In an article a while ago we asked ourselves if carbon storage, or carbon sink, have a financial value. The conclusion was that it actually has a value – in theory. But the question is if any forest owner actually gets payed for storing carbon?

Commodity exchange for ecosystem services

In the new commodity exchange, large forest owners are offered to trade so called ecosystem services, and not only wood. The Swedish company behind this idea is called Skogr Kaupa which means “buy forest” in ancient Nordic language.

Skogr Kaupa is a startup company that is a part of a development project called Bizmaker. The project is connected to forestry and is supported by SCA and IBM among others. The target is to automate and digitalize the process of evaluating ecosystem services.

The company describes the forest owners as “Natural capital owners” and claims that they should be able to double their income from the forest by identifying, verifying and certifying those values. But also find buyers that are interested in paying for ecosystem services like:

– Sustainable wood

– Carbon storage

– Biodiversity

– Ground

– Water

– Recreation

commodity exchange for ecosystem services

A wintery carbon storage in Sweden.
Photo: Per Jonsson

How will they work?

According to the CEO of Skogr Kaupa, Per Holger Dahlén, the company to begin with aims at forest owners who for different reasons are not very active in the forest. Communities, cities and regions who manages forests close to densely populated areas.

The offer to the forest owners is that they can get paid for environmental actions that they already do due to their certification. We are talking about large forest owners, forest companies and private owners that have at least 1 000 hectares of forest land. But Skogr Kaupa also considers working with forest owners’ associations in order to involve small forest owners in the offer as well.

commodity exchange for ecosystem services

Per Holger Dahlén, founder and CEO at Skogr Kaupa.
Source: Bizmaker.se

Certified forest owners

According to the FSC standard (Forest Stewardship Council), certified forest owners have to leave 10 % of their forest land for environmental development. A large forest company like SCA have left over 400 000 hectares in one way or another for this purpose. Skogr Kaupas idea is to find customers who are willing to pay for ecosystem services in those areas.

Per Holger Dahlén lists three categories of potential customers that either have to, are able to or wants to pay for this kind of service:

Companies that have to

Companies that have to compensate for their CO2 emission by buying carbon storage. Skogr Kaupa wants to offer the possibility to do that close to the customer’s home ground instead of at plantation projects far away, like in south east Asia. He mentions Volvo, SSAB and Cementa as examples of such companies in Sweden. It doesn´t have to be forest plantation. To favor biodiversity is also something that´s needed and that could fit in under “ecosystem services”.

In Sweden today, regional authorities demand that cut down forests, due to roads- or construction projects, has to be compensated by planting new forest or creating other environmental values somewhere else.

Private persons, organizations or companies that wants a “green” image

Many wants to contribute to a better environment. As image or just due to bad conscience. Skogr Kaupa offers a way to do that.

Investors

Dahlén claims that the value of ecosystem services will increase over time. If you can find a way to evaluate them, there will be a market for it.

Definitions

How “sustainable wood” is defined is a bit unclear. Skogr Kaupa says that they don´t want to interfere in that discussion and means that it´s up to researchers at universities to define that. Basically, the FSC standard should be good enough, but the impression is that Skogr Kaupa has to work on this to make it clear.

Wants to be largest in the World

Even though it all seems a bit blurry, plus the fact that this is a company who are still searching for financing to get the business going, the bar is laid: The aim is to be the largest trader in ecosystem services in the World. Before the summer 2021 they shall have closed their first major deal. We will let you know.