A recent webinar brought together leaders from ClearBlue Markets, Finite Carbon, and Inlandsis Fund to shed light on the critical elements defining high-integrity Improved Forest Management (IFM) projects. From initial design to market dynamics and tangible real-world impacts, the discussion underscored a market increasingly rewarding projects that deliver not only carbon benefits but also significant ecological and social co-benefits.
Improved Forest Management (IFM) projects are rapidly gaining traction in the global carbon markets, with a growing emphasis on project quality and robust pricing mechanisms. The session, moderated by Vaibhav Jain, Director of Offset Projects at ClearBlue Markets, provided a comprehensive overview of what constitutes a high-quality IFM project in today's discerning market.Distinguishing Improved Forest Management from Conventional Forestry
Juan Manuel Cardona Granda, Associate Director of Nature-Based Solutions at ClearBlue Markets, explained the fundamental distinctions between IFM and traditional forestry. While conventional forestry primarily aims to maximize timber yield through methods such as clear-cutting and short harvest rotations, IFM projects pivot their focus to carbon sequestration and storage within existing forests. Cardona Granda highlighted that IFM is one of several nature-climate solutions, but uniquely requires already-standing forests to be eligible, differentiating it from afforestation (removals) and REDD+ (avoided deforestation in tropical countries).
Key practices that define IFM include:
- Extending harvest rotations: Delaying cuts for years or even decades.
- Implementing selective harvesting or reduced impact logging techniques: Moving away from clear-cuts.
- Setting aside previously logged (or earmarked for logging) areas for protection: Effectively converting them into conserved zones.
- Prioritizing a wide range of ecosystem services: Beyond just timber, this includes biodiversity, water quality, water regulation, and soil health.
- Utilizing less impactful harvesting methods: Such as "original fading" and improved tree cruising to identify commercial trees while leaving others in place.
- Adopting comprehensive protection measures: Avoiding steep slopes, establishing riparian and buffer zones, and employing a high carbon stock approach to create corridors for forest ecosystem continuity.
- Managing tree growth: Through extended rotations, protecting crop trees, and precise thinning techniques.
(Griscom, B. W., & Cortez, R. (2013). The case for improved forest management (IFM) as a priority REDD+ strategy in the tropics.
Tropical Conservation Science 6, 409–425. https://doi.org/10.1177/194008291300600307)
Core Principles of High-Quality IFM Projects
To be considered high-quality in the carbon market, IFM projects must adhere to several fundamental principles that ensure their integrity and long-term impact.
Dynamic Baselines: The Future of Carbon Markets
A cornerstone of high-quality IFM is the adoption of dynamic baselines, which ClearBlue Markets regards as the future not only for IFM but also for afforestation and REDD+ projects. A baseline traditionally represents the carbon level that would exist in the absence of a project. However, dynamic baselines enable periodic adjustments to account for future changes, such as shifts in climate, the emergence of nearby forestry or agricultural projects, and technological advancements. This adaptability ensures that the claimed carbon benefits are genuinely "additional" and accurately reflect evolving market conditions or regional logging practices over time.
David Stevenson, Acting President and COO at Finite Carbon, noted that while dynamic baselines can introduce some financial uncertainty for landowners, they also offer the potential for projects to generate more credits if regional economic conditions or common practices become more favorable. He also clarified that dynamic baselines primarily affect the assumptions underlying baseline numbers, not the numbers themselves, allowing for reductions or increases based on market dynamics like mill closures or increased harvesting. Stevenson also noted that dynamic baselines can sometimes be applied voluntarily to older projects.
Community Participation and Indigenous Engagement
Proper and culturally appropriate engagement with communities, especially Indigenous and traditional communities, is paramount. Their centuries of knowledge regarding forest management are highly valued, extending beyond scientific knowledge to embrace traditional wisdom. Keeping these communities informed and engaged fosters their buy-in and support, which is crucial for ensuring the long-term permanence of forest assets, a commitment that can span decades to centuries. This involvement includes respecting rights, ensuring equitable benefit sharing, and delivering enhanced conservation outcomes. Free, Prior, and Informed Consent (FPIC) is particularly vital during the initial stages of a project.
Additionality and Beyond Business-as-Usual Practices
A project must clearly demonstrate that the carbon benefits it generates would not have occurred without the incentive provided by the project. Jamie Callendar, Managing Director at Inlandsis Fund, emphasized financial additionality, where carbon revenues are indispensable for a project's viability. He highlighted that the acquisition of land specifically with carbon finance can significantly strengthen the additionality argument, especially if the land was previously at risk of intensive harvesting. Callendar also noted that buyers are discerning and demand robust additionality, meaning the carbon benefit wouldn't have happened without the project.
Permanence and Durability of Carbon Storage
For a carbon project to provide genuine climate benefit, the carbon sequestered must remain stored for a substantial period. High-quality projects incorporate mechanisms to mitigate risks of reversal, such as buffer pools or insurance, rigorous monitoring and adaptive management, and legal agreements like conservation easements that protect forests in perpetuity. Inlandsis Fund, for example, avoids fire-prone areas and favors conservation-type projects that use legal tools like conservation easements to reduce permanence risk. A "Forever Wild" easement, for instance, ensures no commercial harvesting and protects lands in perpetuity, while often allowing for public recreation.
Rigorous Monitoring, Reporting, and Verification (MRV)
The MRV process is crucial for building trust and credibility in the generated carbon credits, assuring buyers that the stated climate benefits are real and achieved. Modern approaches increasingly use dynamic performance benchmarks derived from national forest inventories to allocate credits and prevent over-crediting, particularly for IFM and REDD+ projects. Advances in technology, such as LIDAR, are significantly accelerating monitoring processes and improving project credibility by enabling faster data collection and adaptation to dynamic baselines.
Addressing Leakage Risks
Leakage occurs when project activities displace harmful emissions or activities to areas outside the project boundary. There are two primary types:
- Activity-based leakage: Happens when restrictions on one part of a property lead to increased harvesting elsewhere on the same landholding. This is largely mitigated in larger registries' protocols by requiring sustainable forest management certification across the entire property, thereby preventing a shift in logging within the same landholding. David Stevenson stated that this type of leakage is not a major risk in IFM projects that use protocols from larger registries.
- Market-based leakage: Refers to the risk that a company might simply find alternative areas to harvest if a project protects certain forests, thus having no additional regional carbon effect. Protocols address this by deducting a flat percentage of generated credits (e.g., 30-40% in ACR, 60-70% in BC/Canadian protocols for harvested wood products, with the end result being about 30-40% of credits set aside for market leakage). Strategies to mitigate leakage also include using a jurisdictional approach, regional analysis, promoting community development and capacity building, and encouraging sustainable sourcing of materials.
Ecological Integrity and Co-benefits
High-quality IFM projects are increasingly moving biodiversity from an afterthought to a key outcome of forest management. These projects deliver a wide range of environmental and social benefits beyond just carbon and timber. These co-benefits include biodiversity enhancement, improved water quality and regulation, soil health improvement, community and social benefits, and recreational opportunities. Such projects should foster healthy ecosystems that are resilient to disturbance, ensuring natural regeneration and stable carbon stocks for decades or centuries. Buyers in the Voluntary Carbon Market (VCM) actively seek credits from projects demonstrating strong environmental safeguards and co-benefits.
Social Safeguards
Beyond environmental benefits, high-quality projects integrate social safeguards to protect the rights and livelihoods of local communities. This ensures that communities receive rightful benefits and are genuinely involved and engaged in the project, which is critical for project durability and effectiveness. Projects that fail to implement robust social safeguards risk significant reputational damage, often leading to accusations of "greenwashing".
Market Trends and Investor Perspectives
The carbon market is increasingly signaling a robust demand for high-quality IFM credits. Marcela Vera, Manager of Carbon Project Development at ClearBlue Markets, discussed IFM credit pricing trends and market signals. According to ClearBlue's intelligence platform, ClearBlue Vantage, IFM removal credits currently have a spot price of approximately $25.00 USD, with projections for December 2035 indicating a significant increase, potentially doubling or more to around $73.15 USD. IFM avoidance credits are currently priced lower, at $14.50 USD, with similar projections for doubling by December 2035 to around $42.43 USD, though these projections are subject to change as the market rapidly evolves and new standards emerge.
The projected demand for nature-based solution (NBS) removals, which encompasses high-quality IFM projects, is expected to exceed 60 million credits annually by 2040, a threefold increase from 2023 levels (17 million credits). This growth is attributed to a steady 0.5% annual increase in usage and a 1% yearly decline in overall emissions.
Jamie Callendar noted a market challenge where some buyers prefer removals-only projects as a "safe option," making it harder to sell projects that have a blend of avoidance and removals. However, Callendar emphasized that avoidance credits are crucial for financing projects in their early years due to their immediate cash flow contributions. Projects with a heavily back-weighted crediting profile, like pure afforestation projects, are much harder to finance for investors and often higher risk than IFM. David Stevenson added that buyer fear regarding avoidance credits, often stemming from reputational risk, is "overblown." He anticipates that newer protocols and labeling from initiatives like the Integrity Council for the Voluntary Carbon Market (ICVCM) will increase market confidence and demand for these credits.
As an investor, Inlandsis Fund provides upfront capital for projects and seeks IFM, or other projects, that demonstrate strong additionality. They seek projects where carbon revenues are critical to project viability, such as those involving land acquisition where the counterfactual (intensive harvesting) is stronger. Inlandsis also favors projects that enhance permanence through legal tools like conservation easements that protect land in perpetuity, and they stay away from fire-prone areas. Furthermore, they look for projects that address other barriers, such as those involving smaller properties, non-profits, or First Nation groups, which have a more compelling need for carbon revenues compared to larger timber management organizations. Callendar stated that dynamic baselines are "definitely the direction the market is going," with buyers indicating a preference, though the exact pricing premium is still unclear. He also noted the market's "ruthless" nature with little grandfathering of older protocol versions, pushing projects to adopt the newest standards, if feasible.
Real-World Examples of High-Quality IFM Projects
Both Finite Carbon and Inlandsis Fund provided compelling examples of high-quality IFM projects that showcase the diverse impacts of such initiatives.
Finite Carbon's Notable Projects: Finite Carbon, the largest developer of nature-based solutions globally by volume, has developed and sold over 100 million tons of IFM credits since 2009, with approximately half of their project volume stemming from Indigenous projects in North America. They are actively involved in certification programs for partnerships with Indigenous groups.
- The Northeast Carry Woodlands Project in Maine, anticipated to be the first ACR 2.1 removals-only project to market, demonstrates that significant land areas are often required for such projects to be economically viable.
- The Batchawana Bay Project in Sault Ste. Marie, Ontario, exemplifies strong ecological impact. Here, the landowner, after decades of logging, suspended harvesting, closed roads, and pulled culverts to actively improve biodiversity. This land base strategically links Indigenous lands, parks, and conservation areas, creating significant ecological corridors.
- The Passamaquoddy Project in Maine, an Indigenous community project, highlights profound social impact. The tribe has utilized carbon revenues to support the community through investments in operations, drinking water facilities, financial distributions, healthcare, housing conditions, and substance abuse programs, and even legal capacity to engage with the state. This demonstrates how carbon projects can generate benefits far beyond emissions reductions, fostering new economic opportunities, such as the tribe's investment in their maple syrup operation to sell branded maple candy and fancy bottles.
Inlandsis Fund's Innovative Financing Models: Inlandsis Fund has a diverse portfolio of GHG reduction and removal projects, including IFM projects, and is actively seeking new project investments for its second fund, which is roughly 50% deployed so far.
- The Woodbury, Vermont, conservation project, developed in partnership with the Northeast Wilderness Trust (NEWT) and Anew, illustrates strong additionality and permanence. Inlandsis's carbon finance enabled NEWT to acquire approximately 6,000 acres from a private timber company under a tight timeline. The carbon offsets are the sole source of ongoing revenue for this project, helping to create the largest non-governmental protected wilderness area in Vermont. The project also boasts high biodiversity, featuring 39 miles of headwater streams, critical habitat for various wildlife (bears, bobcats, moose, beavers, etc.), and is located in Vermont's only "Important Bird Area" of global significance. Funding also supports wildlife monitoring by NEWT's ecology team.
- The Wildlands Carbon Initiative is an innovative aggregation program involving numerous small properties (as small as 75 acres up to a couple thousand) across three Northeast U.S. states. NEWT coordinates enrollment of properties from other regional land trusts, and Greenline Climate (a subsidiary of Spatial Informatics Group) manages carbon development. Inlandsis provides upfront capital to finance conservation activities, including direct payments to participating land trusts. These properties are managed under "Forever Wild" conservation easements, prohibiting commercial harvesting and ensuring pure conservation, while allowing public non-mechanized recreation. The project achieved its first issuance of nearly 70,000 credits in early 2025 and has sold its first credits. A key carbon market challenge for such small projects is that they generally rely on a combination of avoidance credits and removals credits, since removals-only projects are generally only economically viable with very large land areas.
The collective message from these industry leaders underscores that high-quality IFM projects must consistently demonstrate strong integrity, deliver diverse co-benefits (environmental and social), and offer reliable permanence to attract investors and effectively meet the burgeoning market demand for nature-based solutions. The evolution of protocols, particularly dynamic baselines and increased scrutiny, is enhancing the credibility and value of these projects in the ever-evolving carbon market.
Concerns over permanence – focused on the chance that carbon stored in forests and other ecosystems might one day be released – have become a red herring. The relevant question isn’t whether risk exists but whether it can be understood, managed and compensated for. The future of NbS, including of course IFM, should focus on durability: how long carbon remains out of the atmosphere for a given intervention, what mechanisms exist to manage the risk of its return and what scale of implementation would be needed to realize climate benefits given those realities.
This is how society handles risk in nearly every domain – from finance to engineering – and the same principle applies here.