Page 20 - Georgia Forestry - Issue 4 - Fall 2024

Carbon Markets: A Key Revenue Stream for Forest Landowners
Carbon credits are quickly becoming a valuable tool for forest landowners, allowing them to monetize the carbon- sequestering capabilities of their forests. In Michigan, Mike Smalligan, forest stew- ardship coordinator for the Michigan Department of Natural Resources, has observed a major development of carbon markets compared to other types of envi- ronmental services markets, particularly water-related incentives.
“In Michigan, it’s 100 to zero,” said Smalligan. “We have a lot of carbon projects, but we have zero water funds or investments in payments for ecosystem services related to water quality.”
Carbon markets have seen significant growth as more companies and govern- ments seek ways to offset their carbon emissions through investments in forest management. But while carbon payments are becoming a well-trodden path for landowners, there remains a substantial
untapped potential in combining these carbon-focused projects with other ben- efits, such as water quality.
Carbon markets allow landowners to receive payments based on the amount of carbon their forests sequester, but according to Smalligan, these payments are often lower than desired.
“The price of carbon is so low that it doesn’t really incentivize changing behavior in forest ownership, manage- ment or protection,” said Smalligan.
“People are interested in stacking benefits and trying to get higher prices by quanti- fying co-benefits like water quality.”
The challenge lies in demonstrating the value of these co-benefits in a way that attracts additional investors. As Smalli- gan and other stakeholders explore the potential for new water-related payments in Michigan, their aim is to develop ways to “ride the coattails” of the carbon mar- ket by stacking water quality improve- ments on top of existing carbon projects.
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18 | GEORGIA FORESTRY