CVal: A Spreadsheet Tool to Evaluate the Direct Benefits and Costs of Carbon Sequestration Contracts for Managed Forests

摘要

This documentation is meant to accompany CVal, a downloadable spreadsheet tool. CVal was constructed for foresters, other land management advisors, landowners, and carbon credit aggregators to evaluate the direct benefits and costs of entering into contracts for carbon sequestered in managed forests and forest plantations. CVal was designed to evaluate Exchange Forestry Offset (XFO) contracts on the Chicago Climate Exchange (CCX), although the methodology could be adapted for other trading mechanisms and agricultural sequestration projects. Our general finding is that it is critical in managed forest projects to determine whether carbon accumulated prior to entering the contract can be counted. Depending on the contract year and length, this can triple the revenue from CCX contracts. If it is not possible to count pre-contract year carbon, then it may not be economically worthwhile to enter the program unless it is extended. Other critical variables having a large effect on the overall profitability include the trade price of sequestered carbon, the carbon sequestration rate, and the hurdle rate (the minimum required rate of return on investment) used. Up-front and annual costs are important, but overall profitability is not quite as sensitive to these costs as it is to the previously mentioned variables.