James W. Sewall

Climate Change Mitigation: Monetizing Forestland Carbon Values

The Challenge

Forestland has become an attractive asset class to a broad variety of investors. With increasingly competitive prices, it has become imperative for investors to monetize a broad array of timber and non-timber values, whether harvesting timber, selling assets for development, leasing recreation rights or acreage for natural gas, or granting conservation easements. At the same time, concerns over climate change have fostered explosive interest in carbon markets as a means for both pollution mitigation and green investing. As the role of forests in sequestering carbon gains global attention, forestland owners and investors have growing opportunities to realize incremental returns from ecosystem services. The Winrock-Sewall team has decades of experience serving landowners and investors, and is uniquely positioned to help clients evaluate opportunities to manage property for carbon offsets, and to identify the best markets for these offsets. Monetizing carbon values through trading emission credits not only earns investors a financial return, but encourages sustainable forest management practices, improves the health of forest ecosystems, and reduces greenhouse gases (GHGs) in the atmosphere, all of which builds the green profile of the organization.

The process of qualifying an offset project for sale on the carbon market includes measuring and monitoring existing carbon stock, modeling changes in stock, verifying net change over time and registering with the Chicago Climate Exchange, American Carbon Registry, California Climate Action Registry or Voluntary Carbon Standard Registry. Critical to the process is determining (1) how differing timber management strategies sequester carbon, (2) what quantity of credits must be produced to offset transaction costs and how best to market them, and (3) whether revenues will exceed the opportunity costs of converting land to a non-traditional forestry resource.

Integrated Solutions

To assist clients with carbon projects, the Winrock-Sewall team provides full project life-cycle support, including:

• Carbon project consulting--planning, design & development
• Aerial imaging, photo interpretation & accurate GIS mapping
• Forestland modeling, appraisal & inventory
• Site selection & inspection
• Carbon baseline & leakage analysis, growth & yield modeling
• Sequestration monitoring & verification
• Project reporting & registration; direct or offset aggregator trading
• Field training in carbon estimation, measurement & monitoring

The Benefits

Successful carbon projects yield multiple benefits:

• Carbon offset trading supports other values in a portfolio of assets
• Profitability in a fast-growing market increases over time
• Sequestering carbon promotes an organization's green profile
• Sustainable forest management improves water, air & habitat