1. Forest Certification - What does it mean for you?

2. Certified Sustainable Forest Management Systems The first step towards certified sustainable forest products Must conform to established principles and practices in forest management Third party certification and audit Intended to provide confirmation of sustainable, legal management of the forest and of the products coming from it.

3. Third Party Certification Goes beyond Im OK, Were OK to Theyre OK – an independent audit procedure. Underwriters Laboratories – the UL seal USDA food safety certification - USDA grade A American National Standards Institute – ANSI ISO certifications. Standards are set and products/operations audited to assure compliance.

4. Two Major Sectors: Forest Certification and Chain-of-Custody Certification Forest certification deals with forest management systems, impacts on communities and people, and the primary forest products produced – land ownership based. Forest certification deals with forest management systems, impacts on communities and people, and the primary forest products produced – land ownership based. Chain-of-custody certification tracks certified forest products from the forest, through the manufacturing process, to the consumer – product ownership based. Chain-of-custody certification tracks certified forest products from the forest, through the manufacturing process, to the consumer – product ownership based.

5. Some of the Certification Players Forest Stewardship Council – FSC Forest Stewardship Council – FSC Stated mission is to create a marketplace that promotes well- managed forests by ensuring forestry practices that are environmentally responsible, socially equitable, and economically viable. Stated mission is to create a marketplace that promotes well- managed forests by ensuring forestry practices that are environmentally responsible, socially equitable, and economically viable. > 60 Million acres in US > 60 Million acres in US

6. Sustainable Forestry Initiative – SFI Sustainable Forestry Initiative – SFI Stated Mission: The Sustainable Forestry Initiative (SFI) program is based on the premise that responsible environmental behavior and sound business decisions can co- exist to the benefit of landowners, manufacturers, shareholders, customers, the people they serve, the environment, and future generations. 94.2 million acres in US – 2007

7. American Tree Farm System – ATFS American Tree Farm System – ATFS 24 million acres of privately-held forest land Operating in the United States since 1941 Operating in the United States since 1941 Currently offers some group certification options Currently offers some group certification options Now has certification under an international program for forest certification systems – PEFC – Programme for the Endorsement of Forest Certification Schemes Now has certification under an international program for forest certification systems – PEFC – Programme for the Endorsement of Forest Certification Schemes

8. Why Be Certified? Independent confirmation that you use good management practices Independent confirmation that you use good management practices Access to certified product markets Access to certified product markets Opportunities for price premiums for some certified products Opportunities for price premiums for some certified products Access to other Green Access to other Green Markets Markets Public relations tool Public relations tool

9. Building Green – a driving force behind some certified forest products markets Green Construction Standards may specify or provide extra credit for using certified sustainable products from one or more certification systems: Green Construction Standards may specify or provide extra credit for using certified sustainable products from one or more certification systems: LEED LEED Green Globes Green Globes Others Others

10. Possible Downsides to Certification Costs to obtain and maintain certification Costs to obtain and maintain certification Increased record keeping Increased record keeping May limit your flexibility in management May limit your flexibility in management Someone will be looking over your shoulder Someone will be looking over your shoulder Uncertainty for the future of certification systems and markets – Uncertainty for the future of certification systems and markets – Who will be the top certifier? Who will be the top certifier? Will significant markets develop and last? Will significant markets develop and last? Will price and market access offset costs? Will price and market access offset costs?

11. Certification for Small Landowners Group Certification provides a lower, or in some cases, no cost option for certification of smaller ownerships Group Certification provides a lower, or in some cases, no cost option for certification of smaller ownerships You become certified as a member of a group You become certified as a member of a group Groups have a manager who assures compliance to the standard by members Groups have a manager who assures compliance to the standard by members Groups could be formed by: Forest Mgmt companyForest Mgmt company Landowners associationLandowners association SWCD or similar groupSWCD or similar group

12. Group Certification Opportunities Indiana Classified Forest and Wildlands program is being used to create group certification opportunities for individual forest landowners in the program. Indiana Classified Forest and Wildlands program is being used to create group certification opportunities for individual forest landowners in the program. The program has ATFS group certification and is seeking FSC certification for eligible lands in the program. Voluntary. The program has ATFS group certification and is seeking FSC certification for eligible lands in the program. Voluntary. Indiana Div of Forestry is covering the entry and annual costs of certification and will manage the group. Indiana Div of Forestry is covering the entry and annual costs of certification and will manage the group.

13. Group Certification Opportunities PEFC – Programme for the Endorsement of Forest Certification Schemes The American Tree Farm System (ATFS) program is now certified by the PEFC – Programme for the Endorsement of Forest Certification Schemes An independent, non-profit, non- governmental organization, founded in 1999 which promotes sustainably managed forests through independent third party certification. The largest forest certification system in the world.

14. Tree Farm certification requirements Management plan: The management plan requirements help streamline the process for Tree Farm owners to participate in USDA conservation incentive programs. The management plan requirements under the 2010-2015 Standards correlate with the US Forest Service guidelines for forest stewardship program forest management plans. Tree Farm management plans will address the following elements as appropriate: landowner objectives forest condition and health management activities/ prescriptions tract map soils and water resources wood and fiber production threatened and endangered species, high conservation value forests and other special sites invasive species and integrated pest management

15. Compliance with Laws Reforestation and Afforestation Air, Water, and Soil Protection – BMPs, pesticide use Fish, Wildlife and Biodiversity – T&E species Protect Special Sites - unique historical, archeological, cultural, geological, biological or ecological characteristics. Forest owner must monitor forest product harvests and other management activities to ensure they conform to the management plan objectives.

16. Certified Acreage in the Region Ohio is seeking FSC and SFI certification for state forests – 185,000 ac. Ohio is seeking FSC and SFI certification for state forests – 185,000 ac. Indiana has FSC and SFI on state forests – 150,000. ATFS on C.F. – 460,000 ac.+ and seeking FSC for C.F. Indiana has FSC and SFI on state forests – 150,000. ATFS on C.F. – 460,000 ac.+ and seeking FSC for C.F. Wisconsin has FSC and SFI on 2.9 MM acres of state and county forests. ATFS on 2 MM ac. private forest and seeking FSC. Wisconsin has FSC and SFI on 2.9 MM acres of state and county forests. ATFS on 2 MM ac. private forest and seeking FSC. Pennsylvania has 3.3 MM ac. state forest in FSC. Pennsylvania has 3.3 MM ac. state forest in FSC. Michigan has 3.9 MM ac. in FSC and SFI Michigan has 3.9 MM ac. in FSC and SFI

17. Developments Influencing Forest Certification Demand for certified products is trending up Demand for certified products is trending up Green Building legislation in many states – including IN, KY, OH Green Building legislation in many states – including IN, KY, OH Pressure from consumers to be Green Pressure from consumers to be Green Corporate desire to be seen as Green Corporate desire to be seen as Green Increasing specification for certified wood Increasing specification for certified wood THE BIG ? – is this a fad or is this a market trend? How much of the marketplace will it occupy? Increasing demand over 10 + years. THE BIG ? – is this a fad or is this a market trend? How much of the marketplace will it occupy? Increasing demand over 10 + years.

18. Contacts for Forest Certification Tree Farm: www.treefarmsystem.org or contact your local forester Tree Farm: www.treefarmsystem.org or contact your local forester PEFC: www.pefc.org/ PEFC: www.pefc.org/ FSC: www.fscus.org FSC: www.fscus.org SFI: www.aboutsfi.org SFI: www.aboutsfi.org

19. Your Friendly Local State Tree Farm Committee

20. Unconventional Opportunities – theyre not for everyone, but work for some.

21. Thank You! If you wish to contact me: Lenny Farlee, Extension Forester, Purdue University Dept of Forestry and Natural Resources lfarlee@purdue.edu 765-494-2153 Hardwood Tree Improvement and Regeneration Center Charles Michler, Director Pfendler Hall, 715 W. State Street West Lafayette, IN 47907-2061www.htirc.org

22. Carbon Markets for Conservation Carbon sequestration programs offer private landowners an opportunity to access $ for certain conservation practices Carbon sequestration programs offer private landowners an opportunity to access $ for certain conservation practices The Chicago Climate Exchange provides a market trading platform for sale and purchase of Carbon Offset Credits, while producing verifiable reductions in carbon emissions from members The Chicago Climate Exchange provides a market trading platform for sale and purchase of Carbon Offset Credits, while producing verifiable reductions in carbon emissions from members

23. How the CCX works Entities voluntarily agree to reduce carbon emissions through time Entities voluntarily agree to reduce carbon emissions through time Part (but not all) of the reduction can be from purchased offsets Part (but not all) of the reduction can be from purchased offsets Practices that sequester carbon can be registered to sell accumulated carbon as verified offsets Practices that sequester carbon can be registered to sell accumulated carbon as verified offsets Most landowners must work through an aggregator to sell their carbon on the CCX exchange Most landowners must work through an aggregator to sell their carbon on the CCX exchange

24. Types of Carbon Offsets Tree Planting – urban and afforestation Tree Planting – urban and afforestation Grassland planting Grassland planting No-till farming No-till farming Managed forest lands Managed forest lands Range mgmt Range mgmt Methane capture Methane capture

25. Eligibility Afforestation- tree planting or natural regen Afforestation- tree planting or natural regen. Must have occurred since Jan. 1, 2003 on land previously non-forested or degraded for at least the previous 10 years. Must have occurred since Jan. 1, 2003 on land previously non-forested or degraded for at least the previous 10 years. Contract to maintain the project in forest for 15 years Contract to maintain the project in forest for 15 years Managed Forest – NIPF land Must be sustainably certified – SFI, FSC, or ATFS group certification Must be sustainably certified – SFI, FSC, or ATFS group certification Inventoried to establish baseline carbon Inventoried to establish baseline carbon Letter of intent to maintain certified sustainable management for 15 years Letter of intent to maintain certified sustainable management for 15 years

26. What is Carbon Worth? A metric ton of carbon (2200lbs) was worth $1.80 to $1.90 on 10/1/08 (CCX quote) A metric ton of carbon (2200lbs) was worth $1.80 to $1.90 on 10/1/08 (CCX quote) Some annual carbon sequestration values per acre: Some annual carbon sequestration values per acre: Tree plantations – 1 to 3 tons Tree plantations – 1 to 3 tons Managed forest – 1 to 3 tons Managed forest – 1 to 3 tons Grass plantings – 1 ton Grass plantings – 1 ton Conservation tillage – 0.6 ton Conservation tillage – 0.6 ton

27. Who can help me sell my carbon? Aggregators work with individuals to develop pools of carbon that can be sold Aggregators work with individuals to develop pools of carbon that can be sold Delta Institute: www.deltacarbon.org 312 554-0900 Delta Institute: www.deltacarbon.org 312 554-0900 AgraGate: http://www.agragate.com/ 866 633-6758 AgraGate: http://www.agragate.com/ 866 633-6758 National Farmers Union: http://www.nfu.org 701-952-0116 National Farmers Union: http://www.nfu.org 701-952-0116 FORECON: http://www.foreconinc.com 616 874-9934 FORECON: http://www.foreconinc.com 616 874-9934

28. The Fine Print Some expected fees to deduct from your income off carbon- Some expected fees to deduct from your income off carbon- CCX charges $0.20 per ton of carbon traded CCX charges $0.20 per ton of carbon traded Your aggregator will generally charge a commission on carbon sales – 10% is normal Your aggregator will generally charge a commission on carbon sales – 10% is normal Verification fees are generally shared by the members of the carbon pool being sold – your share will depend on the relative size of your practice in the carbon pool. Verification fees are generally shared by the members of the carbon pool being sold – your share will depend on the relative size of your practice in the carbon pool. 20% holdback of annual carbon sequestration to cover potential losses – released at contract end 20% holdback of annual carbon sequestration to cover potential losses – released at contract end

29. Considerations in Selling Carbon Agricultural, grassland planting, and afforestation carbon offset credits are relatively easy to access Agricultural, grassland planting, and afforestation carbon offset credits are relatively easy to access Extra income for good land conservation Extra income for good land conservation Managed Forest program is limited by sustainable certification requirements and cost of inventory – probably only feasible for larger forest holdings: 100+ acres? Managed Forest program is limited by sustainable certification requirements and cost of inventory – probably only feasible for larger forest holdings: 100+ acres? Annual reporting is required – you may be audited to assure compliance Annual reporting is required – you may be audited to assure compliance