By Jad Daley, American Forests

Scientists and policymakers have long known that forests are key to solving climate change through the carbon capture that occurs during the natural process of photosynthesis.

When it comes to slowing climate change, forests are a big piece of the puzzle: Here in the United States, our forests and forest products capture and store more than 14 percent of U.S. carbon emissions each year. A report from the Obama administration late in 2016 suggested that this forest-based carbon capture could become even more important in the future, capturing as much as 30-50 percent of our carbon emissions each year. In simple terms, our success in overcoming climate change might hinge on U.S. forests.

But there is a far less settled question: Can we use public policy, like financial incentives, to help forests make the jump to greater carbon capture? This month Stanford University researchers released a study of California’s forest carbon offset market that might help to answer this pressing question.

A Quick Primer on Carbon Offset Markets

Does it matter who reduces carbon emissions, as long as it gets done? Does creating a trading marketplace for pollution allow for the kind of benchmark-beating competitive efficiency inherent to capitalism?

These are the kinds of questions raised when people talk about carbon markets.

If you’re unfamiliar, a carbon offset market can be included as part of a “cap and trade” climate change law like California’s Assembly Bill 32 that mandated carbon emissions reductions from certain facilities like power plants. The ability to buy offsets (sold in one ton increments of carbon dioxide equivalent) is an approved way that these legally-regulated industrial facilities are allowed to comply.

Under California law, these offset credits can come from different kinds of carbon reduction projects, including forest offset projects like “improved forest management” whereby a forest owner pledges to capture a greater amount of carbon through a specified set of forest practices not already required by law.

Decades ago, when early versions of emissions trading between regulated polluters was first proposed as a solution to climate change, questions were raised about this approach from both a philosophical and public policy perspective. The theory was that trading emissions would create more flexibility as polluters look for their most efficient pathway to reduce emissions—or in some cases simply transition out of business. But was this letting polluters off the hook or speeding us toward solutions?

After facing this initial skepticism, the results of emissions trading schemes were promising— market-based approaches often proved even more effective than policy makers projected they would be, like the highly publicized sulfur dioxide trading scheme.

Hey, Stanford, Do Forest Offsets Work?

Fast forward to California’s carbon offset market, which is tied to a massive climate change regulatory scheme that covers the seventh largest economy in the world (the State of California). California’s carbon markets are uniquely powerful for environmental interests because they allow carbon emitters to invest in trees anywhere in the U.S., not only in California.

The Stanford study details that California’s forest carbon market program has transacted more than 25 million tons of carbon offsets since its inception in 2013, which translates into more than $250 million dollars of payments to forest owners to make those reductions happen. (California forest offsets have generally traded for approximately $10 a ton.)

We know that $250 million is a tremendous amount of leverage for protecting forests from development and incentivizing additional carbon reductions through restoration and sustainable management. But has that money been used wisely? Do payments to forest owners for carbon offset really lead to “extra” carbon capture that is as clear and measurable as the emissions coming from a smokestack?

The findings of the Stanford study are encouraging, if leaving some deeper questions unanswered. Most importantly, the Stanford researchers found that the carbon capture on forests that triggered an offset payment from a polluter has been truly additional above “business as usual” for the forest owners of those properties. Put differently, they specifically found that without the payment from a carbon offset, the future of those forests and the stored carbon in them could have been very different.

This seems to answer affirmatively the most profound question for carbon offsets, do they work to generate more carbon capture in forests?

The second key finding of the study is that forest projects funded by California carbon offsets have created a host of benefits that go beyond carbon. Forests don’t just clean the air, they clean water, too. Remarkably, 17 of the 39 forests that engaged in the California carbon offset market currently provide habitat for endangered species, a co-benefit that Californians and any conservationist would surely appreciate. This is just the beginning — forests that are protected and managed well provide people and wildlife alike with many, many more benefits.

Perhaps the only “cloud in the sky” of this report has to do with maximizing the carbon-reducing power of the California offset market. There has been some concern among experts that the California rules favor already conservation-minded landowners, and miss some of the biggest opportunities to protect and repair forests at most risk. The authors of the report have acknowledged that they only assessed the effectiveness of the forest projects that have been funded by California offsets—not the projects that have been left out. It will be interesting to see what future studies might say about these missed opportunities.

But all in all, this report is cause for forest advocates and climate champions alike to celebrate. We know forests can help slow climate change, and now we have affirmation that payments to forest owners can help increase this carbon capture. This could have important implications for future investment in forests as a climate solution, from states following California’s lead to corporate social responsibility investors and maybe even federal officials. Stay tuned!