Family Forests and Carbon Markets – Developing the Maine Family Forest Carbon Pilot Project

1. Family Forests and Carbon Markets – Developing the Maine Family Forest Carbon Pilot Project John Gunn, Ph.D. Senior Program Leader Manomet Center for Conservation Sciences Brunswick, Maine ACES - 10 December 2008

2. Outline • Overview of forest carbon offset market requirements applicable to family forest lands • Exploration of how family forest landowners in Maine could take advantage of carbon markets • With focus on application of Baseline Measurement and Additionality concept to FF lands

3. Maine Family Forest Carbon Pilot Project • USDA NRCS Conservation Innovation Grant • Partnership with TCNF and Pinchot Institute for Conservation • Still a work in progress

4. Maine’s Family Forests • 100,000 landowners who own between 10 and 1,000 acres of forest land • 5.5 million acres, or 33% of Maine's forest (55% in Northern US) • 40% of wood used in Maine's forest products industries • 24% of harvests with a forester (implies some form of management planning) – Northern US – only 4% with a management plan

5. WHAT ROLE WILL FAMILY FORESTS PLAY IN FOREST CARBON OFFSET MARKETS AND GHG MITIGATION?

6. The current carbon offset market landscape … • Markets & Registries becoming established (Regulatory and Voluntary - >$64 billion in 2007) • Standards, Protocols, & Rules developing • Primary Pathways Relevant to North American forest owners: • Chicago Climate Exchange (CCX) • California Climate Action Registry (CCAR) • Voluntary Carbon Standard (VCS) • Regional Greenhouse Gas Initiative (RGGI)

7. How forests play a role in markets • Afforestation • Avoided deforestation or conversion • Reforestation/restoration • Forest management • Enduring wood products/product substitution

8. Forests and Carbon – Market Entry Requirements Emerging: • Demonstrate that entity-wide forest holdings are sustainably managed. • Demonstrate long-term commitment to maintain carbon stocks. • Use of approved methods to quantify carbon stocks. • Independent third-party verification of carbon stocks.

9. The Language of Ecosystem Services • Baselines • Additionality • Permanence • Leakage

10. Uncertainty around these concepts will define available ES markets (voluntary vs. regulatory) • Baselines • Additionality • Permanence • Leakage

11. Basic Elements of the Major Forest Carbon Offset Standards

12. Can a credible and efficient framework be developed for the inclusion of FF owners in carbon offset markets?

13. Issues with developing a FF Carbon Program • Existing systems not appropriate: • CCX – serious concerns about legitimacy (additionality and permanence) • VCS – currently requires 5-10 years prior baseline data & harvest history; disincentive to those practicing responsible management

14. Issues with developing a FF Carbon Program • < 25% with rigorous inventory & mgmt plans • Wide range of stand types and dev. stages • High $/acre costs to achieve baseline inventory, monitoring, and legal compliance • Defining appropriate baseline • Defining additional carbon practically & credibly (use CCAR as model)

15. FF Project Baseline and Additionality • Baseline Inventory • 13 parcels in pool, 3,465 acres (12 to 615 acre parcels) • Baseline aboveground inventory conducted (to WoodsWisecost share statistical requirements – typical prism cruise e.g., 1 sample pt. per 3 acres @ 10BAF) • CWD transects • Models to Calculate Additionality (eligible carbon) • Use widely available NED-2 (NE-TWIGS, which is an approved growth model for use on CCX projects)

16. Defining BAU: Silvicultural Activities 2006 • Regulatory baseline is not BAU in Maine • 76% of all FF harvests were “partial harvests” (83% under 1,000 acres) • Partial harvest is the BAU for FF - Can we define the typical “Partial Harvest”? • Unfortunately, FIA and MFS Silv Activities Reports do not support a rigorous definition of “typical” BAU

17. Forest Management Model Treatments

21. Hypothetical Landowner Revenue

22. Potential revenue comparison for a hypothetical group based on Maine BAU Pilot Project approach vs. CCX high estimate (no harvest).

23. Transaction Costs • Note Other remaining costs: • Group Certification Administration; Verification ($12,321 total VCS + FSC); Long-term Monitoring

24. FSC Certification and Carbon • Baseline Inventory, Monitoring, Verification Required • Reduce Transaction Costs through “Aggregation” (=Group Certification) • Some implication of “Permanence” (mitigate risks) • Tool to address Internal Leakage • Document co-benefits (mitigate uncertainty) • Bottom Line – REQUIRED & PROVIDES NECESSARY EFFICIENCIES

25. Some Lessons Learned • Defining BAU without a strong regulatory framework will need good data • Cost-share and certification infrastructure supports needs for FF carbon offset projects • Volume achieved through Improved Forest Mgmt can generate revenue for landowners, but … • “permanence” and $/MTCO2e are critical decision points for FF landowners

26. Next steps • Incorporate carbon-specific forest management strategies into formal management planning. • Seek formal approval of Performance Standard approach through VCS • Develop legal structure (50 year recorded contract) • How do you bring this to large scale? • LCA vs. ecological forestry approach • Address External Leakage

27. Contact • John Gunn jgunn@manomet.org Acknowledgements: Will Price, Pinchot Institute David Saah, Spatial Informatics Group John Battles, UC Berkeley Paul Miller, Consulting Forester David Ganz, TNC