Worth More than Market Value

As residential and second-home development chip away at Maine’s forests, will we recognize them as the climate assets they are?

 

By Erica Cassidy Dubois

 

Over the past two years, a property boom has swept through Maine. Contractors and real estate agents had record seasons. Property values soared. Camps, residential homes, and lots that sat on the market for years were suddenly snapped up (Hill, 2022). More than one-third of this activity was driven by buyers from out-of-state (Ogrysko, 2022). For some communities, the influx of new residents brought much-needed population growth and bolstered numbers for schools. As a friend recently told me, “As a builder, I have all the work I can get.”

But there is also a dark side to expansion. Long-time residents of many rural communities are aghast at the pace of change. “All I hear are trucks and bulldozers, all day long,” a landowner in western Maine lamented to me last autumn. A large tract of undeveloped land across the road from his off-the-grid dwelling had been sold; he was hearing the installation of a new road to service waterfront lots. Among Maine communities, the tone of conversations is changing. The question is no longer, How do we grow? Instead, Mainers are asking, How do we slow this down?

Looming in the background of our local drama is the proverbial elephant in the room: climate change. 

Forests are carbon sinks. Through natural functions, they absorb more carbon from the atmosphere than they release. Trees store carbon in their trunks, branches, and root systems; forests also hold carbon beneath the ground as organic and inorganic components of soil. Forest loss, then, is more than an aesthetic problem or a habitat concern—it is a problem for the climate, too. 

A single house lot may seem like a tiny nibble into the Maine woods, but those bites add up. By current estimates, Maine loses 10,000 acres of natural and working lands each year—an area roughly two-thirds the size of Manhattan (New Project Media, 2021). And that figure is projected to grow. Healthy forests, some of our best natural tools for mitigating carbon pollution, are under threat.

In Maine, one of the best ways to retain woodlands is to keep forests affordable to own and to maintain their value to landowners as a source of income. The act of cutting down a tree is not, from a climate perspective, condemnable. Land that is managed for forest products—and sometimes the products themselves—will continue to be a carbon sink, long-term. The problem arises when forested land is permanently converted to another, more intensive use.  In Maine, it takes decades to grow a tree to harvestable size. The margins for owning, managing, and harvesting timber and other forests products are thin.

There are a number of options a landowner might consider to help fund the cost of owning land. Carbon credit programs to avoid or offset emissions are of growing interest in Maine. When a landowner enrolls in one of these programs, the amount of standing carbon on their property is carefully measured and quantified. An agreement for how much standing carbon will be maintained and sometimes accumulate over a fixed term is negotiated. Landowners receive financial compensation when credits are sold on a carbon market, often purchased by companies to “offset” carbon-generating activities. Forest growth is audited over the length of the contract to ensure that the terms of the agreement are met. One credit represents a reduction in one metric ton of greenhouse gas emissions. As more carbon is stored on the land, more credits can be sold. Carbon credit programs may involve planting trees, which removes carbon from the Earth’s atmosphere, or the preservation of existing forests, which forestalls greenhouse gas emissions from being released.

There are concerns, raised by environmentalists and others, about the efficacy of carbon credit programs to reduce emissions. Some worry that sale of credits provides a smokescreen for polluting companies and industries to declare certain activities “carbon neutral” without clear evidence that credits sold actually reduce global emissions. Projects that buy and sell carbon credits based on forest preservation, for example, only make a measurable impact if the forests preserved were under threat of being cut down (Pearce, 2021). Some researchers suggest that offset programs have overestimated how much carbon is stored in enrolled forests (Badgley, 2021). Despite these criticisms, large environmental organizations such as Conservation International continue to tout carbon credit programs as a means of reducing carbon pollution, provided that buyers of credits are also working to reduce their carbon emissions in other ways. Projects must also meet standards for equity and have their benefits rigorously verified (Conservation International, 2022). One of the largest conservation organizations in the world, The Nature Conservancy, has embraced the sale of credits to help fund forest conservation (Pearce, 2021).

Carbon credit programs have been mainly accessible to large landowners who manage thousands of acres, but there is growing interest in creating programs tailored to bring benefits to smaller landowners as well. One strategy that has been proposed in Maine is to expand existing Current Use programs to encourage and support landowners who wish to sequester carbon by reducing the assessed value of their property. There are presently four Current Use programs accessible to landowners in Maine: Farmland, Tree Growth, Working Waterfront, and Open Space. The Tree Growth designation offers the largest reduction in value. For landowners with ten or more operable acres, enrolling can reduce property tax bills by 90%. But not every small landowner wants to manage their lands for commercial timber, and Tree Growth legally requires landowners to maintain a forest management plan prepared by a paid professional forester, and for periodic harvests—ideally, every ten years—to take place on their land. 

An October 2021 report by the Governor’s Task Force on the Creation of a Carbon Program suggests increasing the tax credit for Open Space from 20 to 50% of a property’s taxable value, and adding an additional 20% break for forested properties of at least ten acres that are managed explicitly for carbon storage. Although the overall tax benefits of Tree Growth would remain greater, a Carbon Management program could appeal to landowners who do not want to actively manage their lands for timber or engage in regular harvests for commercial products. At the end of the day, the goal of Current Use tax programs is to retain and preserve the resources sustained by natural and working lands. In order to be effective, it is essential that these programs be attractive to a wide range of landowners with a variety of management visions and goals. Many small landowners may not want to see a processor-forwarder at intervals in their backyard. A Carbon Management program, as proposed, could reduce the tax burden for these types of landowners. The impacts of such a program have the potential to be significant. Some 40% of Maine forests are owned by small private landowners—nearly seven times the amount of land owned and managed by public (state and federal) agencies (Mullany, 2018). 

A tried and true method for sustaining forests is permanent conservation. When we hear the word “conservation,” many of us think of state or federal lands—Acadia National Park, for example, or state-owned parks and reserves like Lily Bay, Bradbury Mountain, Donnell Pond, and the Cutler Coast. In reality, the majority of permanently conserved lands in Maine are retained in private ownership but overlaid by conservation easements—permanent legal agreements that prohibit development by transferring rights to qualified holders such as land trusts and state agencies. Sixty percent of the four million acres of conserved lands in Maine are held in working forest easements. These lands continue to be harvested for timber and other products, but will never be converted into camps, “kingdom lots” (large parcels carved out of undeveloped tracts and sold for high value to build vacation homes), or other types of development. Lands held in conservation easements will quietly continue to store carbon in perpetuity.

“Easements have made conservation possible in the Maine woods at a landscape scale,” says Karin R. Tilberg, President/CEO of the Forest Society of Maine, a land trust that has been a part of conserving more than one million acres (2021). “We would not see the level of conservation that has been achieved in Maine, today, without easements as a tool.” She points out that landowners who want to avoid selling off land for development may look at easements as an alternate source of funds. “Some landowners will take the money they make from the sale of an easement and use that to buy more forestland,” she explains. “Or they might use it to invest in types of management—such as pre-commercial thinning—that will ultimately result in a healthier, more valuable forest” (2021).

Not every landowner is prepared to enter into a permanent easement. The largest conservation program in the United States is the Conservation Stewardship Program (CSP), a program of the U.S. Department of Agriculture’s Natural Resources Conservation Service. CSP provides financial assistance and professional support for landowners of working lands, such as forests and farms, to maintain or improve strategies for conserving natural resources. CSP currently runs on a five-year contract period (USDA Natural Resources Conservation Service, 2022). While programs like CSP do not offer the same level of assurance as permanent easements in keeping lands from being developed, they do important work to enhance or restore wildlife habitat and improve water quality and soil productivity.

Another form of conservation that is too often overlooked is Indigenous ownership and management. A global study published in 2019 concluded that the greatest levels of biodiversity occur on lands managed or co-managed by Indigenous communities, exceeding that of parks and wildlife reserves (University of British Colombia, 2019). Research has also shown that Indigenous people worldwide are likely to be disproportionately impacted by climate change effects (Ford, 2012). In Maine, Indigenous Wabanaki tribes have access to less than 1% of the lands that once supported their people and cultures (Sharon, 2020). A large opportunity exists to address climate impacts, improve environmental health, and protect vulnerable communities by facilitating Indigenous ownership and management of land. In 2020, when the Elliotsville Foundation, Inc. returned 735 acres to the Penobscot Indian Nation, EFI President Lucas St. Clair expressed his desire for other Maine landowners to follow suit. “I think that this could potentially inspire others to give land back to the Wabanaki Confederacy,” he stated, “and my hope is it’s really just the beginning” (Sharon, 2020). Tribes employ foresters and other natural resources professionals who actively manage their lands for timber, wildlife, and other resources. They are also interested in storing carbon. In 2014, Maine’s Passamaquoddy Tribe became the first tribe in the Eastern U.S. to enter trust lands into a carbon offset project. Nearly 100,000 acres were involved in the 100-year agreement. In 2016, the tribe was recognized by the Climate Action Reserve, an offset registry, for generating 3.2 million credits—more than any other lands in CAR’s registry that year (French, 2017). Proceeds from the sale of credits are used by the tribe to support tribally owned businesses, public health initiatives, and more (Drummond Woodsum, 2017).

Moving forward, commercial forestry in Maine is likely to employ a combination of conservation and management strategies in order to satisfy climate-minded investors while also producing a financial return. In 2020, the New England Forestry Foundation (NEFF) announced their purchase of more than 9,000 acres in Downeast Maine to be managed under their Exemplary Forestry Initiative, which NEFF hopes will become the “new gold standard” for sustainable management of forests (New England Forestry Foundation, 2021). With time, the goal is to grow bigger, higher value trees which—in combination with more income sources like carbon credits and conservation easements—will produce at least as much income for investors and owners as traditional commercial harvests.

There are challenges to this approach. Most land managers must meet demands from investors to generate returns within 10 to 15 years (Rankin, 2018). Investors in an Exemplary Forestry model must be much more patient in order to see a similar return. There is also the question of marketability. Sit in a room of forestland managers, and you are likely to hear how “mills don’t want big trees.” Advances in computer imaging technology have made modern mills incredibly efficient. Each log is scanned and measured. Calculations are made automatically by a software program, and then the tree is cut in order to maximize value to the mill (Rankin, 2011). Big trees can slow down this process. I have heard experienced forestland managers state that the ideal stem size for a milled spruce or fir sawlog in Maine is currently only 8 inches in diameter. That’s a marked decrease from 50 years ago, when a red or white spruce sawlog might be harvested at a diameter of 18 to 20 inches (Frank, 1973). This economic reality forces landowners and managers to adopt shorter growing and harvesting rotations. Landowners and foresters may tell you that their hands are tied—even if they prefer to grow older, bigger trees, waiting 80 to 100 years to harvest may result in a product that mills do not want to buy. Proponents of Exemplary Forestry counter that there will always be a market for the highest value products, like veneer. They hope that Exemplary Forestry will attract a new kind of investor, one with an eye towards philanthropy and deliberate, sustainable growth. Over time, they argue, Exemplary Forestry will increase the financial value of forestlands as well as improve the health of our environment. And the sale of conservation easements, soon after acquisition, is one way to provide investors with an immediate financial return (Rankin, 2018).

A robust forest products’ economy is also important for maintaining forests. In order for landowners to make money selling wood, they need access to mills. There must be enough equipment operators to perform the harvests, and log truck drivers to move wood from point A to point B. A landowner is only one cog in the engine of the forest economy. If one gear gets rusty or breaks, it can wreak havoc on the entire machine. For example, the widespread closure of Maine paper mills created a dramatic drop in demand for hardwood pulp (Mullany, 2018). With no market available for certain sizes and species of trees, many landowners had to halt or slow their investments in pre-commercial thinning—a silvicultural technique that thins out dense, young forests and allows remaining trees to grow at a faster rate. This means less money for landowners now in pulpwood sales, and less money in the future as they will have to wait longer to be able to grow and harvest merchantable wood. When markets fail, landowners have to make choices. If a landowner finds themselves strapped for cash, selling land for development may be the best financial choice they can make. As Mainers, as a whole, continue to age, selling lands to fund retirement plans or long-term care may further drive the pace of sales and subdivisions.

“As Mainers, as a whole, continue to age, selling lands to fund retirement plans or long-term care may further drive the pace of sales and subdivisions.”

The COVID-19 pandemic has played a significant role in the uptick of land sales and development in Maine. Two of the country’s largest moving companies, U-Haul and United Van Lines, recently listed Maine as one of top “move-in” destinations for 2021 (Van Allen, 2022). Flight from urban areas heavily impacted by COVID-19 and the advent of more options to work remotely are gasoline on a fire that was already smoldering as people in the U.S. push north and east fleeing droughts, fires, mega-storms, flooding, heat waves, and other effects of global climate change (Ropiek, 2021, Schauffler, 2021). Ironically, one of Maine’s best assets for absorbing atmospheric carbon—our forests—are being chipped away as more and more people move to the state.

The reaction to this challenge cannot be “no development.” Such a stance would be impractical and impossible to achieve. As noted at the beginning of this essay, many Maine communities are happy to welcome new residents to help bolster their tax base, grow their workforce, and fill the halls of their schools. Thoughtful development, coupled with appropriate conservation, however, should be forefront in the minds of city managers, municipal planners, and local and state officials as Maine attempts to adjust to real estate demands. 

The most intensive use of land occurs when every home is plotted on one to five acres (Brody, 2013). There are many who might prefer the way this kind of sprawl looks, compared to an urban setting. But, in reality, single family homes constructed in this pattern gobble up land, strain municipal infrastructure, and destroy habitat for most kinds of wildlife. A better alternative is to encourage rural “clusters” of homes while retaining large patches of conserved green and forested space. Even better is to continue to support the revitalization of Maine downtowns and encourage new and existing residents to occupy smaller dwellings closer to their workplaces, reducing commuting times and emissions.

Globally, forests absorb up to one-third of the annual carbon pollution that humans release by burning fossil fuels (International Union for the Conservation of Nature, 2021). But forests cannot do their job if they are converted to development, which is happening worldwide at a rate of nearly 25 million acres per year (Organization of the United Nations, 2020). Not all this loss is due to home development. Conversion of forests to agricultural land is a large contributor. Otherwise “green” initiatives such as the installation of solar farms also play a role. In Maine, though, forest conversion is driven mainly by residential and second-home development.

Last November, at the COP26 conference in Glasgow, Scotland, 114 global leaders pledged to halt or reverse deforestation in their home countries (Forde, 2021). Together, these nations—which include Australia, Brazil, China, Russia, the European Union, and the U.S.—represent 85% of the planet’s remaining forests. The Glasgow Leaders’ Declaration on Forests and Land Use emphasized the need for more forest conservation and financial incentives for sustainable forestry, as well as the need to support Indigenous rights (2021). 

When we hear about forests as a carbon sink, “we often think of the famous and well-known places such as the Amazon rainforests,” the Forest Society of Maine’s Karin Tilberg wrote in a letter featured in the Portland Press Herald (2021), reflecting on the outcome of the Glasgow conference, “But Maine forests are part of the solution, too.”

More than 70% of Mainers agree that climate change is a serious problem (Stacker, 2021). Studies have shown that the Gulf of Maine is warming at a rate 2.5 times faster than the global average for oceans—a change that will affect everything from fisheries to snow fall to the intensity of storms (Gulf of Maine Research Institute, 2021). As Mainers seek to mitigate the effects of carbon pollution, we must recognize that our forests are far more valuable to our collective climate future than the price that they can fetch on the market today.

 

---

Bibliography

Badgley, Grayson, Jeremy Freeman, Joseph J. Hamman, Barbara Haya, Anna T. Trugman, William R.L. Anderegg, and Danny Cullenward. “Systematic over-crediting in California’s forest carbon offsets program.” Global Change Biology 28 no. 4 (April 2021): 1433-1445. https://doi.org/10.1101/2021.04.28.441870.

Banks, John, Adam Bishop, Jerry Bley, Cathy Breen, John Bryant, Patrick Corey, Hugh Cowperthwaite, Lee Dassler, Jim Douglas, Tim Glidden, Julia Harper, Dennis Keschl, Don Kleiner, Alex Koch, Janet McMahon, Austin Muir, Liz Petruska, Nancy Smith, Alison Sucy, Wolfe Tone, David Trahan, and Chris Winstead. “Shaping the Next Generation of Land Conservation in Maine: Final Report from the Maine Land Conservation Task Force.” (2019). https://www.maineconservationtaskforce.com/.

Brody, Samuel. Nature Education Knowledge Project. “The Characteristics, Causes, and Consequences of Sprawling Development Patterns in the United States.” Accessed February 1, 2022. https://www.nature.com/scitable/knowledge/library/the-characteristics-causes-and-consequences-of-sprawling-103014747/.

Conservation International. “Carbon Credits: Protecting Forests, Climate, and Communities.” Accessed February 1, 2022. https://www.conservation.org/projects/carbon-credits#:~:text=The%20idea%20behind%20a%20forest,revenue%20being%20paid%20to%20local.

Drummond Woodsum, Attorneys at Law. “Passamaquoddy Tribe Closes Major Carbon Credit Sale.” News, December 12, 2017. https://dwmlaw.com/passamaquoddy-tribe-closes-major-carbon-credit-sale/.

Food and Agriculture Organization of the United Nations. “The State of the World’s Forests 2020.” Last modified December 23, 2020. https://www.fao.org/state-of-forests/en/.

Ford, James D. “Indigenous Health and Climate Change.” American Journal of Public Health 102 no. 7 (July 2012): 1260-1266. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3477984/.

Forde, Amy. “World Leaders Pledge to End Deforestation by 2030.” Irish Farmers Journal, November 3, 2021. https://www.farmersjournal.ie/world-leaders-pledge-to-end-deforestation-by-2030-658495.

Frank, Robert M. and John C. Bjorkbom. “A Silvicultural Guide for Spruce-Fir in the Northeast.” United States Department of Agriculture Forest Service Northeast Forest Experiment Station General Technical Report (1973). fs.fed.us/nrs/pubs/gtr/gtr_ne6.pdf.

French, Edward. “Tribal forest project helps slow climate change, generates revenue.” The Quoddy Tides, May 12, 2017. http://quoddytides.com/tribal-forest-projec-helps-slow-climate-change-generates-revenue5-12-2017.html.

Gulf of Maine Research Institute. “Gulf of Maine Warming Update: Summer 2021.” Last modified October 26, 2021. https://www.gmri.org/stories/gulf-of-maine-warming-update-summer-2021/.

Hill, Madeline. “Real Estate Sales Up 2.41 Percent in 2021; Prices Up 16.8 Percent.” Maine Association of Realtors, January 2, 2022. https://www.mainerealtors.com/wp-content/uploads/2022/01/MaineHousingReport-December21.pdf.

International Union for the Conservation of Nature. “Forests and Climate Change.” Last modified February 17, 2021. https://www.iucn.org/resources/issues-briefs/forests-and-climate-change#:~:text=Approximately%202.6%20billion%20tonnes%20of,absorbed%20by%20forests%20every%20year.

Mullany, Gary, Ernest Bowling, and David Stevens. “Maine Wood Volume and Project Study.” James W. Sewall Company Report (May 21, 2018). http://formaine.org/wp-content/uploads/2020/09/ME_Wood_Supply_FIA_Analysis_FINAL.pdf.

New England Forestry Foundation. “Neff Completes Downeast Conservation Project with 9,150 Acres Protected.” Into the Woods, June 30, 2021. https://newenglandforestry.org/2020/12/23/neff-protects-9150-maine-acres/.

Ogrysko, Nicole. “Maine home prices were up nearly 17% in 2021, another record-breaking year.” Maine Public, January 20, 2022. https://www.mainepublic.org/business-and-economy/2022-01-20/maine-home-prices-were-up-nearly-17-in-2021-another-record-breaking-year.

Pearce, Fred. “Is the ‘Legacy’ Carbon Credit Market a Climate Plus or Just Hype?” Yale Environment360, March 9, 2021. https://e360.yale.edu/features/is-the-legacy-carbon-credit-market-a-climate-plus-or-just-hype.

Rankin, Joe. “Exemplary Forestry: A New Paradigm for the Northeast’s Woodlands?” Forests for Maine’s Future, May 22, 2018. https://mainetree.org/2018/05/exemplary-forestry-a-new-paradigm-for-the-northeasts-woodlan-html/.

Rankin, Joe. “The Modern Sawmill: A High-Tech marvel.” Forests for Maine’s Future, December 21, 2011. https://mainetree.org/2011/12/the-modern-sawmill-a-high-tech-marvel-html/.

Ropeik, Annie. “Americans Are Moving to Escape Climate Impacts. Towns Expect More to Come.” NPR News, January 22, 2021. https://www.npr.org/2021/01/22/956904171/americans-are-moving-to-escape-climate-impacts-towns-expect-more-to-come.

Saffier, Jo D. “Governor’s Task Force on the Creation of a Forest Carbon Program: Final Report.” State of Maine Task Force on Climate Change, October 29, 2021. https://www.maine.gov/future/sites/maine.gov.future/files/inline-files/MaineForestCarbonTaskForce_FinalReport.pdf.

Schauffler, Marina. “Fleeing to Maine from Climate Disasters.” The Maine Monitor, December 24, 2021. https://www.themainemonitor.org/fleeing-to-maine-from-climate-disasters/.

Sharon, Susan. “Elliotsville Foundation Returns 735 Acres to Penobscots.” Maine Public, October 30, 2020. https://www.mainepublic.org/environment-and-outdoors/2020-10-30/elliotsville-foundation-returns-735-acres-to-penobscots.

Stacker. “Counties Most Concerned about Climate Change in Maine.” Stacker, September 2, 2021. https://stacker.com/maine/counties-most-concerned-about-climate-change-maine.

Tilberg, Karin R. “Maine Voices: Our State’s Forests Are a Vital Part of Our World’s Climate Solution.” Portland Press Herald, December 2, 2021. https://www.pressherald.com/2021/12/03/maine-voices-our-states-forests-are-a-vital-part-of-our-worlds-climate-solution/#:~:text=December%203%2C%202021-,Maine%20Voices%3A%20Our%20state’s%20forests%20are%20a%20vital,of%20our%20world’s%20climate%20solution&text=One%20significant%20outcome%20was%20the,or%20reverse%20deforestation%20by%202030. 

UN Climate Change Conference UK 2021. “Glasgow Leaders’ Declaration on Forests and Land Use.” Last modified November 2, 2021. https://ukcop26.org/glasgow-leaders-declaration-on-forests-and-land-use/.

University of British Columbia. “Biodiversity highest on Indigenous-managed lands.” ScienceDaily, July 31, 2019. www.sciencedaily.com/releases/2019/07/190731102157.htm.

USDA Natural Resources Conservation Service. “Conservation Stewardship Program: Learn More.” Accessed February 4, 2022. https://www.nrcs.usda.gov/wps/portal/nrcs/detailfull/national/programs/financial/csp/?cid=nrcseprd1288524.

Van Allen, Peter. 2022. “More Evidence That Maine Has Become a Move-in Destination.” Mainebiz, January 4, 2022. https://www.mainebiz.biz/article/more-evidence-that-maine-has-become-a-move-in-destination.

“With the Right Incentives, Maine’s Forest Landowners Could Be the next Big Carbon Offset Players.” New Project Media, January 29, 2021. https://newprojectmedia.com/news/n2xofmixkd3ucyu78goycebmq4fh8a.