Carbon+

The Carbon+ team came together to address the problems of climate change and the economic marginalization of small landowners. 

It was quickly apparent there is a supply/demand imbalance in carbon markets -- there is soaring demand for carbon removals, as net zero commitments have grown >5X in the past 12 months, yet supply has hardly increased. This is true for small landowners generally, and especially for ranchers. Despite the fact that Project Drawdown highlights silvopasture (productive trees planted on pasture) as the highest potential agricultural intervention for carbon sequestration, there has been limited progress in scaling.

Carbon+ will unlock supply from small landowners by stacking revenue at scale from silvopasture, carbon, and ecosystem service markets through decision-support, tech-enabled verification, and $0 down financing. 

If scaled, our solution could meaningfully increase income for a majority of the 500,000 US small ranchers. Globally, it could impact hundreds of millions of smallholders.

Carbon+ lives at the intersection of two specific problems.

First, a supply shortage of high-quality, verified carbon credits. As net zero commitments have exploded (>5X increase in last 12 months), there has not been a corresponding supply scale-up that meets the new needs of sophisticated buyers: tech-enabled verification, removals (vs. avoided emissions), environmental and social co-benefits, and the ability to scale to 1M+ tons annually. Demand is only expected to continue to increase in the coming decade, with forecasts ranging from a 15-50X increase in market size in the next decade. Despite the fact that land-based offset projects represent the largest and most cost effective pathway to scaling offsets, supply has not scaled up. What’s more, small landowners of <1,000 acres -- despite being the majority of landowners in the US -- are virtually untapped in the supply scale-up, with estimates they represent <1% of carbon projects to-date.

Second, small landowners face a difficult economic situation. In a given year, typically median production income for farmers and ranchers in the US is negative. Pasture owners in particular face a difficult economic situation, with market rates below  $20/acre/year common.

Carbon+ unlocks supply of carbon offsets from small landowners by stacking revenue at scale from silvopasture (productive trees planted on pasture), carbon, and ecosystem service grants. 

We do this through our product, EarthStack, with the below functions:

1. Recommend land practices and forecast financials. In our hundreds of interviews, we have confirmed that there is interest in silvopasture, but limited knowledge of how to best deploy. EarthStack uses satellite imagery and site-specific geospatial analyses to make recommendations incorporating learnings from Extension Programs and the USDA.

2. Guide landowners through complex government programs and carbon markets. In most states, there are meaningful government grants that can offset the majority of the costs of silvopasture installations -- we help navigate these. Similarly, Carbon+ handles the carbon project development process, including aggregating landowners and project documents.

3. Enable financing. If necessary, Carbon+ will facilitate financing for ranchers who cannot pay out of pocket. This would be collateralized against future carbon income.

4. Monitor and verify carbon sequestered. Silvopasture has a benefit vs. natural forests -- the tree species and stand age is known, lowering uncertainty in remotely-sensed estimates. This enables Carbon+ to leverage our team’s expertise in remote sensing and machine learning to lower costs.

We are serving smaller landowners in the US, with a particular focus on owner-operator ranchers. Ultimately, these individuals are the primary custodians of land in the US, as pasture represents the largest single land use across the nation.

Currently, owner-operator ranchers face a difficult economic situation. In a typical year, median net income is negative, requiring ranchers to find off farm income. Depending on the location in the US, the baseline market rate for renting out an acre of pasture can be <$10/acre/year; in the US southeast (the market we are targeting for launch) average rates are ~$20. 

Carbon presents an opportunity to stack revenue and increase profitability. In our target regions, it would be possible to generate >$40/acre/year from carbon alone, while maintaining livestock operations. Despite this potential upside, small producers are currently unable to tap into this market for a few reasons:

1. Unaware of the existence of carbon markets.

2. Land too small. There are fixed costs associated with the traditional approaches to carbon projects (particularly for monitoring and verification). This prevents individuals with <1,000 acres from participating. 

3. Cash constraints. Putting trees in pasture requires investment, ranging from ~$100-1,000 per acre depending on location, species, and livestock protection required.

4. Operational complexity. It is complicated to run a silvopasture operation -- it is different from the traditional, segmented agricultural norms common in the US and requires knowledge and behavior change. 

Our design process in overcoming the above barriers has been in conjunction with ranchers themselves, along with related networks (namely, the USDA NRCS, Extension Programs, and agroforestry institutions). We have conducted dozens of human-centered design discovery interviews, each time testing different elements of EarthStack and gathering feedback from producers on the solution. In the coming months, we will be spending time physically with ranchers in our target regions.

Carbon+ is aligned with the first three dimensions, but is most closely tied to creating scalable economic opportunities.

Overcoming the problem of scaling carbon offset supply is enabled by increasing landowner economic opportunities through stacking revenue sources.

Our solution, EarthStack, spans the first three dimensions. Core to our model is our lower cost methodology for quantifying tree carbon in silvopasture installations. In order to meet the needs of large corporate buyers, smaller landowners must be aggregated. And finally, the only reason landowners have expressed interest in our solution is due to the ability to double or triple baseline economic profitability. 

We started as a concept early in 2021, and have since evolved into the prototype phase. At this point, we are conducting individual land analyses with potentially interested ranchers. We conduct their site specific analyses, suggest potential silvopasture interventions, forecast financials, and discuss potential pathways for implementation. Ultimately, the goal of this prototyping exercise is to develop a pilot program of ~100,000 tons CO2; we are in the process of lining up the supply (landowners) and demand (corporate buyer).

Two innovations:

1. We are pursuing a land practice, silvopasture, that has been demonstrated to be successful by indigenous communities many times over. However, it has been overlooked in modern, segmented agricultural systems particularly in the US.

2. We are leveraging remote sensing and machine learning to reduce the costs of monitoring and verification. In natural forest remote sensing, the key driver of uncertainty is the wood density. For a silvopasture intervention, you know the species and stand age, and therefore can significantly reduce the uncertainty of a remotely-sensed solution. This means that we can reach a remotely-sensed solution much faster, as fewer ground-truth data points are required to train the machine learning model.

We currently serve 0. Aiming for 10 landowners in the 2021-22 planting season. In 5 years, we are targeting tens of thousands of landowners.

4 (all part-time as we are graduate students)

The next phase for Carbon+ is to develop a pilot program of a small number of landowners, facilitated by a buyer contract.

It is hard to imagine a better ecosystem and environment to meet the goals of our pilot. It would provide credibility as we approach potential buyers, which in-turn will unlock landowners as they can have certainty in the project economics. Perhaps most importantly, we are excited to build a network with individuals with such a shared commitment to some of the biggest social and environmental problems we face as humanity.

The next phase for Carbon+ is to develop a pilot program of a small number of landowners, facilitated by a buyer contract.