Baselines and Additionality in Forest Carbon Projects
It has been assumed that the validity of forest and other carbon offset projects as a method for decreasing net carbon emissions hinges on the concept of additionality. Additionality refers to carbon that is sequestered above and beyond business-as-usual, or what would have happened without a carbon project. This may sound simple but can be actually proving quite complex.
In previous blog posts, I have described how business-as-usual can be evaluated using economic measures or by trying to gauge behavior change or by some hybrid of both. For those interested in that analysis, I encourage you to read my previous posts and tagged resources.
The first step in assessing additionality is identifying a baseline. This is a hypothetical scenario that models forest carbon pools on a property as if they were being managed to maximize revenue, taking into account regional common practice and any legal restrictions. To date, these calculations have been primarily driven by the stocking of a particular forest and the current timber markets in that region. Net present valuations are calculated and the most financially optimal scenario is modeled onto the forest. This usually means that most of the merchantable timber on a property is harvested (in the model) over several years depending on local milling capacity and demand. The carbon levels from this model are compared to the project scenario (management the landowner will commit to over the project lifetime) and the difference (minus leakage and buffer pool deductions) is what is available year to year to sell as offsets.
Historically, these economic measures of additionality were applied equally regardless of landowner demographic. In other words, conservation organizations were not held to a different standard than timber companies. This has led to condemnation of some projects as critics have pointed out that it is against the mission of the owning organization to aggressively harvest their forests and therefore not a realistic scenario against which to compare. A proposed solution has been to consider landowner traits when constructing the baseline scenario. Rather than look at broad regional trends in timber markets to assess a business-as-usual scenario, one would now only compare to similar ownerships and model baselines that are subjectively deemed “plausible” given the organization’s mission, goals, stakeholder values, etc. This approach is problematic for several reasons. One, it introduces a very subjective measure into projects that makes them more difficult to forecast, finance and verify. Two, public ownerships, environmental non-profits, and conservation minded family forest owners are in essence being told that most of their present and future forest carbon has no monetary value for the simple fact that it was and is part of their mission. Yet, ownerships that have harvested aggressively and subsequently actually have less carbon per acre/year on the landscape, are rewarded by being able to sell more of their carbon. This sets up a perverse incentivize structure that no longer supports the efforts of our most carbon-positive landowners.
Markets should value a commodity regardless on the owner’s motivation in possessing it. If we are trying to value carbon in the forest, then it should be valued as equally as possible. While one might argue about whether a specific project represents a change in landowner behavior, valuing carbon in the forest changes the way forests are valued and thus changes the behavior of the whole market. Forests are now being valued not just for their timber or development potential, but for the ecosystem services they provide. As the price of carbon goes up, this will exert more and more influence over how forests are bought, sold, and managed. Isn’t that what is needed? We believe the only way this will work is for forest carbon valuations to be as consistent and objective as possible.
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