Soil and Blue Carbon capture and storage in arid lands riparian and coastal areas in the borderlands

Table of Contents

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Phase One: Testing soil carbon measurement methods and collection protocols.

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Phase Two: Elements of carbon credit creation and market development.

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Project Finance

In 2018 a collection of respected scientists published a study titled Natural Climate Solutions for the United States (Fargione et al., 2018). This study concluded that the equivalent of 21% of net annual carbon emissions of the United States could be mitigated through certain land management practices on natural and agricultural lands. The authors identified 21 “Pathways” involving various forestry, cropland, wetland, grassland and other changes to current land management to increase carbon storage and avoided carbon emissions. Unfortunately, the authors did not include arid and semi-arid riparian restoration as a Pathway. As a result, current work to create voluntary carbon offset markets in the United States do not include the large and important carbon sequestration, climate resiliency, water retention, and many other co-benefits of arid land riparian restoration. Borderlands Restoration, L3C (BR) is actively working to change this. Based on numerous conversations with practitioners in Arizona, Utah, and Colorado, and anticipating the publication in early 2021 of measurement methods and protocols developed by the Arizona Carbon Team (ACT), BR will soon have an opportunity to create and sell carbon credits to finance the regional scaling of arid land riparian restoration projects. BR anticipates this will happen in two phases.

Phase One: Testing soil carbon measurement methods and collection protocols.

ACT is working to develop standardized protocols for measuring carbon sequestered through ecological restoration of degraded riparian areas in the arid Southwestern United States. Leveraging ongoing efforts by BRN, CLO, USGS and the Soils Lab at the University of Arizona, members of the ACT will install erosion control structures (ECS) on USFS & private lands in the upper Smith Canyon watershed, Santa Cruz county, Arizona. Prior to ECS installation, partner scientific and technical experts will conduct baseline measurements, establish control watersheds, and design experimental watershed instrumentation/data plots to accurately measure post ECS intervention sedimentation, soil accumulation, hydrologic and vegetative changes, and carbon capture. Based on Petrakis et al.’s (2017) work, there are approximately 125 sub-watersheds in the project area, averaging 7.5 acres each. We will treat (~50% of these (~500 acres) ????, while using the remainder as paired experimental controls. These baseline results will be combined with investigation of intermediate age (decade) and long-term (two and three decade) ECS projects measuring long-term soil organic matter (SOM) accumulation, revegetation, and carbon sequestration. Together, these investigations will produce replicable measurement methodology, collection protocols and scientifically valid regional estimate of carbon sequestration potential, first steps toward creating a voluntary demonstration carbon offset market.

Phase Two: Elements of carbon credit creation and market development.

  1. Credit verification, certification, and registry.
    Once credits have been verified through the chosen scientific methodology they can then be certified, meaning individual credits will be assigned unique identification that references specific supporting documentation, which then will be recorded and maintained in a credit registry. In this way an audit trail detailing where (which project) the credit was generated from, its stewardship, contractual, and transactional history can be maintained.
  2. Credit stewardship
    Either annual inspection of each credit generating practice site or a statistically valid random sampling of practice sites. The cost of this ongoing monitoring would be included in a stewardship endowment funded from the sale of credits.
  3. Contractual obligations and reasonable assurance
    As credit generating projects represent medium to long term (10, 15, 20, 30 years) or even permanent change in land management, it is necessary to obligate landowners to at least a long term but ideally permanent contractual agreement to protect and maintain the restored riparian land. Conservation easements that provide third party enforcement of the stewardship required to maintain practices generating credits are a legal contract with many years of successful use and legal defense. These contractual obligations run with the land, and usually involve a local land trust and/or government agency as grantee(s). A reasonable stewardship endowment should be set aside as part of the negotiated price of credits. This contract should satisfy the required Reasonable Assurance as defined by EPA and/or other regulators.
  4. Credit banking and trading platform
    It may be most efficient to “Bank” verified, certified, and registered credits for sale as this will reduce the amount of time between the need for credits and the generation of credits. Annual sales and trading of credits can take place on this platform, and several online credit trading platforms exist that can be used efficiently by credit sellers and credit buyers.
  5. Insurance and credit reserve pool
    Credit insurance is available in two general approaches or a hybrid of the two. Practices can be insured to the level of “Acts of God” at which time FEMA coverage may become available. The other approach is to “bank” reserve credits in a pool to be used to offset practice failures for any reason. An example would be to bank the carbon sequestered in vegetation generated from restoration practices; in other words, only soil carbon is measured and sold as a credit, carbon stored in vegetation resulting from restoration practices is estimated and banked. Both approaches can be used simultaneously to satisfy market integrity requirements.
  6. Marketing to create demand for credits
    Education, outreach, and marketing to promote voluntary carbon offsets for individuals, businesses, insurers, and municipalities are all possible. Additionally, beneficiaries of ecologic restoration activities can be sold on early involvement or pay-for-success commitments upon project completion and credit generation (see d. below). Targeted beneficiaries include:
    • Local businesses that will gain from enhanced economic activity generated by the project, including hotels/B&B’s, transportation companies, ecotourism, cultural tourism, and recreational tour operators, outfitters, participating ranches hosting tours;
    • Downstream water users who will benefit from restored stream functions such as flood control, restoration of perennial streams and reduced sedimentation;
    • Agricultural producers and ranchers based on more productive ecosystems and watersheds;
    • Municipalities and other jurisdictions based on increased tax revenues and employment;
    • Local and national conservation NGO’s involvement to further their missions and to act as “brokers” for credit sales to their constituents.

Project Finance

BR will work to find grants, PRI’s and individual investors to finance projects initially, and also get commitments from credit buyers to buy at a set price upon successful credit generation (pay-for-success) so that investors can be repaid with modest interest. The negotiated price would cover credit generation and stewardship (1 through 4 above), transaction costs, insurance and a credit reserve pool.

Credits can be sold for the Net Present Value (NPV) of their contractual life (10,15,20, 30 years or permanent). ACT is researching the science that will enable measurement of additional carbon capture as projects mature, even as carbon capture eventually approaches a steady state. In this way the annual amount of stored carbon can be estimated over the life of the credit, with remaining years of carbon sequestration available for re-sale should market and other conditions allow transactions between existing credit owners and new buyers. In other words, credits can have liquidity, which enhances their marketability and market value, even though the amount of carbon being measured as sequestered is annually adjusted to maintain additionality.

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