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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 tesng
Landowners, carbon
developers, consulng
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 consulng
foresters
Step 3: Verificaon
Third-party carbon verifiers
Step 4: Registraon
Registry staff
Step 5: Markeng and sale of
offsets
Carbon developers and/or
brokers
Forest Carbon Commodity Chain
Step 6: Maintenance, inventories, verificaons
for 100 years past final offset issuance
Landowners, consulng foresters? Carbon
developers?
Verifiers
Step 1: Willingness to enter
the market
Landowners
Step 2: Project design,
inventory, permit compliance
Consulng foresters
Step 5: Retail Sales
Distributors, retailers
Step 4: Milling, processing
Primary and secondary mill
purchasers
Step 3: Timber Operaons
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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