How The Trust Works
Let’s start with what the Trust does not do. We do not buy, sell, or trade in carbon credits, nor do we sell carbon “offsets.” These are valid weapons for use in the fight to normalize the carbon cycle and mitigate climate change, but we do something else. Our mission is to accelerate carbon sequestration, not to preserve or take advantage of what already exists.
We join with many others in the hope that there may someday be technological solutions. Indeed, there are occasional press reports of start-up ventures researching, developing, or deploying a variety of such measures. We support this work. It may eventually lead to widespread and successful mitigation. In the meantime, though, we are in business to do something now using a biological construct that has worked well for millions of years – the tree. The Trust buys land, plants, and nurtures trees.
The business model is straightforward: it is grounded in the notion that all persons, households, business enterprises, and development efforts have a vested interest in neutralizing their carbon emissions - what is often referred to as going “net zero.” The Trust’s unique vehicle for doing so is a new twist on a long-established conservation practice, an easement granting carbon sequestration rights over a specific tract of land to the holder of the easement. The holder (the “grantee” in legalese) of the easement pays an up-front fee to cover the cost of the land, its preparation, and the initial planting and management of the trees.
Land acquisition, forestry management planning, initial work on-site, species selection and ordering, planting, and subsequent practices are carried out by the Trust and its agents. The Trust (the “grantor”) owns the land over which the easements are granted. By definition, the easements are long-term and run for thirty years, with renewal options. Annual costs for carrying, maintaining, and managing the woodland are nominal; in some cases, they can be paid annually by the grantee, in others, different arrangements are required.
The Numbers
In order to translate the model into a budget that then informs the sequestration economics, the Trust first identifies costs. Land, of course, is the starting point. Disregarding the opportunities for land by donation or grants, we have found that the lower-cost suitable land in rural New York falls in the $2,000-3,000 per acre range. Larger tracts frequently cost less per acre but require greater resources to purchase. There is less expensive land, but it is frequently in need of remedial work to make it suitable for tree farming. So, we start with a base cost of $2,500 per acre.
Next comes the addition of other acquisition costs: legal, title, survey, tax, and recording fees. These are nominal but real. $100 per acre is a reasonable estimate, based on our experience to date.
Carrying costs must be added -capitalized- for the initial period required to establish the trees, say three years. These consist primarily of taxes plus insurance. Again, they are nominal but real. In the case of the Trust’s land in Catlin, New York, such costs approximately $3,000 per year, or about $42 per acre per year which, times three years, equals $126 per acre.
Forest management planning and analysis are an absolute requirement and carry their own front-end cost. This will vary with the character and complexity of the site, and it can reasonably be expected to approximate $58 per acre. Additional forester time during project execution adds another $80 per acre. Total professional cost: $138 per acre.
And then, the trees. Before they go in the ground the site must be prepared, which generally means selective and tightly controlled application of herbicide at a minimum and can also mean some work to improve access to remote areas. The prep work must be done at the right time of the year and make it possible to optimize the seedlings’ success rate. Costs include the seedlings as well as time and equipment on site. These costs for the 28 acres comprising the first phase of Catlin added up to $1,342 per acre.
To sum up the acre, add land at $2,500, forester at $138, planting at $1,342 to arrive at a cost of $3,980, or approximately $4,000. This figure would represent the initial cost of starting a new woodlot on an acre of relatively open, accessible, level to moderately sloped land with good soil conditions. Adverse conditions requiring replanting, access improvements, or soil conditioning should also be anticipated.
Now we return to the carbon sequestration requirements of the example discussed on the Science page, the 160-unit senior apartment community. The owner set a sequestration goal of 20%, which in turn generated a woodlot requirement of 21 dedicated acres. We know from the foregoing analysis that the capital cost of such a woodlot would be 21 times $4,000, or $84,000.
Add to that figure the present value of the annual costs to carry the woodlot: taxes, insurance, forester, and continuing field work such as pruning, selective removal or replanting, etc. Such costs for the Catlin woodlot total just over $10,000 in year one. Assuming an annual escalation of 3%, the cumulative figure becomes $480,000 over 30 years. That $480,000 discounts to a present value of $254,000, or $3,580 per acre. This translates to $75,180 for the 21-acre dedicated area. The sequestration easement should therefore be priced at $84,000 plus $75,180, or $159,180.
It quickly becomes clear that this analysis must be carried out for each individual circumstance, given the many variables and sequestration goals. The methodology is straightforward, but the results necessarily differ.