The Economic Value of Private Forests and Climate Change Mitigation

Up to 70% of forests in the United States are in private ownership. Investors and government agencies are looking for ways to leverage private forests to mitigate climate change.

Forests and Climate Regulation

Carbon sequestration is a biological process where trees take carbon dioxide from the atmosphere and store it in the form of woody biomass. Carbon dioxide is a common greenhouse gas that acts like a blanket in the atmosphere helping keep planet earth warm. This warming effect can become socially undesirable when carbon dioxide reaches certain concentrations in the atmosphere. Sustainably managed forests help regulate the amount of carbon dioxide in the air and are considered a useful strategy for mitigating climate change.

While carbon offsets and markets are the main topic of discussion in this article, it is not our intention to suggest that offsets should be the primary way of dealing with climate change. Forests are a limited resource and provide many other important goods and services. This section provides a broad overview of private forest land and carbon markets so that readers gain a better sense of how carbon management may become part of private forestry. 

Carbon Values are a Function of Rate and Risk

How society values the climate regulation services provided by forests depends on the "rate" at which carbon is removed and the "risk" that carbon will be released. The rate at which trees grow and how long they live often depends on local environmental conditions, tree species, and forest management. However, under the same conditions, different tree species sequester or take up carbon at different rates. Pine tree species (e.g., red pine (Pinus resinosa), short-leaf pine (Pinus echinate), and loblolly pine (Pinus taeda)) tend to grow at a faster rate, but have shorter life spans compared to most hardwood tree species (e.g., northern red oak (Quercus rubra), water hickory (Carya aquatica), and sugar maple (Acer saccharum). Stand density, or change in the amount of live woody biomass per acre over time, is the basis for how most carbon sequestration rates are calculated. 

Forests can store large amounts of carbon in the trees and soils for long periods of time. This carbon is unable to become a greenhouse gas unless it is released, either through decomposition or combustion. Risk of carbon release is the likelihood that a forest will stop serving as a carbon sink and become a carbon source. Forestland conversion to other uses (e.g., development) often causes the land to become a permanent carbon source. Forests that are harvested can sometimes operate as a carbon source until new trees are grown to replace the trees that were removed. Invasive species, disease, and wildfire increase the risk that many trees will die, and the forest operates as a carbon source until it recovers.

The goal of a nature-based carbon offset project is to use forest management to enhance the likelihood of carbon gains over carbon losses over time. Paying forest owners to delay harvest is the strategy most often used in the United States today to enhance carbon gains. Reforestation is also a strategy used globally to combat climate change, but the amount of land available for cost-effective reforestation in the United States is limited. It is critical that the United States protect forest health under climate change. Hazards such as drought, disease, extreme storms, and wildfire are expected to increase under climate change, and a greater number of tree deaths can cause forests to become a carbon source. 

Most family forests are managed passively, either due to financial constraints or the incorrect belief that the forest can take care of itself. For example, a survey by the National Woodland Owners Association found that only 11% of family forest owners have a forest management plan. Programs that support active forest management and planning can help mitigate the impact of these hazards and protect forest carbon stocks on private lands.   

If the carbon does leave the forest in the form of wood products, climate benefits are still provided. Wood products in use (e.g., construction, furnishings, and flooring) hold onto carbon and displace the use of other materials that are more fossil fuel–intensive (e.g., steel, concrete, and glass). Cradle-to-grave carbon accounting methods are often used to track total carbon inputs and outputs associated with wood products over time, but the analysis can get complicated as products have different lifespans and require various amounts of transport and energy to create. Today, the climate benefits provided by harvested wood products are only starting to be included in carbon offset projects (e.g., Verra registry protocol vm0045).

Carbon and Timber Stocks in the United States

The U.S. Forest Service maintains a census of all forests in the United States. The data collected, using remote sensing and field data collection methods, describe key forest features, such as location, tree species composition, and tree density. These data are available to the public through the Forest Inventory Analysis (FIA) website and are often used by state agencies and other organizations to help inform planning and investment decisions about forests.

On average, private forests in the United States contain about 22 metric tons of carbon per acre in aboveground live biomass (i.e., trees and living ground cover). Forests in the eastern states and some western states contain the most carbon. These forests have carbon stocks up to 33 metric tons per acre and can sequester over 1 ton of carbon per acre per year (Table 1).

Currently, more wood is grown than lost through mortality or harvesting in the United States. A recent census found 90% of U.S. forestland has reached a biologically relevant threshold of stand density, or maximum number of trees per acre. In parts of the southern United States the growth-to-drain ratio for pine tree species is greater than 2, meaning that for every tree that is harvested two more are grown to replace it. Working forests are an important source of sustainable wood products. Up to 80% of U.S. domestic timber supply comes from private lands. Timber production in the United States accounts for approximately 4% of total gross domestic product ($200 billion). However, up to 12% of U.S. greenhouse gas emissions have been offset each year due to voluntary or unintentional slowdowns in harvesting on public and private lands. Experts estimate that U.S. forests could help offset another 10% of U.S. emissions.

The Market Price of Forest Carbon

Corporations and individuals interested in reducing their carbon footprint tend to prefer nature-based carbon offset projects. This has created opportunities for family forest owners to become involved in the carbon economy. More specifically, instead of changing their behavior to reduce carbon emissions, buyers are looking to pay someone else (i.e., landowners) to change their behavior, from a business-as-usual forest management plan to a climate-smart plan (Figure 1). The emission reduction benefits that come from the landowner changing plans are then credited to the buyer.

Figure 1. Life cycle of a carbon offset project.

To help make this trade possible a growing number of carbon project developers have emerged with a variety of business plans for quantifying and trading carbon credits. The standards that must be met for developing a legitimate carbon credit include the idea of additionality (i.e., emissions reductions should come from a real change in behavior), permanence (i.e., a guarantee that carbon emissions reduction benefits are long-term) and nonleakage (i.e., carbon offset projects do not have unforeseen impacts on carbon emissions and forests outside the project area).

Standard-setting bodies and carbon registries provide the rules for managing and measuring forest carbon and verifying carbon emission reductions. The registries also track the generation and sale of carbon credits from projects that use their protocols. Once carbon reductions are verified and the landowner is paid, a carbon credit is generated by the project developer and distributed to buyers through a series of brokers and exchanges.

One carbon credit represents 1 metric ton of CO₂e emissions avoided or reduced for at least 100 years. Carbon markets use the nomenclature "CO₂e" to describe the market value associated with a metric ton of carbon dioxide and/or equivalent greenhouse gases, since some emissions contain multiple types of greenhouse gases.  Feeding the demand for carbon offsets is an increasing number of corporations looking to buy carbon credits in order to raise their environmental, social, and corporate governance (ESG) ratings.

The voluntary carbon offset market is where most forestland offsets are currently sold. In 2022, sales for forest carbon offset projects ranged from $5 to $20 per metric ton of CO₂e (Source: Abatable: Carbon credits prices in the voluntary carbon market ).  The wide range in market prices, as seen on news sources (e.g., carboncredits.com), are due to variation in the types of assurances associated with the project and the methodologies used to manage and verify carbon gains. 

How much compensation is directed to forest owners is a function of how much carbon dioxide (CO₂) emissions are offset by their forest. Carbon credits represent metric tons of CO₂ emissions avoided. Forest carbon is in a solid form until disturbed by decomposition or combustion. When oxygen is added the carbon transforms into CO₂, which acts as a greenhouse gas in the atmosphere. One unit of forest carbon stored equals 3.6667 units of CO₂ avoided.

Using this ratio, preventing forest loss on 1 acre of private land in the United States helps avoid the release of 82 metric tons of CO₂ emissions, on average (Table 1). In the eastern United States, up to 150 metric tons of CO₂ emissions can be avoided by preventing the loss of 1 acre of forestland. Delaying harvest for 1 year on 1 acre of forestland helps avoid the release of almost 2 metric tons of CO₂ emissions, on average. Forests in the southeastern United States are especially efficient. Up to 4.78 metric tons of CO₂ emissions can be avoided by delaying harvest on 1 acre of forestland for 1 year.

Using current carbon market prices and FIA data, one can estimate an average market value for emissions reduction services provided by private forest land per acre per state (Table 1). On the voluntary market, the average value of delaying harvest on private forest land for 1 year is $16.00 per acre, but it can be as high as $30 per acre in some southeastern states. The dollar values reported in Table 1 does not necessarily reflect what the landowner may be paid, because (1) project developers tend to target properties with higher rates of carbon storage, and (2) the project developer, registries, and other collaborators collect a commission for arranging transactions with buyers. Compensation for forest owners is also based on the type of commitment made by the forest owners. Longer contracts (e.g., 100+ years) tend to provide better assurances of permanent carbon storage, so payments to forest owners may be higher. However, many family forest owners prefer short contracts because over half of people in the United States own their forests for less than 24 years.

Today, carbon revenues per acre are generally less than the per-acre revenues that come from alternative forestland uses, such as agriculture, development, and timber harvesting (e.g., about $8–$10 per acre per year). However, depending on the type of carbon management and how the cost-benefit analysis is set up, owners can benefit from receiving carbon incentives. For example, owners looking to secure some income from their forests may want to stack income streams from compatible management objectives. Other owners may see climate-smart forestry as part of being a good climate steward and are less concerned about maximizing income (e.g., willing to accept a cost-share). Finally, some owners may prefer the idea of receiving a regular carbon payment, compared to the complicated task of arranging a one-time harvest. Either way, it is important that owners have a financial analysis performed before acting, to help avoid unforeseen risks or costs.

The Social Value of Carbon

Public investment in climate-smart land uses has increased dramatically, as part of a broader agenda by state and federal agencies. In 2021, over $3 billion in federal funds was allocated to the U.S. Department of Agriculture (USDA) to help jump-start the production of climate-smart commodities in agriculture. Other recent federal actions (i.e., Inflation Reduction Act of 2022) are directing millions of dollars to state programs that support climate-smart forestry practices on private lands.

The economic justification for allocating public dollars to climate change mitigation programs is based on the expected "social cost" of not mitigating climate change. This value represents the expected impacts to the economy and human health and well-being from extreme changes in environmental conditions due to climate change. In 2022, the Biden administration set the social cost of allowing one more ton of CO₂e to enter the atmosphere at $51. However, scholars at Resources for the Future estimate that the social cost of carbon could be set as high as $185 per metric ton of CO₂e. 

Using FIA data and the price of $51 per metric ton of CO₂e, the average social value of preventing forest loss on 1 acre of private land in the United States is $4,158 per acre (max $7,305; min $885). The average social value of delaying harvest on private lands for 1 year is  $102 per acre (Table 1). Currently, the market price of forest carbon is far less than the estimated social value of avoiding carbon emissions.

Closing Thoughts

Harvesting on private lands will likely slow down further if the market value of carbon credits from delay-in-harvest projects approaches the estimated social value of carbon. Related research has found potentially 2.5 million acres of merchantable pine forests could be set aside if the price of CO₂ reaches $55 per metric ton. This has important implications for the U.S. timber economy and other nations that may use their forests to help meet U.S. demand for wood. If not managed properly, delayed harvests may have unexpected impacts on forest health by pushing biological limits for stand density and increasing risk of wildfire and disease.

To put the limited scale of our forest resources in perspective, consider this. The average person in the United States needs about 8–10 acres of forest to offset their personal emissions each year (i.e., 16–20 metric tons CO₂ per year). However, if an equal portion of US forests (818 million acres total) was allocated to everyone in the population (331.9 million), the average amount of forests per person is only 2.46 acres. Even if harvesting was prohibited on all forest land, there are still not enough forests in the United States to offset the carbon emissions of U.S. residents. 

The pathway forward for people and forests is to (1) continue looking for ways to lower our carbon footprint through behavior change, and (2) expand strategies for carbon offset projects that help support the broader forest economy. New types of wood products (e.g., biochar, bioenergy, and cross-laminated timber), carbon offset protocols, and forest landowner assistance programs will be key for managing carbon on private forest land. Designing regional solutions based on forest conditions and landowner needs will also be important for sustaining climate change solutions into the future.  To learn more about climate-smart forestry check out the links and references below.

This article was produced by the Forest Owner Carbon and Climate Education (FOCCE) program. What do you think? Please take this short survey.

Related FOCCE Articles and Resources 

• How to Manage Forests for Carbon: An Introduction for Family Forest Owners
• Carbon Accounting in Forest Management
• Long-Term Financial Planning for Timber and Carbon
• What Should I Think About Before Signing a Forest Carbon Contract?

Methods and data sources for Table 1.

• (A) Data describing the average amount of carbon in above ground living biomass on private lands in each state was collected from the USDA Forest Inventory Analysis Database.
• (B) The average amount of CO₂ emissions avoided by preventing forest carbon loss on one acre of private lands was calculated by multiplying the values in column A with 3.6667.
• (C) The average rate of carbon sequestered per acre per year was calculated by divided the values in Column A with the average stand age of forests within the state. All states were assigned an average stand age of 50 years, except the southeastern region where states were assigned average stand age of 30 years. Data for average stand ages was collected from Pan et al., 2011.
• (D) The average rate of CO₂ emissions offset on one acre each year (due to forest growth) was calculated by multiplying the values in column C with 3.6667.
• (E) The average social value of preventing forest loss on one acre was calculated by multiplying the values in Column B with the estimated social value or the value of preventing one more ton of CO₂ emissions from entering the atmosphere ($51/metric ton CO₂). Data describing the social value of carbon emissions abatement collected from Bloomberg Law News (November 2022).
• (F) The average value of carbon sequestered by delaying harvest for one year on one acre, was calculated by multiplying values in column D with the current price on the voluntary market ($8.00/metric ton CO₂).
• (G) The average social value of carbon sequestered by delaying harvest for one year on one acre was calculated by multiplying values in column D with the social value of avoiding one more ton of CO₂ emissions ($51.00/metric ton CO₂).

Article Information Sources

Bloomberg Law News (Nov. 2022).

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Fargione, J. E., Bassett, S., Boucher, T., Bridgham, S. D., Conant, R. T., Cook-Patton, S. C., … & Griscom, B. W. (2018). Natural climate solutions for the United States. Science Advances 4(11). 

Ling, P. Y., Baiocchi, G., & Huang, C. (2016). Estimating annual influx of carbon to harvested wood products linked to forest management activities using remote sensing. Climatic Change 134(1), 45-58. 

National Woodland Owners Association.

Pan, Y., Chen, J. M., Birdsey, R., McCullough, K., He, L., & Deng, F. (2011). Age structure and disturbance legacy of North American forests. Biogeosciences 8(3), 715-732. 

Resources for the Future. (2022). The social cost of carbon: Reaching a new estimate.

Sharma, S., & Kreye, M. M. (2022). Forest owner willingness to accept payment for forest carbon in the United States: A meta-analysis. Forests 13(9), 1346.

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USDA Forest Service. 2021. FIA DataMart 1.9.0. Available online, last accessed May 25, 2021. 

USDA Forest Service. (2023). Bioeconomy and biochar.

Verra Registry. (2022). Protocol VM0045,  Methodology for Improved Forest Management Using Dynamic Matched Baselines from National Forest Inventories, v1.1

Woodall, C. W., Coulston, J. W., Domke, G. M., Walters, B. F., Wear, D. N., Smith, J. E., … & Wilson, B. T. T. (2015). The U.S. forest carbon accounting framework: Stocks and stock change, 1990–2016. Gen. Tech. Rep. NRS-154. Newtown Square, PA: U.S. Department of Agriculture, Forest Service, Northern Research Station. 49 p. 

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