• Who We Are
    • The Climate Trust
    • Climate Trust Capital
    • Achievements
    • Leadership And Board Of Directors
  • What We Do
    • Action
    • Impact
    • Case Studies
  • Financials
  • Media
    • Blog
    • News & Press
The Climate Trust | The Role of Economic Motivation in Forest Carbon Accounting

The Role of Economic Motivation in Forest Carbon Accounting

Forestry

This blog has recently covered the various ways that additionality is calculated in forest carbon projects. We have drawn attention to the differences in how landowner demographics are treated and some of the economic assumptions that are incorporated into the calculations. In a nutshell, past behaviour and economic motivation are factored into economic models that determine a project’s carbon baseline in the form of different discount rates and harvest assumptions based on assumed landowner motivation. Landowner demographics that are assumed to be less purely economically motivated are asigned lower discount rates, which result in longer assumed rotation lengths, less aggressive harvests, and subsequently less additional carbon to sell over the course of a 40 to 100+ year carbon project.

This system is problematic for various reasons, some of which we have already discussed but could perhaps be summarized as setting up a system that rewards past carbon emitting behaviour. From a policy pespective, if one were seeking to change a certain behaviour which has come to be understood as negative, you would not start making certain rewards or incentives available strictly to those committing the negative behaviour. The expected approach would likely involve regulation (stick) with perhaps some incentives (carrots) to soften the blow. This calculus is a bit more complicated in the case of carbon emissions because many of the activities that emit carbon have both positive and negative public outcomes. Industrial agricultural and forestry practices have provided the public with a steady supply of relatively inexpensive food and fiber over the past 5 or so decades, but that model of production has run a profound carbon deficit (among other ecological and social consequences). As the world wrestles with how to arrest the march of terrestrial carbon into the atmosphere, changing this model of production in the face of increasing population and supply demands is an extremely complex issue.

As decisive policy seems to be gettting less politically viable, voluntary and private programs are trying to step up in a big way. These programs have the distinct advantage of not relying on coercion or the stick of regulation to solicit involvement, but they are also in the position of having to appeal to entities whose very business model is built around cost free GHG emissions. Without an economy wide price on GHG emissions, many forms of emission intensive production will likely remain the most economically advantageous business model well into the future. This fact is really what shapes the motivation of participants in a voluntary carbon market. Curently, timberland owners entering into a carbon agreement wherein they sell carbon credits to emitters incur a significant sacrifice in potential income because timber remains much more valuable than carbon. Essentially, the price difference signals that our society values carbon in being used as forest products more than carbon being stored in forest ecosystems. Knowing this, it is logical to say that anyone entering into a forest carbon project is motivated by more than just economics, whether this is written into their mission statement or not.

The viability of a voluntary offset market depends on having businesses, landowners, investors, and other actors with the flexibility, willingness, and motivation to do things differently. Some carbon standards even specify that credited activities cannot be economically viable on their own. So how then are we going to discount carbon sequestered by landowners we deem to be alternatively motivated? As long as sequestering carbon is less profitable than activities that emit it, carbon market participants will of a nature be alternatively motivated or they wouldn’t be participating at all. Trying to asign a precise value to the level of this alternative motivation introduces unneeded complexity to already complex projects and transactions, and slows the pace of climate progress.

 

News + Resources

Previous Blog Posts:
https://climatetrust.org/baselines-and-additionality-in-forest-carbon-projects/

https://climatetrust.org/objective-economic-additionality-v-subjective-behavior-predictions/

Tags
Adaptation
Aggregation
American Carbon Registry
Biochar
Blue Carbon
C-AGG
California Air Resources Board
California Carbon Info
Cap and Invest
carbon offset standards
Carbon Pricing
Carbon-Pulse
Clean Power Plan
Climate Action Reserve
Climate Bonds
Conservation Finance Network
Corporate Social Responsibility
CORSIA
Culture
Dairy Digester
Ecosystem Marketplace
Edible Portland
Energy Central
Environmental Defense Fund
Environmental Justice
EPAF
Farm Power Northwest
GreenBiz
IPCC
Job Announcement
Leadership
Low Carbon Fuel Standard
Milestone
Oregon Carbon Dioxide Standard
Oregon Clean Fuels Program
Oregon Energy Facility Siting Council
Oregon Global Warming Commission
Pacific Coast Action Plan on Climate and Energy
Paris
Portland General Electric
REDD
Renewable Fuel Standard
Renewable Identification Numbers
Request For Proposal
RGGI
Rice
Risk Management
Scientific American
Social Cost of Carbon
Supply Chain
Sustainable Business Oregon
Triple Pundit
USDA Natural Resources Conservation Service
Verified Carbon Standard
Western Climate Initiative
Recent Comments
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT
Proud Member Partners in Diversity
  • DONATE
  • CAREERS
  • CONTACT

©2020 The Climate Trust. Crafted by ILLUSIO