Scaling Down to Scale Up: Unlocking Carbon Markets for Small Landowners

Who has the biggest stake in keeping a forest intact?

Usually the people who live on the land, manage it, and have an emotional connection to it. Over 50% of U.S. forestland is owned and managed by more than 10 million landowners. Most of this land is owned by families and individuals, with the average parcel size being less than 25 acres. Globally, 22% of the world's forests are privately owned - the share of publicly owned forests has decreased since 1990, while the area of forest under private ownership has increased.

Traditionally, forest carbon projects have focused on large-scale operations and have frequently overlooked small landowners, arguably the people most directly impacted and invested in the health of their ecosystems. So - how can we unlock the carbon markets for small landowners and increase the success of their regenerative forest management practices?

The Problem with Large-Scale Projects

Projects explode when they get too big and complicated to manage.

As the size of REDD+ projects increase, so does the complexity of their management. It's not uncommon for these projects to encompass tens of thousands of landowners, with some even surpassing the 100,000 mark. The sheer size of these projects necessitates governance structures that rival those of small cities, yet, more often than not, such structures are either inadequate or entirely absent.

The lack of robust governance in large REDD+ projects leads to several significant issues. Primarily, there's a notable failure in equitably distributing funds among those on the ground. When a project sprawls across such vast territories and involves so many people, ensuring that every participant receives their fair share becomes a logistical nightmare. This challenge raises a critical question: is it even feasible to obtain free, prior, and informed consent from tens of thousands of individuals? The reality suggests otherwise, as these governance shortcomings have frequently resulted in scandals involving human rights abuses. Mai N’dombe is an example of this with 64% of people living inside the project unaware of the project’s existence, and as of 2018, a maximum of only 76 cents had been distributed to the communities after millions of tonnes of successful credit sales.

Handling the hundreds of millions of dollars these large projects attract inevitably opens doors to corruption. This issue is exacerbated by the impersonal nature of these mega-projects. Many participants have little to no emotional investment in the project outcomes. They might receive minimal compensation, if any, which does little to incentivize conservation efforts. Why would an individual refrain from exploiting their own resources if the benefits of conservation are abstract and the project feels distant and irrelevant to their immediate community?

Despite these challenges, there's a clear trend towards increasing project sizes, with jurisdictional programs now paying entire regional governments to administer them. However, even in a country like the United States, where state governance might be expected to be relatively reliable, the trustworthiness of state actors can be questionable. This issue is magnified in regions that have a history of nepotism and corruption, raising serious concerns about the effectiveness and integrity of such large-scale projects.

Why Small Landowners?

By contrast, small-scale projects offer numerous advantages. They ensure that the revenue generated by carbon credits directly benefits the on-the-ground participants, thereby supporting the local economy. This direct financial incentive is more likely to lead to sustainable conservation practices. Smaller projects foster a sense of ownership and personal responsibility among participants, who are more likely to protect a forest when they feel a direct, personal stake in its preservation.

Consider the case of Rio Preto, a community-based project in Brazil. Here, responsibility for protecting the land is officially assigned to the local police, who are often reluctant to engage actively with the project. Contrast this with the image of a local landowner personally guarding their land. Such grassroots involvement typically results in more effective protection than can be achieved through large, impersonal governmental structures.

A strong example is Rip’s Redwoods in Northern California, which represents a small landowner-led Improved Forest Management project. Previously used for commercial harvesting, the area was bought by Rip, who is committed to conservation. The project, registered under the Climate Action Reserve for a 100-year term, aligns the purchase of land and carbon credits to support conservation efforts. It plays a crucial role in preserving coastal redwood habitats and maintaining ecological balance in the region.

Challenges Faced by Small Landowners

Despite their potential for positive impact, small landowners encounter significant barriers. The complexity and cost of entering carbon markets are exorbitant. Projects require extensive verification processes, including detailed field assessments and measurements, which are costly and logistically challenging. These barriers discourage participation and lock out those who could benefit most from and contribute significantly to carbon sequestration.

There are, however, successful models that demonstrate the viability of small landowner participation. For instance, VM0045 is a methodology specifically tailored to American small landowners and has shown promising results. Initiatives that use VM0045 like the Family Forest Carbon Program have begun to make it easier for small landowners to engage in the carbon market, although they are still limited in reach. Internationally, reforestation programs such as TIST have successfully enrolled small landowners which showcases the global potential for scaled-down projects.

Technology is another solution that can dramatically simplify participation in carbon markets for small landowners. Remote sensing and algorithmic measurements can streamline the verification process, reducing barriers to entry. Envisioning a future where technology enables every small landowner to measure, report, and verify their carbon stocks autonomously offers a promising avenue for expansion. Implementing software suites that automate much of the paperwork and calculation would democratize access to these markets, making them more inclusive and effective.

Key Takeaway

Unlocking the carbon markets for active participation from small landowners is crucial for the efficacy and equity of carbon credits. By adapting market structures to be more inclusive, we can harness the potential of every small plot of land, ensuring that environmental and economic benefits are realized at the grassroots level. It is imperative for policymakers, technologists, and community leaders to work together to reform these systems, making them accessible and beneficial for all, especially those who have the most to lose—and gain—from their land.

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