Urban Forests and Carbon Markets: Buyers’ Perspectives

preferences for carbon credits sourced from urban forests. Current market carbon credit prices do not necessarily reflect the type and location of offset projects. Despite the fact that revenue generated from sales of carbon credits could help communities in many ways, the source of offset credits is largely unknown to the buyers. For example, buying offset credits generated by storing carbon in urban trees could help local governments raise revenue to manage trees and greenery and also would benefit residents with aesthetic beauty and other ecosystem services. Similarly, buying offset credits from rural forestry projects could help fuel local economic growth and potentially contribute to alleviating poverty (Lipper and Cavatassi 2004, Antle and Stoorvogel 2009). An earlier survey of carbon credit buyers concluded that buyers want to purchase the credits from reliable agencies (Neeff et al. 2009). From an intuitive standpoint, we expect that urban forest credits should be desirable for businesses because of the credibility of local governments that implement offset projects and their joint benefits (e.g., ecosystem services) to the local population. Joint benefits could be important because they would help businesses earn social recognition and potentially improve their green image. Offering a price premium for carbon stored in cities in which businesses operate or market their products and services may be very important to companies for positive image promotion. Because most companies are located in big cities or urban areas, carbon credit purchases from local projects may be viewed as an effort to promote environmental and social responsibility. However, we currently do not know whether buyers prefer carbon credits sourced from certain locations (e.g., local versus regional) or whether they are willing to pay more for credits sourced from certain project types (e.g., urban forestry versus agriculture). Appropriate market protocols could be developed once there is a clear understanding of the demand side of the market (e.g., buyers’ preferences and willingness to pay, to name a few) for urban forest carbon credits. This can be achieved in several ways. First, a growing interest by credit buyers with strong preferences for certain offset project types and specific characteristics may encourage existing market platforms to revise or advance their market protocols to accommodate such specific credit. The case of urban forestry projects at the CCX provides an example. Eligibility requirements at the CCX require trees to have been planted since 1990, tree owners to be insignificant GHG emitters, and a 15-year commitment period—these requirements are not difficult for urban forestry projects, given their public ownership and long-term conservation goals. Clearly, there are some technical challenges including density-space requirements and the relevancy of growth and carbon uptake tables the CCX uses to monitor and quantify the carbon. However, recent developments in urban forestry technology have made expanding the growth rate tables for individual trees possible, along with taking advantage of customized look-up tables. As a result of these developments, the CCX, which did not initially consider urban forestry projects for carbon registry, has recently approved its first urban forestry carbon project (CCX 2009). In addition, there are other potential registries and markets that in the future may consider trading urban forest carbon credits. Second, once the existing over-the-counter sellers become aware of the fact that the buyers have different preferences for such credits, they will find incentives to supply these credits. Third, with the emergence of information that such market segment exists, local government units and municipalities, who are the owners and managers of urban forestry projects, could label their products and jointly establish new market platforms. A limited number of studies have attempted to address these issues. For example, Ashford et al. (2008) analyzed trends in carbon offset sales to examine what buyers think are important factors in selecting offset credits. Hamilton et al. (2008, 2009) assessed company motivations for participating in voluntary carbon markets. However, these three studies were based on sales and retirement data obtained from credit suppliers and may not necessarily reflect the buyers’ stated preferences and intentions. Recently, Neeff et al. (2009) surveyed 141 corporate participants in carbon markets to examine their attitudes and preferences for project characteristics as well as their willingness to pay for forest carbon credits. Other studies have adopted contingent valuation surveys to assess individual willingness to pay to offset personal carbon footprints. For example, Brouwer et al. (2008) surveyed air travelers to elicit their willingness to pay for offsetting emissions from personal flights. Ott (2009) conducted an online survey of the general Internet public to determine how much they were willing to pay for offsetting emissions associated with a hypothetical vacation trip. However, the respondents in these two studies were not the typical buyers such as businesses or organizations with voluntary or mandatory emission reduction targets. Also, a particular market segment, such as urban forest carbon credits, was not the focus of any of these