A new revenue stream from California's redwoods

By Betsy Herbert for the Santa Cruz Sentinel

Posted: 02/15/13, 12:00 AM PST

San Lorenzo Valley Water District is preparing to earn hundreds of thousands of dollars from its redwood forested watershed lands -- without cutting a single tree.

By conducting a rigorous inventory of the vast amounts of carbon stored in its forests, the district can qualify to sell carbon credits through the California Cap and Trade Program, a key piece of the state's Global Warming Solutions Act, also known as AB32.

On Feb. 7, the district's board of directors voted to proceed with a $45,000 carbon inventory on 1,620 acres of district-owned land, forested with older second-growth redwoods.

So-called "cap and trade" is a workable approach to reducing carbon emissions, the primary driver of global warming. The "cap" sets a limit on emissions, which the state Air Resources Board ratchets down each year, steadily reducing total statewide emissions to levels mandated by AB32. The "trade" creates a market for carbon allowances, such as those earned by the water district by avoiding logging its forests.

As forests grow, they pull vast amounts of carbon out of the air and store it in their trunks, leaves and roots. Forests cover approximately 30 percent of the Earth's surface, so climate change scientists are looking at forests with renewed interest to help solve the world's carbon problem.

What makes coast redwoods so exceptional at storing carbon is their enormous size, fast growth and longevity. Attaining heights up to 350 feet and trunk diameters more than 24 feet, redwoods can live more than 2,000 years.

Water district operations annually emit some 500 metric tons of carbon into the atmosphere, while its redwood forests accumulate roughly 30 times that. That means the district is set to earn lots of extra allowances, which it can then sell to other businesses that can't fully meet their carbon emissions allotment for that year.

Joe McGuire, a professional forester, estimated last fall that the district could sell allowances on 7 percent of its total forest carbon, equal to the amount of carbon in the trees that could be cut under an approved timber harvest plan. This sale could net the district approximately $550,000 over 12 years, based on the current price of $10 per metric ton.

"As the demand for carbon allowances increases, the price per ton will likely go up," said Margaret Bruce, who serves on the district board. "I think it's a wonderful opportunity, because the district has opted to avoid logging its property anyway, to protect water quality and habitat."

For hundreds of years, the dollar value of California's redwood forests has been based almost entirely on the dollar value of the timber that can be extracted from them. Such a valuation ignores -- to the distress of environmentalists -- the many other priceless contributions of forests in terms of biodiversity, watershed and spiritual sustenance. Ecological economists have worked for years to correct the balance sheet by assigning a dollar value to these invaluable "ecosystem services" provided by forests.

The door has opened for California's redwood forests to be valued in dollars for something in addition to their timber-producing capability. Through cap and trade, they can now be valued for their essential and significant contribution to averting climate change.

There are caveats for forest landowners interested in selling carbon credits. Their land must be zoned for timber production, the timber rights must be unencumbered, and they must be willing to forego some timber harvesting. Finally, the forest must be large enough to justify the expense of the inventory.

For some landowners, cap and trade offers a welcome new revenue stream from their redwood forests.