Forest Carbon Markets

As trees photosynthesize, they remove carbon dioxide (CO2) from the atmosphere in a process known as carbon sequestration. Trees then store carbon in their leaves, roots, trunks, and the soil, which can reduce the overall amount of CO2 in the atmosphere for hundreds of years. Some ways to increase sequestration by forests are to plant more trees, protect young trees from deer, remove invasive species, restore unhealthy forests, and thin crowded forests.

Additional carbon sequestered by forests can be sold as carbon credits to entities that emit carbon dioxide and other greenhouse gases to reduce their impacts on climate change. In this way, the increased CO2 intake from forests in one location offsets CO2 emissions in another.

Though landowners can sell their carbon credits directly through a forest carbon market, undertaking a carbon offset project is expensive. Instead, many landowners use forest carbon developers. These are third-party companies that assist with the up-front and ongoing costs of the project and sell the carbon credits on a registry in exchange for a share of the profits.

Carbon Offset Projects Must:

  • Increase the amount of CO2 absorbed and/or stored by a forest compared to if the project had not taken place;
  • Not lead to a loss in forest carbon in in another area (leakage, e.g., a landowner reduces the number of trees cut in one forest, but cuts more in another to compensate);
  • Typically have a long-term time commitment to ensure the additional CO2 absorption isn't short-lived; and
  • Be periodically checked to verify that the impact of the project continues to meet the carbon credits awarded.

Considerations for Landowners

Forest carbon offset projects can be costly

  • Up-front costs may include a written management plan, forest certification, forest inventory, and calculating the amount of carbon that would be removed and stored in the area without the project.
  • Additional costs may include removal of weeds, purchasing and planting trees, thinning the forest, delaying harvest, maintaining a forest management plan, conducting additional inventories, and reporting.
  • Tree harvesting restrictions and other requirements may reduce future forest income opportunities.
  • If you are working with a forester or forest carbon developer or program, know what project costs will be covered and for what duration. In addition, note any fees and the percent of carbon profits that will be deducted for their work.

Projects Usually Require 20-125 Year Commitments

  • Commitments may require monitoring, verification, and restrictions on what can be done to the forest in that time period.

Commitments May be Tied to the Deed or Signing Landowner - Even After the Land is Sold.

  • In most forest carbon markets, the person who signs the contract is held accountable for the carbon stored in the forest, the execution of the project, and any penalties for the entire timeline of the project-even if the land is sold.
  • In other cases, participation in the forest carbon market is tied to the deed.
  • Whether accountability is tied to a contract or a deed, future sale of the land will be impacted, and future landowners may be restricted in how they can manage the forest.
  • To learn more about estate planning, see the guides Protecting your Legacy and Estate Planning for Forest Landowners: What Will Become of Your Timberland (PDF).

Forest Pests and Diseases can Reduce Offset Profits or Terminate a Carbon Market Agreement

  • Currently, ash, hemlocks, beech, and elms are some of the species in New York that are heavily impacted by pests and diseases.

Not All Forests are Eligible to Participate in a Forest Carbon Offset Project

  • Existing restrictions and requirements on your land, such as a conservation easement, participation in New York's Forest Tax Law program (480a), and timber harvest agreements, may not be compatible with participation in a forest carbon market or program.

If you plan to work with a forest carbon developer or program, ask if they have stable prices and buyers lined up prior to signing an agreement.

Additional Information