An Assessment of Lake States Landowner Interest in Selling Forest Carbon Credits

Abstract

Forests serve as important terrestrial carbon sequestration sinks. In response to industry, individual, and state/regional commitments to reduce emissions of carbon dioxide, carbon is now a commodity that can be sold in the marketplace. Practices that enhance sequestration ability can generate carbon credits that can be sold to entities wishing to offset emissions.

The nation’s family forest lands, representing 40 percent of the nation’s forest land, can be an important contributor to carbon sequestration efforts. Yet very little is known about how family forest landowners view programs that enable them to sell carbon credits generated from the growth of their forest and the compensation level required to encourage meaningful levels of participation among the nation’s family forest owners. To address this information gap, we conducted a contingent valuation study to identify and quantify family forest landowner interest in participating in a voluntary carbon market-trading program in the Lake States. A mail survey was administered to 2,200 randomly selected family forest owners in Michigan, Wisconsin, and Minnesota. The questionnaire assessed landowner interest in participating in a hypothetical carbon credit program at certain compensation levels and sought information on landowner objectives, perspectives and forest land characteristics.

A total of 850 usable responses were used to develop a profile of Lake States family forest owners, estimate required compensation levels, and determine how various program characteristics influence a landowner’s interest in participating. A logistic regression model was developed to examine the factors affecting participation in a forest carbon offset project by family forest owners. Results showed that carbon program characteristics, alongside landowner and parcel characteristics, are associated with the decision to participate in a carbon credit program. Specifically, payment amount, contract length, gender, value placed on other nonmarket forest amenities, need for additional income, attitude toward climate change, absentee status, land tenure, and total acres owned were found to be significant determinants. Models were run using all respondents as well as only with those respondents indicating a high certainty in their answer. The study’s findings and implications for future forest carbon policy will be discussed in this report.