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The Natural Capital Exchange

Growing carbon in Western Pennsylvania

Every growing tree removes carbon from the atmosphere. America's hundreds of millions of acres of forests can play an important role in fighting climate change.

The Natural Capital Exchange is a market-based, data-driven mechanism for democratizing access to forest carbon markets. By paying landowners to change their forest management, NCX increases the amount of carbon on the landscape.
NCX is built on top of Basemap, the first high-resolution forest inventory of the continental United States. Built with support from Microsoft AI for Earth, Basemap is annually updated to provide forest data about every acre every year.
To understand how NCX increases the amount of carbon on the landscape, let's look at McKean County in Pennsylvania. Western Pennsylvania forests provide hardwoods that are world-renowned for their beauty and durability. Highly sought after for furniture and flooring, cherry trees in particular are the economic lifeblood of the region.
Forests and the timber industry have been an important part of the Western Pennsylvania economy for hundreds of years. As other kinds of manufacturing left these rural counties, sawmills became the primary economic driver of the rural economy. Western Pennsylvania is home to many thousands of small forest owners who earn income by harvesting their timber.
Yet forests provide many values beyond just timber. Wildlife habitat, recreational opportunities, and carbon storage are just a few. Emerging forest carbon markets offer both a powerful tool for fighting climate change as well as an exciting new potential source of income for landowners in Pennsylvania.
However, only 4 of the over 19,000 landowners in McKean County have large enough landholdings that they could reasonably expect to participate in conventional forest carbon projects. This represents only 5% of the total acreage in the county.

Decades-long contract periods, high setup costs, and expensive ongoing measurement and monitoring requirements prevent most landowners from profitably participating in forest carbon markets.
NCX democratizes forest carbon markets by empowering every landowner to participate. With one-year contract terms and zero participation fees, NCX makes it easy for landowners to receive payment for reducing their timber harvests this year.
NCX is made possible by Basemap, which reports the sizes and species of trees on every acre of forest every year.
To understand how NCX changes the amount of carbon on the landscape, let's start by visualizing the amount of carbon held in these forests today.
In a year, with no timber harvests, these forests would remove over a million tons of carbon from the atmosphere. This is equivalent to taking more than 200,000 cars off the road for the year.
But of course, many timber harvests occur every year in this county, removing carbon from the landscape. Where is carbon at risk? Using high-resolution forest data from NCX Basemap and economic modeling, NCX is able to calculate how much carbon is likely to be harvested on each property. This represents the "business as usual" case.
To see the effect of paying landowners to defer their harvest with NCX, let's consider the amount of carbon on each property one year from today. White represents no additional carbon relative to the "business as usual" case without NCX.

When landowners reduce their timber harvests through NCX, their properties will turn more green the more carbon they retain above their "business as usual" harvest levels.
Each landowner can decide whether or not reducing their timber harvest makes economic sense for them. Their decision will be strongly influenced by the price of carbon. At a price of $0.50/ton-year, some landowners begin to reduce their harvests.
At $1.00/ton-year, more landowners elect to participate and will reduce harvests even further.
As the price of carbon rises, more landowner participation translates to more carbon removed from the atmosphere and stored on the landscape that year.
Year over year, NCX offers every landowner an opportunity to reduce their timber harvest, remove carbon from the atmosphere, and receive payment.

Each year, payments flow efficiently to the lowest-cost carbon on the landscape.

The overall effect is to significantly increase the amount of carbon on the landscape relative to the "business as usual" scenario.
NCX makes it simple for every landowner to become part of the climate solution. NCX is expanding soon to cover every acre of forest in the US.

For more details, see Forests and Carbon: A Guide for Buyers and Policymakers
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