
through equity-sharing contracts, with possible consequences for
long-term offset project financial viability and land management
flexibility.
The importance of specialized knowledge and upfront and
ongoing capital means that some landowners will have greater
access to market benefits. Industrial forest landowners and institu-
tional investors have capital and in-house technical capacity and
therefore access to the market. Non-industrial forest landowners
are far less likely to have ready capital, and are unlikely to have
the knowledge necessary to create complex inventories and feasi-
bility analyses (Fletcher et al., 2009; Wade and Moseley, 2011;
Charnley et al., 2010; Fischer and Charnley, 2011; Markowski-
Lindsay et al., 2011; Thompson and Hansen, 2012; Miller et al.,
2012). Conservation landowners may lack available capital but
have extensive ability to secure grant funding to facilitate projects.
Tribes, meanwhile, may have revenues from other businesses or
settlement agreements, though because they are understudied for-
est landowners, their objectives and in-house capacities are less
known and deserve further attention.
3.2.2. Access mechanism: identity
Unlike knowledge, capital, and technical capacity, which aid
forest offset production, landowner identity functions as a market-
ing tool, by signaling value-added attributes, such as ecological or
social co-benefits. Within voluntary markets and sustainable
development programs, identity-based narratives are central to
forest offset sales, because of the need to demonstrate project
integrity in the face of large price and offset quality differentials.
In contrast, California’s cap-and-trade market suggests limited
room for identity-based price distinctions, because meeting regu-
latory obligations is paramount. Yet landowners and project devel-
opers continue to construct identity narratives, particularly for
NIPFs, tribes, and projects with apparent high conservation value
(Section 2.5). This raises questions about why identity cachets per-
sist amid rigorous state oversight, under a methodology designed
to promote offset equality. One possibility is that because forest
offsets compete with alternative offsets lacking the uncertain
quantification, impermanence, and public environmental scrutiny
of forest offsets, producers may highlight the charismatic attri-
butes of forest conservation, such as habitat and open space pro-
tection, to bolster market appeal.
10
Alternatively, identity
narratives could be less impactful on offset sales and more useful
for the branding of producer organizations, such as land trusts and
tribes. We see promise in future research to uncover why environ-
mental and social contexts of production still matter, in the face of
state efforts to deem offsets commensurate and tradable in markets.
Analyses might explore the extent to which regulated emitters
demonstrate higher demand or willingness-to-pay for projects with
greater ecological or social credibility; how landowner identity
affects access to the political process, and thus future influence over
program design; and whether industrial and investor landowners,
with their substantial financial resources, could capitalize on iden-
tity narratives through marketing, or alternatively diminish the
value of these narratives through claims of project equivalency.
3.3. A policy-dependent commodity
California regulatory forest offsets depend on state policy to
define, quantify, and assign value to them as market goods, creat-
ing what Knox-Hayes called ‘‘legislatively stimulated demand”
(2013, p. 125). In this way, they contradict neoliberal assumptions
about market functioning as the state has maintained power over
project design and sale through control of protocols. We described
elsewhere that nonstate actors with political capital originally had
strong influence over program design (Schmitz and Kelly, 2016),
however once ARB adopted the IFM protocol it moved into state
jurisdiction. This research demonstrates that engagement with
the commodity chain hinges on landowner ability to comply with
now state-controlled protocol requirements and is sensitive to
design adjustments which may decrease project viability. We have
already seen protocol amendments alter commodity chain partici-
pation, signified by the flood of IFM projects (n = 70) in October
2015, just prior to controversial protocol revisions, suggesting
project developers anticipated and sought to avoid reductions in
project profitability. We see ARB management of the protocol,
invalidation as a state tool to overturn offsets even once
third-party verified, and the state’s role as sole grantor of
compliance-grade offsets, as indicators that the state functions as
the ultimate access mediator, repeating Ribot and Peluso (2003).
This contrasts starkly with traditional wood products, which are
certainly affected by forest management regulations, but which
nonetheless possess use and exchange-value independent of
state policy and may be transacted in markets without direct state
intercession. This signals an important aspect of policy-dependent
commodity chains, such as markets for carbon offsets: they
are neither producer nor consumer-driven, but ultimately driven
by the state, confirming the perspective of Raikes et al. (2000)
10
The primary alternative offsets in California’s cap-and-trade program are those
produced by destruction of ozone depleting gases and destruction of methane.
E.C. Kelly, M.B. Schmitz / Geoforum 75 (2016) 99–109 107
about governance external to the commodity chain. The state both
creates demand through the creation of the market—in this case
through legislation for a cap-and-trade market—and regulates
production dynamics and offset supply through program
implementation authority.
4. Conclusion
We have employed CCA to systematically and critically analyze
the relationships among market actors and processes, as a frame-
work for understanding how and by whom benefits are accessed
in California’s regulatory forest offset market. This setting was
unusual, with offsets created in the US on predominantly timber
producing forests, in contrast to CDM and REDD, which link Global
South producers to Global North polluters (Bumpus, 2011). We
found that despite differing geographic contexts, California’s regu-
latory market exhibits unequal benefit flows similar to offset mar-
kets globally, chiefly because production cost and complexity limit
participation of economically marginal landowners and encourage
dependence on third-party experts, who share both the risk and
reward of market entry. This demonstrates the utility of CCA even
within the Global North, where tenure rights are presumed secure
and market relationships, well-defined. CCA also allowed us to
trace the otherwise obscure forest offset production process, docu-
menting the feats of technical sophistication needed to produce
and legitimize abstract ES goods, and revealing the pervasive role
of the state: establishing demand, regulating production supply
and terms, and participating directly in the supply chain through
issuance and invalidation of commodities. These insights present
a lucid picture of state governance used to create, sustain,
and manipulate an ES marketplace, rendering it anything but
natural. We submit this translates across policy-dependent ES
markets globally, where state agents are/will be similarly empow-
ered to shape market access and functioning through program
administration.
Future analyses should study evolving questions of production
and governance as the California carbon market matures. For
instance, current participation is shaped largely by threat of mar-
ket discontinuance post 2020; subsequent analyses might test
how policy-related risks, such as market impermanence, shape
ES production dynamics, e.g. by circumscribing which lands are
viable for market entry. More fundamentally, research should clar-
ify whether land-use offsets actually facilitate their ultimate goal
of mitigating climate change, or whether they simply provide
new forums for land management commodification, while offering
carbon emitters low cost compliance. Such investigations might
also consider the California regulatory market in a global context.
Emissions trading systems are proliferating worldwide and may
try to link to California. Already California has developed
Memoranda of Understanding (MOUs) with states in China, Brazil,
Mexico, and Canada to link emissions trading systems and poten-
tially trade offsets (see Hsia-Kung et al., 2014). Our analysis
points-out some of the difficulties of linking as the steps of the
commodity chain for the California market are highly regulated
and exceedingly specific. Without similar obligations such as stan-
dardized baselines, rigorous third-party verification, and 100-year
permanence commitments, other forest carbon schemes will have
difficulty linking to California. Thus the problematic nature of
carbon commodification is that while offsets are all theoretically
the same good (a ton of CO
2
), in practice they are differently
quantified, with diverse social, economic, and environmental
implications. Future research should consider emerging gover-
nance questions raised by linkages to methodologically distinct
ecosystem service markets, while monitoring the outcomes of
globally dispersed environmental commodities.
Acknowledgements
We gratefully acknowledge the critical input of Dylan Jenkins of
Finite Carbon, and two anonymous reviewers. This material is
based upon work that is supported by the National Institute of
Food and Agriculture, U.S. Department of Agriculture McIntire-
Stennis program, accession number 231837.
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... When comparing the highest EAEs for each scenario at HBEF, the "carbon markets without harvests" scenario (I) is 114-520% more than the "harvests without carbon markets" scenario (II), and 12-17% more than the "harvests with carbon markets" scenario (III) between discount rates of 4 and 8%. Shifting objectives from management for stumpage to management for carbon would be a better economic option for HBEF due to lower value timber species coupled with a high initial carbon base (Kelly and Schmitz, 2016). The "harvests without carbon markets" scenario (II) at HBEF isn't very attractive because it doesn't fetch higher stumpage revenue despite having approximately the same average volumes as HWF for the stumpage projects in Scenarios II and III. ...
... They acknowledge that this value is lower than what it would be if the projects were undertaken by project developers and also associate it to the lower land area of the projects (600 ha) which is the lower range of their financially viable projects. The high upfront costs are a financial risk for landowners because it takes months for ROCs to be realized by the Air Resource Board Offset Credits (ARBOCs), the official instrument for cap-and-trade offset market compliance (Kelly and Schmitz, 2016;Ruseva et al., 2017). As a result, revenues may not be realized during the first year. ...
Article
Riparian Management Zone (RMZ) allocations can place a burden on landowners due to restrictions (sometimes prohibitions) on harvesting. The opportunity cost for the landowner may be minimized by shifting the primary management objective in RMZs from timber production to compensation for above-ground carbon. Our primary objective was to compare long-term net revenue generating potential of RMZs under three scenarios: (I) compensation for carbon credits without harvesting; (II) partial harvesting using Best Management Practices (BMP) guidelines without carbon credits; (III) partial harvesting combined with carbon credits as per the California Compliance Offset Protocol. Basic stand data on trees of 2.5 cm and higher were collected in riparian forest plots along headwater streams within two experimental forests in the northeast US. The USFS Forest Vegetation Simulator was used to simulate growth and yield and schedule management activities over 20-year cutting cycles. Timber volumes and registry offset credits along with their market values were calculated for the respective scenarios and a Net Present Value (NPV) and Equal Annual Equivalent (EAE) analysis was performed under assumptions of constant prices and costs. The initial aboveground carbon stocks at both locations were 32% and 140% higher than the average value for their assessment areas. Having above-average carbon stocks and basal areas between 30 and 33 m 2 /ha, all scenarios returned positive NPVs and EAEs. The hardwood ri-parian forest had a higher NPV and EAE by not participating in the carbon markets and pursuing partial harvesting as per BMP guidelines (Scenario II) at lower discount rates but had higher NPVs and EAEs under carbon markets at higher discount rates (Scenario I and III). The conifer/mixed species riparian forest provided greater positive net revenue flows by participating in the carbon markets either in a no harvesting scenario or under partial harvesting as per guidelines in the Protocol (Scenarios I and III). Our results indicate that a protocol for compensating landowners with large forest holdings for riparian carbon offsets provides an opportunity to generate positive net revenues in scenarios in which state BMP guidelines may restrict harvesting in RMZs. Given the high density of ecologically critical headwater streams in the Northeast and potential RMZ restrictions, the carbon offset option provides landowners with the opportunity to remain economically viable.
... To date, the literature on California's carbon offset program has focused on the mechanics of the program rather than the outcomes, for example (Jenkins 2013;Jenkins and Smith 2013;Hsia-Kiung et al. 2014;Kelly and Schmitz 2016). Anderson et al. (2017) found that California's offset program has provided additional carbon emissions reductions beyond a business-as-usual management approach. ...
... There has been relatively little activity reported in government-operated forest carbon offset programs (Han et al. 2019, p. 368;ICAP 2019;RGGI 2019). Previous research on the California's forest carbon offset credits focused mainly on the mechanics of the program (Kelly and Schmitz 2016;Anderson et al. 2017). One study found that in 2015 certified forests produced additional carbon reductions equal to 4.4 million tons of carbon dioxide equivalent, or a modest 1% of California's total carbon equivalent emissions (Anderson et al. 2017, p. 360). ...
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The mitigation of climate change through the reduction in greenhouse gas emissions has become a central goal of international policy. An estimated 27 cap-and-trade programs to reduce carbon emissions exist worldwide. But only a small number of them use a forest carbon offset credit option. In 2012, California created a forest carbon offset credit option as part of its greenhouse gas cap-and-trade program. The offset credits have come primarily from US forests that meet requirements for additional, verifiable increases in carbon storage through improved forest management. California, with the help of its cap-and-trade program and modest carbon offset option, has met its initial goal for lower carbon emissions. This case study reveals a gap in socio-ecological practice research on a forest carbon offset credit option by identifying seven measures of success. These seven measures show how a forest carbon offset credit option can enhance a cap-and-trade program to reduce greenhouse gas emissions. Countries and regions that are using or contemplating the use of a forest carbon offset credit option can employ these seven measures to design, evaluate, or upgrade their forest carbon offset programs.
... Registries and verifiers have pushed for greater precision and conservativeness to reduce opportunistic behavior, in contrast to developers who favored less precision in carbon inventorying and verification (Interview 17,18). The former position became dominant in the 2015 CARB protocol revisions (Interview 2, 15; Kelly and Schmitz 2016). Through field testing and stakeholder input, protocol rules became stricter increasing project design and verification costs (Interview 13). ...
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As one of the leading programs and largest subnational carbon-crediting mechanism in the world, California’s Offset Program and carbon market reflect key aspects of polycentric governance, including public and private actors interacting in rule-governed relationships, multifaceted strategies for carbon reductions, multiple jurisdictions, and standards of accountability, legitimacy, and environmental integrity. Participation in California’s program, however, remains low particularly among private forest owners who own the majority (56%) of forests in the United States (Butler et al. Family forest ownerships of the United States, 2018: results from the USDA Forest Service, National Woodland Owner Survey. General Technical Reports NRS-199. U.S. Department of Agriculture, Forest Service, Northern Research Station, Madison. https://doi.org/10.2737/NRS-GTR-199). This paper therefore asks: what characteristics encourage or discourage participation in California’s program, and which interactions among related situations inform participation and the supply of forest offsets? To address these questions, the analysis adopts the network of action situations approach as a diagnostic tool for understanding interactions among related decisions for forest carbon commoditization under California’s system for climate mitigation. The analysis relies on policy documents, offset projects data, semi-structured interviews, and empirical literature. Findings show how technically complex rules designed to protect the environmental integrity of offsets create interdependencies via multiple long-term contracts and increase participation costs relative to uncertain future payoffs. Results also highlight the important role of expert and state actors, and suggest that experimentation with carbon accounting methodologies, issues of scale, and uncertainty are likely to shape the future of forest carbon governance.
... Developing a baseline scenario, sometimes called "business-asusual," is a critical step in determining additionality. However, the baseline scenario is also distinct and unique to the specific project, and it can be time-consuming and inefficient to develop (Kelly and Schmitz 2016). For example, if project promoters determine additionality, a new baseline scenario needs to be developed every time a project is started. ...
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Forest carbon offset (FCO) projects play an increasingly important role in mitigating climate change through market mechanisms in both compliance and voluntary markets. However, there are challenges and barriers to developing an FCO project, such as carbon leakage and cost-effectiveness. There have been few attempts to summarize and synthesize all types and aspects of existing challenges and possible solutions for FCO projects. This paper systematically reviews and discusses the current challenges involved in developing FCO projects, and then draws on the experience and lessons of existing projects to show how those challenges were addressed in world-leading voluntary carbon standards, namely the Verified Carbon Standard, the American Carbon Registry, the Climate Action Reserve, and Plan Vivo. These voluntary markets have rich experience in FCO projects and are responsible for a significant share of the market. From the 53 publications used in this analysis, three broad thematic categories of challenges emerged. These were related to methodology, socio-economic implications, and implementation. Methodological challenges, particularly additionality, permanence, and leakage, were the focus of 46% of the selected research papers, while socio-economic challenges, including transaction, social, and opportunity costs, were addressed by 35%. The remaining 19% of the research articles focused on implementational challenges related to monitoring, reporting, and verification. Major voluntary standards adequately addressed most of the methodological and implementational barriers by adopting various approaches. However, the standards did not adequately address socio-economic issues, despite these being the second most frequently discussed theme in the papers analyzed. More research is clearly needed on the socio-economic challenges involved in the development of FCO projects. For the development of high-quality forestry carbon offset projects, there are many challenges and no simple, universal recipe for addressing them. However, it is crucial to build upon the current science and move forward with carbon projects which ensure effective, long-term carbon sinks and maximize benefits for biodiversity and people; this is particularly important with a growing public and private interest in this field.
... A study of California's Improved Forest Management projects showed that making carbon offsets viable required a level of cost and complexity, capital, knowledge, and technology that excluded marginal landowners. Carbon sequestration projects, therefore, may possibly involve more heavily State-managed initiatives, as opposed to balanced collaboration with small community landowners (Kelly and Schmitz 2016). ...
Technical Report
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... Several scholars have employed this framework to understand the complex processes behind access to natural resources, including water (Sultana, 2011;Bell, 2015) and forests (Kelly and Schmitz, 2016). I extend the framework by examining narratives of access that are found in newspaper coverage of waterrelated issues and use it to document the access mechanisms that two groups (urban and agricultural water interests) use to constrain or enable access to the basinʼs water resources under various political, economic and ecological conditions. ...
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The waters of the Lower Colorado River Valley of Texas have sustained urban populations and agricultural operations for over a century. More recently, however, rapid urban growth, continued economic development, and a changing climate have led to the prioritisation of urban over agricultural water uses. This research analyses public discourse found in newspaper coverage of water-related issues to understand how media represents two decades of change in the control of water resources along an urban-to-agricultural gradient. It documents the changing relationship between long-established commercial agricultural water users and the increasing water demands of one of North Americaʼs fastest growing urban areas and identifies the discourses and counter-discourses that are used by urban and agricultural interests to constrain or enable access to the basinʼs water resources. Findings indicate that the water-related discourse has evolved through distinct periods of cooperation, fragmentation and control. These periods are defined by the mechanisms that urban and agricultural interests have used to constrain or enable water access. Themes identified suggest that urban interests have increasingly expanded their influence in decisions related to water distribution and that they have done so by forming strategic alliances with the regional water authority and by leveraging the power of local and state officials in water matters. Agricultural interests have, in the meantime, struggled to maintain access to their historic share of water despite forming new social ties with environmental organisations and despite outlining the importance of water to the local economy.
... Third-party verification of forests' carbon storage and other associated costs are prohibitive to smaller landowners joining the programme [89]. The stringent requirements of the California market have made landowners less likely to participate than they were in previous voluntary forestry offset programmes with more flexible requirements [90]. Changes in the market's structure in 2017 reduced the role of offsets so as to encourage more emissions reductions and limited out-of-state projects [91,92]. ...
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Forests increasingly will be used for carbon dioxide removal (CDR) as a natural climate solution, and the implementation of forest-based CDR presents a complex public policy challenge. In this paper, our goal is to review a range of policy tools in place to support use of forests for CDR and demonstrate how concepts from the policy design literature can inform our understanding of this domain. We explore how the utilization of different policy tools shapes our ability to use forests to mitigate and adapt to climate change and consider the challenges of policy mixes and integration, taking a close look at three areas of international forest policy, including the Kyoto Protocol's Clean Development Mechanism, Reducing Emissions from Deforestation and Forest Degradation (REDD+) and voluntary carbon offset markets. As it is our expertise, we then examine in detail the case of the USA as a country that lacks aggressive implementation of national climate policies but has potential to increase CDR through reforestation and existing forest management on both public and private land. For forest-based CDR to succeed, a wide array of policy tools will have to be implemented in a variety of contexts with an eye towards overcoming the challenges of policy design with regard to uncertainty in policy outcomes, policy coherence around managing forests for carbon simultaneously with other goals and integration across governance contexts and levels.
... We also expect GHG emission reduction benefits by retaining higher rates of forest growth and carbon sequestration by returning species composition to the more productive historical conditions where fast-growing, long-lived conifers dominated. High trans-action costs may prevent smaller landowners from entering carbon markets (Jenkins 2018;Kelly and Schmitz 2016), but all landowners should understand how their management decisions affect carbon dynamics and how they might enhance carbon sequestration and storage in trees. ...
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Modern forest management involves tradeoffs between harvest intensity and carbon storage in live trees. A key component is how non-merchantable tree species are treated. We simulated forest growth and yield over a century of multiaged management in a mixed stand in northern California. Pre-treatment basal area comprised 136 ft 2 ac −1 (31 m 2 ha −1) non-merchantable hardwood and 73 ft 2 ac −1 (17 m 2 ha −1) merchantable conifer. Individual-tree selection harvest was simulated for various conifer BA retention levels at 20-year harvest return intervals. Silvicultural prescriptions promoted conifer dominance by retaining only 5 ft 2 ac −1 (1.1 m 2 ha −1) hardwood BA at each harvest. Alternatively, retaining 50% of hardwood BA at each harvest slowed the conversion to conifer dominance. Higher BA retention favored per-acre growth and storage of carbon in live trees. Lower BA retention sacrificed per-acre wood volume growth, but sizeable early conifer harvests ensued. The FORSEE growth and yield model did not predict the expected positive responses of conifer tree growth to treatments that eliminated hardwoods, suggesting it may not adequately simulate benefits of hardwood management. Therefore, our projections of growth and harvest yield should be regarded as conservative when evaluating forest restoration and management options in terms of growth, yield, and carbon dynamics.
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Carbon offsets are widely used by individuals, corporations, and governments to mitigate their greenhouse gas emissions on the assumption that offsets reflect equivalent climate benefits achieved elsewhere. These climate-equivalence claims depend on offsets providing real and additional climate benefits beyond what would have happened, counterfactually, without the offsets project. Here, we evaluate the design of California's prominent forest carbon offsets program and demonstrate that its climate-equivalence claims fall far short on the basis of directly observable evidence. By design, California's program awards large volumes of offset credits to forest projects with carbon stocks that exceed regional averages. This paradigm allows for adverse selection, which could occur if project developers preferentially select forests that are ecologically distinct from unrepresentative regional averages. By digitizing and analyzing comprehensive offset project records alongside detailed forest inventory data, we provide direct evidence that comparing projects against coarse regional carbon averages has led to systematic over-crediting of 30.0 million tCO2 e (90% CI: 20.5 to 38.6 million tCO2 e) or 29.4% of the credits we analyzed (90% CI: 20.1 to 37.8%). These excess credits are worth an estimated $410 million (90% CI: $280 to $528 million) at recent market prices. Rather than improve forest management to store additional carbon, California's forest offsets program creates incentives to generate offset credits that do not reflect real climate benefits.
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Interest in forest-based carbon storage has led to growth in financing for carbon forestry. Most financial strategies rest on strong assumptions which are not valid in many parts of the world. We use cases drawn from tribal forestry in the US and government forestry in India to illustrate how carbon finance relies on the presence of enforceable rights, representative and accountable institutions, clear incentives, and symmetrical power relations. In the absence of these conditions, carbon finance provides perverse incentives that undermine biodiversity and human rights without storing carbon. We suggest that for forest-based carbon storage to be successful, more attention needs to be paid to underlying political reforms, as well as to policies that are not reliant on finance.
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This review essay critiques two REDD+-focused special issue journals: Environmental Science and Policy, ‘Governing and Implementing REDD+’, and Forests (2, 2011). This is an effort to address the varying assumptions from the academic journals – that REDD+ can be fixed with more governance, finance and/or community engagement – through a critique of the wider neoliberal climate regime, issues of ‘governance’ as an unproblematised category, and by exploring, from de-colonialist and environmental justice perspectives, the issues of real participation and sustainability. We conclude that REDD+ is framed within an epistemological understanding of forests and lands which supports the domination of nature by humans for economic profit, regardless of financial input, governance and/or participation from communities, and therefore will not be a successful means of climate mitigation or forest protection. In addition, the essay stresses the goal that any climate change policy should include: keeping fossil fuels in the ground, and devising just and effective ways to protect the environment, lands, forests and peoples. Finally, emphasizing that deforestation is a complex socio-political and economic event, the article strongly voices other knowledges opposing REDD+ projects, which are largely marginalized in these discussions, especially those from Indigenous Peoples and forest-dependent communities.
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Increasingly, one hears furtive whispers in the halls of conservation: "REDD+ is dead; it's time to cut our losses and move on." In a recent Conservation Biology editorial, Redford, Padoch and Sunderland (2013) identify REDD+ (Reduced Emissions through avoided Deforestation and forest Degradation) as one of the latest in a long line of conservation "fads," defined as "approaches that are embraced enthusiastically and then abandoned" (2013: 437). They caution: "we must take such fads more seriously, to work collectively to develop learning organizations. . .and study where new ideas come from. why they are adopted, why they are dropped, and what residual learning remains" (2013: 438). This article is protected by copyright. All rights reserved.
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How can REDD credits be included in a future global carbon market, and what are the impacts of inclusion? We analyze ten different scenarios through 2020, varying the global emission caps and the REDD rules. An inclusion of REDD credits without any adjustments in the global cap will lower carbon prices significantly and cause crowding out. The cap must move towards the 2 degrees climate target if REDD inclusion is to maintain high carbon prices and strong incentives for emissions reductions in other sectors. At the same time, reaching the 2 degree target without full REDD inclusion will increase global mitigation costs by more than 50%.
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In 2013 the state of California launched a cap-and-trade program with a groundbreaking protocol for improved forest management (IFM), providing a framework to monetize carbon sequestration in managed forests. Through in-depth interviews and document review, this research examines California's IFM program development as a case study in stakeholder-engaged ecosystem commodification. We consider how diverse, vested-interest actors contested rival program design options by using the familiar narratives of ecological modernization, green governmentality, and civic environmentalism. The results reveal the benefits and complexities of delegating methodological design to stakeholders who seek direct participation in the market, and highlight the challenges of balancing multiple program objectives, including environmental benefits, legitimacy and market reception, and landowner participation potential. This research provides a unique window into the complex process of forest-offset program design and offers broader lessons for ecosystem markets currently being designed and implemented globally.
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This paper provides detailed descriptive accounts of two important methodological positions for analysing the political economy of global production and trade, Global Commodity Chain (GCC) analysis and the Filiere tradition. As well as describing the similarities and differences between the positions, the paper raises a series of criticisms of them. It concludes that GCC analysis provides a more promising point of departure than the Filiere tradition, although some work related to the latter could help fill certain of the lacunae within GCC analysis.
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Payment for forest-based carbon sequestration may be an emerging opportunity to help mitigate climate change while creating new income streams for forest landowners. It is important to understand families' willingness to participate in emerging carbon markets, as they own 35% of the nation's forestlands. Most family forest owners have not enrolled in forest stewardship programs, suggesting that it may be difficult for them to participate in emerging carbon offset markets. The pilot study reported in this article sought to understand family forest owner willingness to participate in carbon sequestration projects by asking professional foresters who are members of the Forest Guild what they believed would influence family forest owner willingness to participate in sequestration projects and how projects could be designed to foster participation. These foresters identified profitability, compliance difficulties, immaturity of carbon markets, property rights infringements, moral objections to carbon markets, and forester hesitation in recommending participation as the principal barriers to participation. They suggested that barriers could be overcome by increasing profitability, creating low cost and low hassle compliance systems, addressing landowner property rights concerns, and implementing education campaigns aimed at increasing forester knowledge of carbon markets and sequestration projects.
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This paper bridges critical legal geography and geographical work on neoliberal natures to illustrate the vital role that US law has played in reimagining the values of nature as divisible from their supporting contexts and the spatial outcomes of this “individuation.” The development and widespread use of conservation easements by nonprofit land trust groups serves as a precedent-setting case study. I review the two major pieces of enabling legislation: the Uniform Conservation Easement Act, and the addition of Section 170(h) to the federal tax code, to argue that these legal changes mark a pivotal moment of reregulation that has been significant for regularizing the separation of conservation values from their socio-ecological contexts. Finally, I offer three examples of the spatial manifestations of the legal foundations of conservation easements: shifting geographies of conservation prompted by highest and best use valuation and tax deductibility, an altered public/private divide in protected areas, and the creation of new spaces of accumulation, through the use of easement law by entrepreneurial forest carbon firms.
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The Climate Action Reserve's Forest Project Protocol Version 3.2 is the current basis for the participation of US-based forest carbon projects in California's cap-and-trade system, yet is largely untested in forests beyond California, particularly those of the southeastern US Coastal Plain. Applying the Protocol to a hypothetical project on a longleaf pine site managed primarily for ecological restoration produced on-site gains of 0.3 mt CO2/ac/yr, but net emissions of 0.8 mt CO2/ac/yr over the project lifetime. These results are based on site-specific conditions (e.g., low stand density) and certain elements of the Protocol (e.g., heavy influence of off-site stocks), highlighting the potential conflict between managing for both climate benefits and ecological restoration on some lands. We recommend that forest owners conduct preliminary analyses to determine whether implementing a carbon project on their forestlands would likely produce their desired results. We further recommend modifications to the Protocol to improve its utility.