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In response to the growing awareness of climate change across the globe, innovative
conservationists have begun employing market approaches to capture the true value
of carbon emissions and encourage sequestration. The most widespread mechanism used
to date, both domestically and internationally, is the carbon cap-and-trade system.
The US carbon market is currently highly fragmented and mostly voluntary, but the
growth of state actions, business participation, and growth in climate change market
proposals in the 110th Congress all suggest that the US is headed towards a regulated
carbon cap-and-trade system. Beyond reducing carbon emissions from sources, the market
has the potential to promote conservation efforts and sustainable land-use practices
on private lands by providing an additional revenue stream to private landowners.
Without regulations, however, there are several barriers to entry that are preventing
private landowner participation. These include: a lack of information of entry opportunities
and characteristics of cap-and-trade proposals in the 110th Congress, cost constraints
due to low market prices prevalent in US carbon markets, concerns about carbon market
eligibility with other conservation funding programs, and concerns about entering
into long-term conservation contracts required by market schemes to ensure permanence
of sequestration activities. This report examines these barriers through 1) a scoping
analysis of international and domestic carbon markets to determine North Carolina
private landowner entry opportunities, 2) an assessment of eligibility criteria for
relevant Federal and state conservation funding and other ecosystem service markets,
and 3) an economic analysis of representative NC properties to determine income potential
from carbon activities.
Carbon market participation is shown to be a worthwhile endeavor for conservation-minded
landowners. The modeled gains in income demonstrate a low but positive income gain
if carbon market prices are to stay constant at the Chicago Climate Exchange’s current
credit price of $2.05 per metric ton of CO2 equivalent. Using predictions from recent
studies that have modeled trading price increases with cap-and-trade proposals in
the 110th Congress, landowner gain is shown to sharply increase over a fifty year
time horizon with a regulated carbon market. This study is useful for the North Carolina
land protection community in encouraging private landowner participation in the carbon
market. Policy recommendations are also provided to assist the state of North Carolina
in moving forward with carbon market participation.
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