New Forest Carbon Offset Strategies Turn to Small Landowners for Big Impact

Marnie Ochs had never considered the carbon offset market before Zack Parisa - co-founder of precision forestry company SilviaTerra - walked into her restaurant bar. Her husband’s family had long owned roughly a thousand acres of timberland in western Pennsylvania, but closed their lumber mill over two decades ago, leaving the land largely unmanaged. It just so happened this was exactly the type of property Parisa was looking for. 

Forest owners like the Ochs family are at the center of a new generation of carbon offsets. The US Forest Service estimates that over a third of all American forest land is controlled by family or individual owners; yet at an average size of 66 acres, the vast majority of these properties have been orders of magnitude below the scale needed to bear the costs of developing a carbon offset project. 

A forest carbon offset represents 1 metric ton of carbon dioxide equivalent absorbed by the tree biomass in a forest. Through the carbon market, a landowner can be paid for management practices that will sequester additional greenhouse gas above a business-as-usual scenario. Yet this process requires significant upfront costs, from an initial carbon inventory to the creation of a management plan and hiring of a third-party verifier. As a result, the high fixed costs of project development and ongoing monitoring have served to exclude family and individual owners - the single largest segment of US forest ownership - from participating in carbon markets. 

Two new programs, the Natural Capital Exchange (NCAPX) and the Family Forest Carbon Program, are taking innovative approaches to bridge this hurdle and bring small landowners into the forest carbon offset market. By leveraging new technology and rethinking how carbon capture is quantified, they hope to aggregate small acreage into large cumulative impact in managing forest land for greater carbon storage. 

Annual Carbon Capture: SilviaTerra’s Natural Capital Exchange

Parisa’s team at SilviaTerra thinks that remote sensing technology holds a key to addressing the challenges of traditional forest carbon offsets. In partnership with Microsoft, the company  created the first high-resolution inventory of all US forest land. Now their hope is to translate better data into targeted changes in managing that landscape.

Forest carbon projects have historically faced skepticism around their additionality and potential for leakage -- that is, the shifting of tree removals to nearby acreage. The concern is that despite paying a landowner to keep trees on one parcel, the same number will simply be removed elsewhere, resulting in a null offset with no net change in carbon storage. Yet SilviaTerra believes this problem can be addressed by creating a market in which all landowners are eligible to receive carbon payments as an alternative to timber revenues. 

The company combines satellite imagery with limited field measurements to estimate the annual carbon value of a forest. Through the Natural Capital Exchange, SilviaTerra acts as a broker to connect landowners with payments from credit purchasers in exchange for keeping that carbon in the ground. According to Max Nova, co-founder of SilviaTerra, “not only do we measure every acre every year so that there’s zero measurement and monitoring cost borne by the market participants, but we also make it a 1-year term instead of a 100-year term.”  

By moving from traditional 10-100 year contracts to an annual payment model, the company hopes to sell carbon offsets that reflect real year-over-year carbon storage gains. Payments are scaled to target the timeframe when forests have matured to a point of likely timber harvest. By narrowing the time horizon for the offset activity, Nova believes SilviaTerra can more accurately incentivize real carbon sequestration than traditional forest carbon projects. Furthermore, the immediacy of the payments offers greater security and flexibility to a family or individual landowner.  

So far, the program is off to a promising start. In 2019 SilviaTerra piloted its annual offset model, selling carbon credits from landowners in 6 Pennsylvania counties to its corporate partner Microsoft. This year the company is looking to expand throughout the US South, with over 10 million metric tons of carbon signed up on the supply side of its Natural Capital Exchange (NCAPX).

“The beautiful thing is that compared to the 100-year time period, every dollar you put into these annual markets makes change today,” said Nova. “If we think this is a critical decade for climate change, why are we paying dollars today to sequester 50, 60… 90 years in the future?”

A Practice-Based Approach: the Family Forest Carbon Program 

The opportunity in aggregating small forest parcels has attracted wide interest across the public and private sectors. A $7.3 million commitment from Amazon helped develop the Family Forest Carbon Program (FFCP), a collaboration between the American Forest Foundation and The Nature Conservancy. The program looks to depart from traditional carbon offsets by paying incentives for specific land management practices based on estimated impact rather than carbon inventories. A draft of this practice-based forest carbon methodology was submitted to Verra – the largest standards and certification body in the voluntary carbon market – this June.

Money and technical assistance are typically the key barriers to practice changes among small landowners, who may not actively manage their forest. By offering payments for actions such as removal of invasive species or limiting thinning, the FFCP hopes to increase total carbon storage of forest parcels while providing landowners with the resources for implementation. 

“We really got into the carbon market side of things because, at the end of the day, there’s only so much public funding that can go into supporting private landowners,” said Elizabeth Greener, communications director for the American Forest Foundation.
 
The innovation of the FFCP is in creating a dynamic model of landscape-level carbon capture. Small forest parcels are aggregated into a single large-scale project; subsequently, a group of routinely measured USFS Forest Inventory and Analysis plots with similar characteristics to the project area are selected to act as a control group. Rather than assume a fixed baseline for carbon storage, the new methodology generates offsets calculated as the difference between the control group and the treatment areas where the improved forest management practices are implemented. 

Campbell Moore, Central Appalachians director at The Nature Conservancy, notes that this departure from a static baseline is a key development of the program. 

“It will give us greater accuracy, but it also means that the carbon accounting and the program will be able to respond to shocks that happen in the real world [such as drought or fire] that don’t happen in your model,” said Moore. 

Additionally, by paying in advance for practice implementation rather than in carbon revenue on the back end, the program shifts the risk of under-delivery off of the landowner. Moore believes that changes like these will be critical for increasing access to carbon markets. 

“I think this opens the door to some important conversations in carbon finance around equity issues,” said Moore. “It’s a model that is going to work much better for average people that need money upfront if they’re going to make an investment in their land.”

Building a Pathway Forward

For both programs, scaling is critical. Creating approaches that can be utilized across a diversity of property types and ownerships will be essential to achieving potential financial and environmental impact. For private sector partners like Microsoft and Amazon, investment into developing these markets could build the pathway for meeting ambitious long-term climate commitments. 

This March, the Family Forest Carbon Program launched a pilot with 125 landowners, totaling 9,000 acres in the Central Appalachians. Elizabeth Greener of the American Forest Foundation estimates this region alone could yield more than 18.8 million carbon credits through 2057, in partnership with over 7,000 local landowners. SilviaTerra believes that timber harvest deferrals hold the potential for removing over a billion tons of atmospheric carbon within the United States in the coming decade, or 4.3 billion tons globally. 

On a personal level, forest owners like Marnie Ochs hope that carbon revenues can preserve their landscapes. Ochs laments that all too often beautifully managed forests are stripped down to meet cash needs. 

“At that point the forest is kind of ruined,” said Ochs. “It won’t come back in my lifetime, it probably won’t come back in my daughters’ lifetimes, and they’re teenagers. So, if you can offset that … amen.”