Cashing in on Carbon--Land and Offset Project Valuation: Incorporating Climate Legislation and Environmental Incentives in Property and Project Appraisal

Abstract

The CBO, EIA, and EPA predict carbon offset prices will rise to $15-30/ton CO2e in the next decade (ACESA). The creation of carbon offsets markets provides landholders with an alternative means of income generation on suitable tracts. Relevant businesses might recognize what carbon and offset prices mean for their companies, but little information exists for prospective suppliers of offsets like land owners, farmers, land trusts, etc. This project presents a customizable tool based on assumptions including but not limited to offset price forecasts, expected sequestration rates, and tax data (State, Federal). Users can tailor inputs like acreage availability, forest type, and start-up costs to yield rough estimates of project and property value based on planting-for-carbon initiatives. This paper demonstrates sample outputs produced by the model, conducts sensitivity analyses to evaluate project variability, and runs financial forecasts using Oracle’s Crystal Ball to predict outcome probabilities. It is important to note that at the current stage, this tool predicts carbon sequestration and financial outcomes for tree planting projects, not existing forest tracts.