Corporate Climate Solutions

Forestry 2021

Preventing deforestation is a key part of fighting the climate crisis, but forest carbon offsets suffer from a number of problems that make it difficult to know their true impact. It is difficult to measure the contribution of any forest offset project, as there is limited rigorous evaluation of the effectiveness of forest interventions. Of particular concern is “permanence”, which refers to the fact that in order to keep CO2 out of the atmosphere, trees must stay alive for many years. This adds an additional layer of uncertainty to any forest project that is very difficult to resolve.

Given the limited evidence on the effectiveness of forestry interventions and concerns over leakage and permanence, we have not yet been able to find any forestry offsets we can recommend with confidence. We are continuing to look for high-quality forestry offset projects.

Overview

Forest conservation, improved forest management, and afforestation/reforestation projects have gained popularity in recent years as “nature-based” solutions to fighting climate change. This makes sense, as deforestation contributes around 8% of the world’s annual CO2 emissions, and revitalization of forests can be a key carbon removal solution. Nature-based projects have received notable financial support from companies like Apple (launched a $200 million Restore Fund in 2021), Amazon (recently launched a $100 million restoration fund), Netflix, and others to help achieve their net-zero climate goals. Globally, a recent initiative out of the World Economic Forum has even been established to plant 1 trillion trees by 2030.

This frenzy to support forest conservation and tree-planting comes as the world’s tropical forests lost 12.2 million hectares of tree cover in 2020, a 12% increase from the year before. An area roughly the size of the Netherlands (4.2 million hectares) was lost within humid tropical forests in 2020 alone, and the rate of tropical forest loss looks like it will remain on pace in 2021. The stunning rate of ongoing deforestation, leading to many degraded forests becoming carbon sources instead of carbon sinks, and the increased global attention to address this challenge warranted a deeper look into forest carbon offsets.

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Disclaimer

This report was last updated in November 2021. This work is preliminary, and subject to change. Questions and comments are welcome.

Unfortunately, it is hard to know the net contribution of any tree or forest to global carbon dioxide or global warming. This recent article in the journal Nature discusses the difficulty of assessing the effect of trees on climate change. While direct carbon capture likely has a cooling effect, trees emit other gases (including methane) into the atmosphere, some which may have warming effects. Additionally, trees can affect warming through changing the earth’s reflectivity of sunlight (known as an “albedo” effect). For example, conifers with dark leaves in far northern forests tend to absorb a lot of heat relative to highly reflective snow cover, reducing or even eliminating the positive effects of their carbon capture.

This research is highly controversial, and many climate scientists believe that increasing forest cover is a key tool in fighting climate change. However, it is safe to say that our understanding of the relationship between trees and climate is still evolving and will improve with more direct measurement.

Even under the assumption that increasing the number of trees unambiguously fights warming, establishing the causality of any given forest project on carbon sequestration benefits that qualify as additional (beyond business as usual) can be difficult. For example, some forest offset projects aim to prevent deforestation by paying landowners to not cut down their trees - but how can you really know that they would have cut down the trees without the credit? Organizations like Verra and Gold Standard that sell offsets set detailed standards and require projects to document the history of the land and suggest what would have happened in the absence of credits. But there is limited rigorous evidence using valid counterfactuals on the effect of forest interventions. In fact, it was recently discovered that many forested areas that were never under threat of being cut down were sold and marketed to major offset buyers. In another investigation, systematic over-crediting of forest offsets under California’s forest offset program was uncovered and was estimated to amount to 30 million tons of CO2 worth $400 million. The over-crediting was the result of project developers overstating the climate benefit by creating faulty counterfactual baselines. Without a convincing counterfactual it is hard to trust claims of the amount of change in forest cover.

Forest projects can also suffer from “leakage” – the concept that preventing deforestation in one area may just cause it to increase in other areas. This is likely true if the underlying demand for non-forested land is not addressed. For example, a project in Brazil might seek to protect a certain forested area from being converted to pasture land, but if the ranchers’ demand goes unmitigated they will likely just shift their activities to another forest where the project is not operating. Whether or not there is leakage in a given project depends heavily on the underlying reason for deforestation, as well as the outside options for the people who are demanding the deforestation.

Forest carbon offset projects do not try to directly measure greenhouse gas emissions or quantify other contributions to warming, presumably because doing so would be prohibitively expensive. Instead, program staff model carbon capture based on the number and type of trees planted, managed, or conserved. But project developers face the incentive to exaggerate claims about the number and type of trees, as well as various forest management practices that affect net carbon reduction. Agencies such as Verra address this by requiring periodic audits, but these are generally contracted by the program implementer, which presents a conflict of interest.

In the public policy literature, there are few rigorous impact evaluations of forest interventions. One exception is a recent RCT by Jayachandran et. al. (2017) published in the journal Science. This RCT studied a program in Uganda in which farmers were paid to not cut down their trees. They indeed found decreased deforestation compared to control areas, and established that leakage was unlikely to be occurring. Another study of a government-run payments for ecosystems (PES) program implemented in Mexico that compensated communities for protecting ecologically valuable land resulted in a reduced rate of tree cover loss in areas enrolled in the program compared to areas that were not. Some areas at particularly high risk of deforestation saw reductions in tree cover loss by 40%, though overall rates of observed forest cover change were low. A more recent study mapping over 400 tree plantations in India planted between 1980 and 2017 raised serious questions about the success of tree planting and forest restoration campaigns, finding no change in tree canopy cover across the plantations studied. Potential reasons for this could be low survival rates of planted trees and tree planting where canopy cover is already dense. A review of 12 localized REDD+ (Reduced Emissions from Deforestation and forest Degradation, and enhance carbon stocks) projects found mixed outcomes in terms of increased carbon stocks, with the diversity of interventions across projects making it difficult to understand the drivers of differential effects.

Overall, it is difficult to validate the causality of any given forest project and for that reason, causality is assessed as low (or at least uncertain)for many forest projects. Companies have emerged to better track forest activities, estimate CO2 levels, and identify leakage using satellite imagery, LiDAR imaging, and artificial intelligence, but it is still too early to determine whether these technologies can address causality concerns successfully at scale.

Trees capture and store carbon as biomass as the tree grows. This carbon is not eliminated, but converted into tree matter and fixed to the soil, and if the tree dies and decays (or burns) it will be released back into the air. The ability of trees to reduce atmospheric carbon depends on their survival over decades.

If trees that are planted or conserved end up getting destroyed in the future, most benefits of the project are lost (except a delay in GHG emissions). Risks to permanence can be unintentional (such as fires and pests), or intentional (such as logging). To address the risks of such “reversals”, voluntary certifying agencies such as Verra assigns risk score to forest projects and require a risk-related proportion of credits to be put into a risk buffer pool. However, it is unclear whether future monitoring of reversals will be adequate, and if the buffer pool will be enough to account for them. For instance, a recent report by the non-profit CarbonPlan calls into question whether the buffer pool in forest offsets in California’s cap and trade market is sufficient given increased susceptibility to forest fires. Meanwhile, over 150,000 acres of forested areas along America’s West Coast previously used as forest offsets have burned to the ground this past summer alone.

Additionally, a recent article by the investigative journalism organization ProPublica looked into a myriad of forest conservation offset projects, and came to the following conclusion:

“In case after case, I found that carbon credits hadn’t offset the amount of pollution they were supposed to, or they had brought gains that were quickly reversed or that couldn’t be accurately measured to begin with. Ultimately, the polluters got a guilt-free pass to keep emitting CO₂, but the forest preservation that was supposed to balance the ledger either never came or didn’t last.”

The conservation program studied in Jayachandran et al (2017) only lasted two years, so they address permanence questions in their article. The authors do not make a claim of permanence- instead they assume that deforestation will likely resume once the program ends, and therefore the benefits of project come from delaying the deforestation. While they do find that the program is cost-effective even when only considering a delay in deforestation, this conclusion comes from a complicated calculation relying on an assumed discount rate and evolution of the social cost of carbon over time. The parameters chosen in this calculation are controversial, and therefore we don’t have a high degree of confidence that a short-term program would be cost effective. To permanently offset carbon emissions the program would have to be run in perpetuity, making the cost of the offset prohibitively high.

Permanence is an important consideration because, once emitted, CO2 can remain in the atmosphere for anywhere between 300 and 1,000 years. It is therefore questionable for forest projects to credibly claim long-term climate benefits if there is a high risk of reversing advertised benefits within a timespan of a few years or even a few decades. Overall, permanence is a persistent issue in forest projects, as it is very difficult to permanently guarantee an emissions reduction with a temporary project. As a result, we assess permanence of many forest offset projects as low.

Forestry 2021

Overview

Disclaimer

Forestry as a carbon offset

Mechanism

Causality

Project-level additionality

Marginal additionality

Permanence

Cost

Co-benefits

Assessment of forestry projects

Finding the right forest project

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