Harvest Deferral Carbon Credits, Explained

As a landowner, your forest is more than just a stand of trees; it's a valuable, dynamic asset. Beyond timber, your land holds immense potential to contribute to environmental solutions while creating new revenue streams. One innovative opportunity gaining traction is harvest deferral carbon credits. This approach allows you to earn income not by cutting trees, but by letting them grow.

What Are Harvest Deferral Carbon Credits?

With harvest deferral carbon credit programs, a landowner gets paid for postponing a planned timber harvest. Here’s the core concept: growing trees absorb carbon dioxide (CO2) from the atmosphere and store it as carbon in their trunks, branches, and roots. This process is called carbon sequestration. When you defer a harvest, your forest continues to grow and sequester more carbon than it would have if the trees were cut down. The additional carbon stored during this deferral period is measured, verified, and converted into carbon credits. Each credit typically represents one metric ton of CO2 removed from the atmosphere. These credits are then sold on a carbon market to companies or individuals looking to offset their own emissions.

How Harvest Deferral Carbon Credits Work

In simple terms, you get paid to delay cutting your trees for a specific period of time with a harvest deferral carbon credit program. The process involves determining eligibility, quantifying the carbon your land is sequestering, signing an agreement with a carbon developer to enroll in the project, measuring the credits, and then receiving payment from the developer who will verify and sell the credits.

1. Eligibility and Assessment

The first step is to determine if your land qualifies. To qualify for harvest deferral credits, trees must be at genuine risk of being harvested under the landowner's normal management practices, known as "business-as-usual". This means you can't receive credits for simply maintaining trees you never intended to harvest anyway. The deferral must represent an actual change from your typical forest management regime.

Carbon project developers will assess your property based on several factors:

• Forest Type and Age: The species, age, and health of your trees matter. Older, more established forests often have higher carbon storage potential.

• Harvest Plan: You must have a credible and legally permissible plan to harvest timber. The carbon sequestered must be "additional"- meaning it results directly from enrolling in the program and deferring the harvest, not from carbon that would have been stored regardless of participation. This concept, known as additionality, is a key requirement to qualify for harvest deferral carbon credits.

• Acreage: While minimums vary, most programs require a certain number of acres to make the project economically viable.

2. Carbon Quantification

Next, the project developer will determine how much carbon your land is sequestering. Generally, heavily forested properties with older trees sequester the most carbon. Project developers use satellite imagery, growth and yield modeling, and forest inventory data to determine how much carbon would be released if the planned harvest proceeded. They also consider factors like timber prices and tree maturity to model the likelihood of harvest.

If you're interested in seeing how much carbon your land is sequestering before engaging with a developer, get a free LandApp Property Report. Simply find your parcel on our map on desktop or on our mobile app and export a PDF Report, then navigate to the 'Trees' page to learn more about the trees on your property and see what you could earn:

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3. Project Development and Enrollment

Once deemed eligible, you partner with a carbon project developer. They handle the technical and administrative aspects, which include:

• Carbon Baseline Calculation: The developer establishes a "business-as-usual" scenario. This baseline models the amount of carbon that would be released and the future sequestration that would be lost if you proceeded with your planned harvest.

• Contract Agreement: You sign a contract that outlines the length of the deferral period (often ranging from one to several years, sometimes up to 40), payment terms, and your responsibilities.

4. Measurement and Verification

Carbon credit measurement and verification is the next step, and this is where the science comes in. The developer uses forestry inventories and advanced modeling to quantify the additional carbon stored on your land during the deferral period. An independent third-party auditor must then verify these calculations to ensure they meet rigorous standards set by carbon registries like the American Carbon Registry (ACR) or Verra. This verification is essential for the credits to be considered legitimate.

5. Credit Issuance and Sale

Once the deferral is verified, carbon credits are issued by the registry and sold to corporations and organizations aiming to offset their emissions. Your project developer handles the sale of these credits on the voluntary carbon market. Each credit typically represents one metric ton of CO2 equivalent prevented from entering the atmosphere.

Payments to landowners depend on factors like the property's characteristics and agreement terms but are generally based on the amount of carbon the property sequesters. For example, LandYield, a harvest deferral carbon credit developer, guarantees a competitive price per credit for the first three years of the program. For the remaining 20-40 years, payments are based on a fixed percentage of the carbon credit price, allowing landowners to benefit if future carbon market prices increase. This generally ranges from $30-100 per acre per year.

Key Considerations for Landowners

When considering participation in a harvest deferral carbon project, landowners should evaluate several critical factors to ensure the program aligns with their goals and land management practices. These projects can offer significant financial and environmental benefits, but they also come with long-term commitments and specific requirements. Understanding the key aspects and pros and cons involved with harvest deferral carbon programs is crucial.

Benefits of Harvest Deferral Carbon Credit Programs

Participating in a harvest deferral program offers several compelling advantages that align with both financial and land stewardship goals.

• Diversified Income Stream: The most direct benefit is a new source of revenue. Instead of relying solely on timber sales, which can be subject to market volatility, carbon credits provide a stable income. This can help you cover property taxes, maintenance costs, or fund other land management activities without liquidating your timber assets.

• Increased Timber Value: Delaying a harvest allows your trees to continue growing. This means that when the deferral period ends, your timber may be larger, of higher quality, and potentially more valuable. You can think of it as earning money while your primary asset appreciates in value.

• Enhanced Forest Health: Letting your forest mature provides numerous ecological benefits. Older, more complex forests offer better wildlife habitats, improve water quality in local watersheds, and enhance soil health. These ecosystem services add intrinsic and long-term value to your property.

• Continue Using the Land: During a harvest deferral carbon program, landowners can generally use the land for recreation, hunting, and non-timber forest projects, as long as these activities don't interfere with the project terms. There may be certain land use restrictions during the carbon lease, but these will vary depending on the specific developer and agreement.

Potential Challenges of Harvest Deferral Carbon Credit Programs

While the benefits of harvest deferral carbon programs are significant for landowners, it's important to approach harvest deferral with a clear understanding of the potential challenges and commitments.

• Long-Term Commitment: Carbon projects are not short-term endeavors. Deferral contracts can lock you into a specific land management plan for many years. It is crucial to consider your long-term goals for the property and ensure the contract aligns with them. What happens if your financial needs change unexpectedly? Be sure to understand any clauses related to early termination.

• Eligibility Considerations: Landowners must meet specific criteria to qualify for a harvest deferral carbon project, which can include a minimum acreage, the type of forest stand, and the ownership of timber rights. Landowners should note that some programs may limit future participation. For instance, enrolling a parcel in one program could prevent it from being eligible for another program later.

• Market and Price Fluctuation: The value of carbon credits can fluctuate based on supply and demand in the voluntary carbon market. While developers often work to secure favorable prices, there is no guarantee of a specific return. You should view carbon income as a component of your overall financial strategy, not a single solution.

• Risk of Reversal: Natural disasters like wildfires, pests, or disease can damage or destroy your forest, releasing the stored carbon back into the atmosphere. This is known as a "reversal." Carbon programs manage this risk by contributing a portion of credits to a buffer pool, which acts as an insurance policy to cover such losses. However, it's a risk inherent to any forest-based project.

Is Harvest Deferral Right for You?

Harvest deferral carbon credits offer a powerful way to unlock new value from and make money with timberland. By paying you to let your trees grow, these programs align economic incentives with environmental stewardship. For the right landowner with the right property, it can be a rewarding opportunity to diversify income, improve forest health, and make a tangible contribution to a healthier planet.

Deciding whether to enroll in a harvest deferral carbon program is a major decision. Here are a few final questions to ask yourself:

• What are my long-term goals for my land? Do you plan to pass it on to the next generation, sell it, or continue managing it for timber?

• What is my financial situation? Can I afford to defer timber income in exchange for carbon revenue?

• Am I comfortable with a long-term contract? Do the terms and length of the commitment fit my plans?

• Who will I partner with? Have I vetted potential carbon project developers to find a trustworthy and experienced partner?

How to Start a Harvest Deferral Carbon Credit Project on Your Land

Whether you're managing a small family woodlot or a larger timber holding, harvest deferral credits may provide a valuable income stream while your trees continue to grow and capture carbon. If you're interested in exploring harvest deferral carbon credits for your forested property, the first step is determining whether your land qualifies and what the potential revenue could be. Every forest is unique, with different species composition, growth rates, stand ages, and management histories. The carbon storage potential, and therefore the credit value, varies significantly based on these factors.

Ready to explore your options? List your property for carbon credits on LandApp to connect with carbon project developers. Our platform makes it easy to connect with carbon developers to explore various opportunities and compare offers from multiple programs, helping you make an informed decision that aligns with both your financial goals and your commitment to environmental stewardship. Listing is free, with no fees, commissions, or obligations to accept any offers- just opportunity.

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