Transaction Costs and Forest Management Carbon Offset Potential

Transaction costs are one of the key challenges that private forest landowners may face in participating in emerging carbon markets. As most forestlands in the United States occur in the form of small, privately held landholdings, the supply of forest carbon offsets could be constrained by high transaction costs. Using a custom spreadsheet model, this study examines the transaction costs of different forest offset projects operating in different forest types under different accounting methodologies. Results suggest that transaction costs can be signficant for small forest management offset projects.