Carbon Offsets and Tropical Trees

The issue of carbon offsets is very important in Europe, and slowly gaining ground in North America. In May of 2010 the public market for carbon offsets was around €16 Euros ($20 USD) per metric ton (2,204 lbs). I am going to show in this article why planting tropical trees is a much more cost effective method of carbon sequestration for a company or business seeking to offset its emissions, than is the purchase of carbon offsets in the public market. For that purpose I am going to use a hypothetical ABC Company that needs to purchase 10,000 metric tons (10,000,000 KG or 22,046,226 lbs) of carbon offsets every year to balance its emissions.

The average fast growing tropical tree, like Acacia mangium or Eucalyptus pellita, sequesters 22.6 KG or 50 lbs of carbon per year. That means that one would have to plant 442,478 tropical trees to balance 10,000 metric tons of emissions every year. In order to account for any losses of trees planted to disease, pests, drought or fire, I am going to round up that number to 500,000 tropical trees, providing an ample safety margin for ABC Company’s carbon offset requirements. The cost of planting and maintaining each tropical tree for carbon sequestration purposes for a period of 10 years is approximately €1 Euro per tree ($1.27 USD in May 2010). That means that ABC Company would have to spend €500,000 Euros or $635,000 USD to plant sufficient tropical trees to offset 10,000 metric tons of emissions for a 10 year period.

The reason for the 10 years is simply that the average tropical tree is most effective at carbon sequestration in the first 10 years of its life, after which its effectiveness declines. That is why organizations like CO2 Tropical Trees work and calculate how they balance emissions on the basis of a 10 year cycle. ABC Company may have one other additional expense of approximately $30,000 USD or €23,630 Euros to obtain carbon certification of the trees planted, should it require the same for legal, political or tax reasons. Needless to say, planting tropical trees in the Orinoco or Amazon basins of South America provides ABC Company with excellent public relations and advertising value as well, given ther increased consumer demand for “green” business conduct.

Now let’s compare these numbers to the cost of purchasing carbon offsets from the public markets. At €16 Euros per metric ton, ABC Company would have to spend €160,000 Euros every year for 10 years to offset its carbon emissions, or a total of €1,600,000 Euros ($2,032,000 USD). That is an amount that is more than 3 times higher than the cost of planting tropical trees to offset its emissions. This means that funding the planting of tropical trees is not only more cost effective than purchasing carbon offsets in the public markets, it is also better for the environment, as trees seed clouds, expand wildlife habitat, and have a significant impact on socio-economic conditions in developing countries like Colombia, Venezuela or Brazil. Tropical trees also remove a number of pollutants other than carbon from the atmosphere, and depending on the species used can greatly enhance soil fertility for permaculture activities. Organizations like CO2 Tropical Trees and Amazonia Reforestation, when planting for carbon sequestration purposes, also plant native tree species, whose conservation enhances global biodiversity.

Dexter B. Dombro, B.A., LL.B., is a former lawyer who is actively engaged in afforestation and reforestation projects in the Orinoco river basin of Colombia in South America. His web sites include http://www.co2tropicaltrees.com/ for carbon sequestration and http://www.myreforestation.com/, while his blog on investing in tropical trees can be found at http://co2tropicaltrees.blogspot.com/.  The plantations Dexter works with are also associated with the University of Alberta in Edmonton, Canada, and the Swiss-based NGO Weforest.

Six Groups of Profitable Native Tree Species

One of the exciting aspects of tropical tree plantations in the Orinoco basin are the many native tree species that have commercial value and potential. These tropical trees can be divided into 6 basic groups that lend themselves to profitable commercialization. In the case of Amazonia Reforestation, commercialization means collecting seeds from many of these native tree species, some of which are endangered, and discovering the best way to germinate them, how to sprout them in tree nurseries, how to prepare the soil for them, and when the best times to transplant them are. Some groups, like the world renowned Omacha Foundation, have already been experimenting with some of these issues, and Amazonia Reforestation is proud to be partnered with them as we establish our own natural reserve for the conservation and preservation of these wonderful native tree species. So what are the 6 groups?

The first group are those trees that can provide sawn lumber for both light and heavy construction, and for wood products like flooring, decking, plywood, crates and other common uses. The second group are those that are of such fine quality and grain that they are ideal for fine furniture, cabinetry and instrument making. The third group are those tropical trees that provide chips or pulp for paper and cardboard, excelsoir (packaging material), fibreboards, cement boards and similar uses. The fourth group are tropical trees that have a high calorific value, making them ideal for charcoal, briquets, and home heating and cooking. The fifth group are tropical trees that provide human food like fruits, nuts, seeds or saps, or fodder for animals, and which have local uses such as arts and crafts, tannin for curing leather, pigments, roofing materials (palms leaves etc.), dugout or canoe materials, and more. The sixth and final group are those tropical trees that offer natural, ayurvedic, naturopathic and aboriginal medicines, fragrances, insecticides, soaps and oils. All of the many diverse species in the Orinoco river basin have one thing in common, they support an amazing variety of endangered and other wildlife, birds (both local and migratory), insects, reptiles and amphibians.

Many of these tropical tree species are extremely fast growing (10 to 15 years to maturity), making them very attractive for commercial use. They provide additional benefits, because they are already adapted to poor soil conditions, nutrient depletion and high soil water content. They occur in both gallery forests found between the savannah and the riparian flooded forest or inundation forest, and the latter. Gallery and inundation forests are common to the Orinoco and its tributaries, like the Meta and the Rio el Bita. Sustainable and profitable socio-economic development must therefore include conservation, preservation and expansion of these forests, something our entire family is dedicated to achieving. Using native tree species in our afforestation and reforestation efforts will have a huge impact on local and migratory wildlife and birds, and can provide an essential gene pool for the future bio-diversity of our planet, which is rapidly diminishing due to mono-culture agro forestry practised in many other locations.

I am starting this blog to tell people about the low risk - high return opportunities offered by tropical trees. Despite the name, this blog is about more than financial investing. The way I see it, any time you fund the planting of tropical trees you are having a positive impact on the planet. Besides making money, tropical trees sequester carbon dioxide (CO²), provide employment to people in developing countries, feed and provide habitat to endangered wildlife, absorb pollutants, produce oxygen, are the source of numerous natural medicines and remedies, fix nitrogen in the soil, stop erosion, hold ground water and lift the spirits of humans on a planet with more and more people living on it all the time. The list continues, and it is my hope that I will be able to address all of these issues in the coming months.

First I guess in would be in order to introduce myself. My name is Dexter Dombro. I am a lawyer who had an epiphany one day and decided to do something useful with his life. I quit the law and started to work on affordable low cost housing for low income working families in Central America. This led to a fortuitous meeting with some folks in Colombia who wanted me to see some areas in the eastern plains of Colombia (the llano oriental or Orinoquía) that were ideal for afforestation and reforestation projects. I agreed and the next thing I new my wife and I became the owner operators of a tropical tree farm in the Departamento of Vichada, in Colombia. The tree farm is located along the banks of the Rio el Bita, which flows into the mighty Orinoco River, not far from the river port city of Puerto Carreño.

So everything I am going to talk about in this blog is based on first hand experience, a little bit of knowledge and a lot of passion. Perhaps the most exciting aspect, for some people, is the fact that tropical trees as an investment have consistently outperformed the world's stock markets since before the 1940's. This shouldn't really surprise anyone, because there are less and less forests available to logging companies and more and more people on the planet wanting wood products, for construction, furniture, pulp and paper, cooking fuel, natural remedies, arts and crafts, toothpicks and satay sticks and a zillion other uses. The bottom line is that demand exceeds supply, and is likely to continue to do so. I hope you will therefore enjoy my musings about investing, the science of tropical trees, life in Colombia, and the importance of creating habitat for endangered wildlife.