Improved Forest Management Projects in the U.S.

Improved Forest Management projects hold tremendous potential. They directly remove CO2 from the atmosphere and avoid emissions at the same time. They are often implemented in developed nations with strong land tenure and minimal illegal harvesting, ensuring some level of permanence. They are scalable, with large landowners having enrolled in them for years and an increasing number of proposed methodologies aimed at bringing small landowners into the market.

They are also complicated. Forest management regimes vary by species mix on the landscape, access to markets, ownership, legality, topography, etc. Projects must take some or all of these aspects into account depending on where the project is located. If a project is in the United States, for example, its baseline will have to reflect all of these complexities. Mexican IFM projects through Climate Action Reserve, on the other hand, primarily focus on legality and use tonne year accounting for their credit issuance, which is a huge topic unto itself that merits its own future blog post.

This article will focus on IFM projects located within the United States. More specifically, this article will talk about how IFM projects in the United States are issued credits over time.

Put plainly, IFM projects in the United States are issued front-loaded credits. What does that mean? Using a simple example, if a project calculates it would receive 2 million credits over the entire crediting period (usually 100 years in the US), it might be issued 900,000 credits in the first year with the rest distributed slowly over a longer time period to account for additional forest growth. Those 900,000 credits come from avoided emissions from harvesting in the baseline scenario.

Using this hypothetical scenario, the offsets the project will generate in years 50-57 and 77-82 are issued within the first year of the project. This means purchasers of those credits will not have their emissions offset for at least another 49-81 years. In terms of climate change, this is disastrous. The United Nations has set a worldwide goal of going net zero by 2050 with shorter term goals of substantially cutting emissions. This is because the effects of climate change are imminent and already being felt in some places around the world. By allowing purchasers of carbon credits to emit more CO2 into the atmosphere than is being offset in the short term, projects that front-load their credit issuances are actively contributing to climate change.

The reason registries issue credits this way is to offer a financial incentive to project proponents so they will implement a carbon project rather than conduct business as usual forest management on their land. Money today is worth more than money tomorrow, and implementing IFM projects using existing protocols is expensive. Project proponents often hire a third party developer to design and run the project, and they have to pay for ensuing verifications, which are costly as well. All of this means the implementation of IFM projects using existing protocols are mostly limited to relatively large and/or wealthy landowners.

So how do we balance the need for IFM projects in the United States to be ecologically conscious of climate change while acknowledging the realities of economics? How do we make project implementation more affordable for small landowners? These are complicated questions with emerging answers. Remote sensing tools are becoming cheaper every year, and models are becoming more accurate with improvements in technology. With the right mix of determination, resources, and cooperation among organizations it is conceivable that remote sensing algorithms could act as a substitute for traditional implementation methods in the near future. This could substantially lower the cost of implementation and verification for project proponents over time. In regards to the financial value of the credits themselves, the average value of IFM credits on the voluntary market around the world have decreased from $17.81 in February 2023 to $13.15 as of the writing of this article. This follows a trend of decreasing credit prices across the broader carbon market in response to articles and studies showcasing flaws in current carbon project methodologies.

These flaws are solvable. One major criticism of IFM projects in the United States, for example, is that their baselines often assume a harvest regime that is too aggressive relative to previous land use history by the landowner, resulting in an inflated number of credits being issued (this is a separate issue from the temporal problem). Several organizations are working on improved baseline methodologies to estimate project baselines in real time. Renoster, for example, uses a dynamic control area baseline to review existing IFM projects. Verra released a new IFM methodology in 2022 that uses a similar method to Renoster, though it utilizes U.S. Forest Inventory and Analysis data rather than remote sensing resources. The idea is that by improving the ecological value of credits, their financial value will rise as well to the point that with a reduced cost of project implementation, IFM projects can be issued credits on a temporal basis that makes sense ecologically while still being profitable for the landowner.

Carbon projects are hard, folks.