Michigan mixed hemlock forest

Forest product markets offer woodland owners flexible options for turning a profit

By Grant Peterson | This blog is a cross-post and will appear in the Summer 2022 edition of the National Woodlands Magazine.

It’s no secret that forests have a tremendous capacity for storing carbon. But how can we harness that capacity in practical ways? And can we do it in time to make a meaningful difference? We think it’s possible, but it’ll depend on the help of woodland owners like you.

Right now, there is more carbon dioxide (CO2) in the atmosphere than at any point in the last 800,000 years.[1] We’ve already begun to see the effects of Earth’s disrupted carbon cycle: unpredictable storms, record-breaking heat waves year after year, acidifying and rising oceans, and global declines in biodiversity. Fortunately for us, plants make good use of the potent gas.

Michigan mixed hemlock forest

Plants convert CO2 through photosynthesis into the carbohydrates and sugars that constitute the towering trunks, lush canopies, and beautiful flowers and fruit that typify our most treasured forested landscapes. Nationwide, across more than 800 million acres of private and public forests, this process of photosynthesis removes between 600 and 900 million tons of greenhouse gas (GHG) equivalents from the atmosphere each year.[2] What’s more, the CO2 extracted from the air by plants stays locked up in forest soils, understory biomass, and individual trees over the long run, ultimately mitigating about 14% of the United States’ carbon emissions annually.[3]

Our forests can’t continue providing this invaluable service if they’re cleared for cow pastures, paved over for parking lots, or scorched by wildfires. There’s no way around it: forests have to stay forests – and healthy forests at that! – to process CO2 and sequester carbon. This is where America’s family woodland owners can play an indispensable role in fighting climate change. Because most of America’s forests are owned by individuals and families, small forest ownerships as a collective have the ability to meaningfully mitigate the effects of climate change.[4]

At the same time, family forest landowners have limitations. While they have the authority to actively manage their woodlands for greater carbon storage capacity, they may not always have the know-how or the financial resources to do so. What’s more, non-corporate and family woodland owners are up against some tough odds. Property taxes, heirs’ property disputes, land management and maintenance expenses, bureaucratic red tape, and development pressures can all make selling forested acreage tempting, if not necessary, for many small woodland owners. This is why it is imperative that government agencies and non-profit organizations provide options for profitable and sustainable land management that incentivize landowners to retain and maintain their forests.

Wood Product Markets

Expanding markets for wood products is vital to carbon sequestration efforts precisely because greater market access and processing capacity is necessary to keeping forests as forests. Think about it: if there aren’t enough mills to process harvested timber, fewer trees are harvested, and forests are less actively managed. In addition, building components crafted from wood not only act as long-term carbon sinks, but they can also be utilized as substitutes for concrete, steel, and brick building materials, which together generate about 11% of GHG emissions globally every year.[5]

One of the innovations that has improved the outlook for timber markets and sustainable building construction is cross-laminated timber, or CLT. Invented in the 1990s, CLT is manufactured using heat and special adhesives to bind together several layers of wood that, if arranged correctly, are capable of bearing extremely heavy loads. Prefabricated CLT panels can be used for walls, floors, and ceilings, and are extremely quick and quiet to assemble and install.

Three photos depicting the wood products sector

The global market value of CLT and other mass timber technologies is an estimated $1.1 billion (US) annually and is projected to at least double over the next five years.[6] Just in two years – from 2018 to 2020 – the number of mass timber production facilities in the U.S. grew from five to ten,[7] and last year, Structurlam Mass Timber Corporation – North America’s leading mass timber manufacturer – expanded to the U.S. by opening a plant in Conway, Arkansas. The Conway facility will provide the mass timber inputs for Walmart’s new Home Office campus in Bentonville, Arkansas.

Outside of CLT, markets for other wood products are also expanding. Wood waste and harvest residues are being used as renewable biofuels, and wood-derived biochar is being used to amend soils for increased productivity and as a feed supplement for livestock. The USDA Forest Service’s Community Wood Grant and Wood Innovations Grant Programs help to stimulate emerging markets for wood products. In 2021, the Community Wood Grant Program provided $2.1 million to six projects set to reduce fossil fuel reliance and wood waste. One, led by the Arizona Log & TimberWorks, will add a biochar plant, firewood kiln, and pole peeler to an existing processing facility.[8] Also in 2021, the Wood Innovations Grant Program invested $8.9 million into 44 projects, half of which focus on mass-timber and CLT.[9]

Of course the wood used for new and exciting products like these must be sustainably produced to have their intended carbon benefit. Landowners who manage their forests in accordance with a forest stewardship or management plan will have a leg up in this respect, and depending on the state, may also have more opportunities to tap into rising wood product markets. State forestry agencies often lead initiatives to support wood product markets and greater market access. For example, the Colorado State Forest Service administers the Colorado Wood Utilization and Marketing Program, which lends money to innovative forest product producers, helps consumers learn about and access local wood product markets, and works with cities to increase energy efficiency through the utilization of woody biomass.[10]

As new innovations catch on, demand for wood products will increase, in turn helping to stabilize and grow opportunities for private landowners to turn their timber into profit. States and the federal government know how important healthy wood products markets are, and will no doubt continue to provide grants, cost-share, and loans to landowners, wood processors, and wood product developers in the future for this kind of work.

Forest Carbon Credit Markets

Generating and selling carbon offset credits is another potential revenue stream for woodland owners. Airlines, power plants, and other high GHG emitting entities are increasingly investing in carbon credit markets as a means to remediate their environmental impact.

In the most basic terms: a carbon offset credit represents an agreed upon amount of sequestered carbon, most often measured in “metric tons of carbon dioxide equivalent” (MtCO2e). Typically, one MtCO2e equals one “offset credit.” The method by which a credit is generated is generally defined by a project developer. Project developers determine the feasibility of a carbon credit generation project and bring landowners and offset credit buyers together. Developers can also help connect landowners to accreditors who measure carbon storage on a plot of land and decide how many carbon credits a project is worth.

Credit generators must be able to demonstrate that the carbon stored over the course of the project is additional to what would have been stored if the project hadn’t taken place. Additional carbon can be sequestered through afforestation (planting a new forest), reforestation (planting a forest where a forest once was), preventing deforestation (the conversion of forest to another land use), and implementing forest management practices that delay harvest and/or promote healthier forests capable of sequestering more carbon faster.

View from the forest floor looking up to the sky through forest canopy

The management practices most commonly used to create additional carbon capture are planting trees on non-forested land and postponing harvest. By postponing harvest, the trees within a given stand have more time to sequester additional carbon. Landowners should carefully weigh the pros and cons of deferring harvest, however; it can constitute a significant economic loss depending on landowner’s management priorities.

Participating in carbon offset projects is generally most feasible for landowners with forest holdings of 5,000 acres or more, but increasingly, developers are finding ways to get smaller acreage landowners involved in credit generation. One developer strategy includes pooling (or aggregating) smaller plots of land together under one project. The American Carbon Registry and the Climate Action Reserve both allow for this kind of aggregation, which effectively lowers the price of baseline land analysis and simplifies verifying projects throughout their lifecycles. Similarly, developers like Natural Capital Exchange (NCX) have eliminated requirements for minimum acreages and groups like the American Forest Foundation (AFF) specifically target small landowners for inclusion in carbon credit generation projects.[11] In fact, the average size of a landholding enrolled in AFF’s Family Forest Carbon Program is 144 acres.[12]

Given these recent developments, the primary impediment to landowner participation in forest carbon markets remains a lack of access to carbon inventory data. A carbon inventory, or greenhouse gas inventory, is an account of GHGs released and stored by different sources and sinks. If the USDA has its way, forest carbon inventories will be widely available starting this winter with the release of a new carbon calculator built by the Forest Service’s Research and Development arm. With this handy tool, property owners can enter forest type and age class information and determine baseline carbon storage data for their properties. Then, using those baselines, the system can calculate rough estimates for carbon flux under a variety of different management scenarios, including prescribed burns, timber harvests, and reforestation projects.

While the field of carbon offset credits may feel a bit like the Wild West now, carbon accounting methods are improving, developers are making the market much more accessible, and governments are developing guidelines for the industry. Over the next few years, carbon offset credits are expected to become a reliable way for forest landowners nationwide to generate income from their land and keep their forests as forests.

Grant Peterson is NASF’s policy and communications intern for summer 2022. He can be reached at intern@stateforesters.org. Have questions about NASF’s work in the forest carbon space? Contact NASF Communications Director Whitney Forman-Cook.

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