One of the most common methods of generating carbon offsets is through forestry projects. These projects can take the form of reforestation (planting trees where a forest once stood), afforestation (planting trees in areas where they did not previously exist) or avoided de-forestation (preserving trees already present).

At the most basic level, forests affect climate by:

  • cooling the Earth by functioning as carbon sinks;
  • cooling the Earth by adding water vapor to the atmosphere and increasing cloudiness;
  • warming the Earth by absorbing a high percentage of sunlight due to the low reflectivity of forest's dark surfaces.

Trees can sequester (collect and trap) carbon through the process of photosynthesis, in which they convert carbon dioxide and water into oxygen and plant matter. Thus, as trees grow they remove carbon dioxide from the atmosphere. Although carbon is released back into the atmosphere if the tree or its lumber burns, so long as trees are able to grow back and replace those burned the end result will be carbon neutral.

In their 2001 assessment, the IPCC estimated that the potential of biological mitigation options (mainly tree planting) is on the order of 100 Gigatonnes of carbon by 2050. This would be equivalent to about 10% to 20% of projected fossil fuel emissions during that period.

Advocates of forestry projects argue that because 20-25% of human-caused emissions are due to land use change, any solution to climate change must address land use and de-forestation. Moreover, they stress that forestry projects can have additional socio-economic and environmental benefits, such as biodiversity conservation, and are often the only means for the very poor, particularly in Africa, to access the carbon markets.

Opponents of forestry projects, on the other hand, argue that forestry projects distract attention from the real problem, which is the world’s fossil-fuel based energy system. They have also noted the great difficulty and scientific uncertainty in accurately measuring carbon sequestration from trees. Finally, it is of significant concern to some that carbon sequestered in newly planted trees will ultimately be released again as carbon emissions when the tree dies and decays. Poorly planned or implemented forestry projects have in some cases been merely carbon neutral; in other cases they may have led to a net increase in carbon dioxide emissions (planting trees in some terrains can release existing carbon stores into the atmosphere).

While the cost-benefit ratio of tree-planting is complex, forestry projects are lower cost than many other means of generating offsets. The IPCC reports that "the mitigation costs through forestry can be quite modest (US$0.1–US$20 / metric ton carbon dioxide) in some tropical developing countries . . . The costs of biological mitigation, therefore, are low compared to those of many other alternative measures". As little as $90 will plant 900 trees, enough to annually remove as much carbon dioxide as is generated each year by the fossil-fuel usage of the average American citizen.

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