Selling a Credit for a Tree You Were Not Going to Cut

What an Offset Claims to Be

A carbon offset is a claim that one unit of greenhouse gas emissions was avoided or removed somewhere, which the buyer uses to counterbalance a unit it emitted.

Forestry is the largest category in voluntary markets, and the dominant project type is improved forest management: a landowner commits to harvesting less timber than they otherwise would, and the additional carbon stored in the standing trees generates credits.

The claim is therefore not that carbon was removed from the atmosphere by a new forest. It is that carbon was not released because a harvest did not occur. That distinction is the source of every difficulty that follows.

Additionality Is a Counterfactual

A credit is only meaningful if the emissions reduction is additional, meaning it would not have happened without the offset revenue. A payment for something that was going to happen anyway does nothing except transfer money and permit the buyer to keep emitting.

Establishing additionality in forestry requires demonstrating what the landowner would have done otherwise, which is unobservable. Project methodologies address this by constructing a baseline scenario describing the harvesting that would have occurred, and crediting the difference between that baseline and actual practice.

The baseline is an assumption, chosen by the project developer within methodology rules, and validated by a third party paid by the developer. Every party in that chain benefits from a baseline showing aggressive hypothetical harvesting, because a higher baseline produces more credits.

What the Investigations Found

Journalistic and academic investigations of large forestry offset programmes have repeatedly reached similar conclusions. Analyses comparing project areas against matched control forests found that a substantial share of credits from certain avoided deforestation projects did not correspond to measurable reductions in forest loss, because the baseline deforestation rates assumed had not materialised in comparable unprotected areas either.

In improved forest management, studies found projects enrolled on land already protected by conservation easement, in ownership by conservation organisations with no harvesting intent, or in terrain where harvesting was economically implausible.

The specific mechanism identified in several analyses was baseline inflation through the selection of unrepresentative reference regions, which is permitted within methodology rules and produces credits without behaviour change.

The Three Other Problems

Permanence. Carbon stored in a tree can be released by fire, disease, or a later harvest. Credits are issued as permanent claims against a store that is not permanent. Registries address this with buffer pools, withholding a share of credits as insurance against reversal. Wildfire losses in several regions have consumed buffer pool contributions faster than the pools were sized for, which raises the question of whether the reserve is adequate.

Leakage. If a landowner harvests less, and demand for timber is unchanged, harvesting increases somewhere else. Methodologies apply leakage deductions, and estimates of the true rate vary widely, with some analyses suggesting leakage can offset the majority of the claimed benefit.

Measurement. Estimating the carbon stored in a forest requires sampling and modelling, with real uncertainty bands. Credits are issued as precise integers.

Why It Matters Commercially

For companies using offsets in emissions claims, the reputational and regulatory exposure has risen considerably. Advertising regulators in several jurisdictions have challenged carbon neutral claims resting on offsets of contested quality, and consumer litigation has followed.

The market response has been differentiation. Buyers increasingly distinguish removal credits, where carbon is physically taken out of the atmosphere and durably stored, from avoidance credits based on emissions that did not occur. Removal credits are far more expensive, considerably scarcer, and much easier to verify, and demand has shifted toward them.

Standards bodies have also tightened methodologies and, in some cases, invalidated previously issued credits, which introduced a novel risk: an asset that was purchased in good faith and later declared not to be what it claimed.

What Would Actually Fix It

The structural fix is to break the link between the party benefiting from issuance and the party setting the baseline. Proposals include independent baseline setting by registries rather than developers, jurisdictional accounting that measures emissions across a whole region rather than project by project, and shifting entirely toward removals where the physical carbon can be measured.

None of these is simple, and the last one is expensive enough that it would substantially reduce the volume of offsets available, which is the honest reason it has not happened faster.

The Bottom Line

A forest carbon credit is a payment for a counterfactual, and the counterfactual is chosen by parties who are paid more when it is aggressive. That is the whole problem, and it explains why investigation after investigation finds the same pattern without anyone needing to be dishonest. The market is correcting toward removals, which can be physically verified, and away from avoidance, which cannot. Anyone buying offsets should treat the baseline methodology as the entire due diligence question, because it is.