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Carbon Credits Increase Land Prices

In recent years, carbon credits have emerged as a powerful tool in the fight against climate change. They have not only helped companies reduce their carbon emissions but also opened up new opportunities for landowners to earn revenue from their land. This has the potential to significantly impact land prices and values. Bob Waun, a prominent real estate agent at Dirt Realty, has been closely following this trend and believes that carbon credits could be game-changers when it comes to the value of land.

Carbon credits are a type of tradable permit that allows companies to emit a certain amount of carbon dioxide or other greenhouse gases. Each credit represents one metric ton of carbon dioxide equivalent (CO2e) that has been avoided, reduced, or removed from the atmosphere. These credits can be bought and sold on carbon markets, which operate similarly to other financial markets.

According to a report by the International Emissions Trading Association (IETA), the global carbon market was worth $214 billion in 2020, up from $194 billion in 2019. The report also found that the market saw a 34% increase in trading volume, with over 6 billion metric tons of CO2e traded in 2020. This growth is expected to continue as more countries and companies commit to reducing their carbon emissions.

Landowners can earn carbon credits by adopting sustainable land-use practices such as reforestation, conservation, and regenerative agriculture. These practices help sequester carbon from the atmosphere, which can then be quantified and sold as carbon credits. This creates a new revenue stream for landowners and encourages them to adopt more sustainable practices on their land.

According to Bob Waun, "Carbon credits could be game-changers when it comes to land values. Land that can generate carbon credits will be more valuable than land that cannot." He believes that this will particularly benefit farmers who are struggling with low commodity prices and rising costs.

One example of how carbon credits can increase land values is the Chicago Climate Exchange (CCX). The CCX was the first voluntary carbon market in the United States and operated from 2003 to 2010. During this time, landowners who implemented sustainable practices such as no-till farming, reforestation, and conservation were able to earn carbon credits that were traded on the exchange. This created a new revenue stream for farmers and increased the value of their land.

A study by the National Agricultural Law Center found that the average value of CCX-registered farmland was $67.23 per acre higher than non-registered farmland in the same county. The study also found that the value of CCX-registered farmland increased by 35% from 2003 to 2008, while non-registered farmland increased by only 14%. These findings suggest that carbon credits can have a significant impact on land values.

In addition to increasing land values, carbon credits can also benefit the environment by encouraging sustainable land-use practices. This can lead to increased biodiversity, improved soil health, and reduced greenhouse gas emissions.

In conclusion, carbon credits have the potential to significantly impact land prices and values. Landowners who adopt sustainable land-use practices can earn carbon credits, creating a new revenue stream and increasing the value of their land. This trend is expected to continue as more companies and countries commit to reducing their carbon emissions. As Bob Waun suggests, carbon credits could be game-changers when it comes to land values.

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