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 9/16/2018

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 9/16/2018

Maine Family Forest Carbon Pilot Project USDA NRCS Conservation Innovation Grant Partnership with TCNF and Pinchot Institute for Conservation Still a work in progress 9/16/2018

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 9/16/2018

WHAT ROLE WILL FAMILY FORESTS PLAY IN FOREST CARBON OFFSET MARKETS AND GHG MITIGATION? 9/16/2018

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) 9/16/2018

How forests play a role in markets Afforestation Avoided deforestation or conversion Reforestation/restoration Forest management Enduring wood products/product substitution 9/16/2018

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. Common elements of most carbon market opportunities. 9/16/2018

The Language of Ecosystem Services Baselines Additionality Permanence Leakage 9/16/2018

Baselines Additionality Permanence Leakage Uncertainty around these concepts will define available ES markets (voluntary vs. regulatory) Baselines Additionality Permanence Leakage 9/16/2018

Basic Elements of the Major Forest Carbon Offset Standards Baseline Additionality Permanence CCX Base Year =Net Growth – Harvest 15 years VCS 5-10 Years Prior Inventory and Practices Practices “forever” w/ risk assessed CCAR Regulatory BAU Perm. Easement RGGI Proposed FIA mean > FIA mean 99 years 9/16/2018

Can a credible and efficient framework be developed for the inclusion of FF owners in carbon offset markets? 9/16/2018

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 9/16/2018

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) 9/16/2018

FF Project Baseline and Additionality Baseline Inventory 13 parcels in pool, 3,465 acres (12 to 615 acre parcels) Baseline aboveground inventory conducted (to WoodsWise cost 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) 9/16/2018

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 9/16/2018

Forest Management Model Treatments Run Treatment Label Description Baseline B Natural Stand Development Run1 H40BA Heavy Harvest, 40 ft2 BA residual, return 35 years Run2 H50BA Heavy Harvest, 50 ft2 BA residual, return 35 years Run3 H60BA Heavy Harvest, 60 ft2 BA residual, return 35 years Run4 Q70BA Quality Harvest, 70 ft2 BA residual, return 15 years Run5 Q75BA Quality Harvest, 75 ft2 BA residual, return 15 years Run6 Q100BA Quality Harvest, 100 ft2 BA residual, return 15 years Run7 Clear Cut Clearcut Year 1, return 45 years 9/16/2018

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Hypothetical Landowner Revenue Stand Type Landowner H Acreage Eligible MTCO2e/ac/yr $/year ($5/t) 10 Year Total Revenue M3B 15 0.00 $ - $ - M2B 30 3.11 $ 466.50 $ 4,665.00 M2A 23 3.33 $ 382.95 $ 3,829.50 H2A 78 3.35 $ 1,306.50 $ 13,065.00 H3B 17 0.43 $ 36.55 $ 365.50 H1A 32 $ - $ - TOTALS 195 $ 2,192.50 $ 21,925.00 $/ac/yr = $ 11.24 NOTE: 1 Metric Ton (MT) of Biomass = 0.5 MT Carbon =3.667 MTCO2 equivalent (MTCO2e) 9/16/2018

Potential revenue comparison for a hypothetical group based on Maine BAU Pilot Project approach vs. CCX high estimate (no harvest). Scenario Annual Eligible Carbon (MTCO2e/year) Mean MTCO2e/acre Potential Group Annual Revenue Potential Per Acre Revenue Maine BAU Performance Standard 10,246 2.98 $51,230 ($5/MT) $14.92 CCX (Natural Stand Development only) 7,829 2.28 $14,483 ($1.85/MT, Oct. 2008 CCX price) $4.22 9/16/2018

Transaction Costs Transaction Cost Cost per Acre Description Inventory $6.86 Timber inventory, stand typing, coarse woody material transects Management Planning $11.33 Management plan that meets the Be WoodsWISE requirements, including basic GIS data layers Subtotal Planning and Inventory $18.19 Cost-share would cover up to $12/acre Growth Models $4.71 NED-2 growth models and harvest simulations Legal Expenses $1.43 Research and contract drafting Total $24.33/acre Note Other remaining costs: Group Certification Administration; Verification ($12,321 total VCS + FSC); Long-term Monitoring 9/16/2018

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 9/16/2018

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 9/16/2018

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 9/16/2018

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 9/16/2018