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Malcolm Knapp Tree Top Down Business and Management Plans Demille, Greg; Hodgins, Jesse; Majidian, Maryam; Molander, Mariko; Thy, Emilie 2010

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         SEEDS Student Reports    1  UBC Social, Ecological Economic Development Studies (SEEDS) Student Reports          Malcolm Knapp Tree Top Down Business and Management Plans Greg Demille Jesse Hodgins Maryam Majidian Mariko Molander Emilie Thy University of British Columbia FRST 424 April 2010          Disclaimer: “UBC SEEDS provides students with the opportunity to share the findings of their studies, as well as their opinions, conclusions and recommendations with the UBC community. The reader should bear in mind that this is a student project/report and is not an official document of UBC. Furthermore readers should bear in mind that these reports may not reflect the current status of activities at UBC. We urge you to contact the research persons mentioned in a report or the SEEDS Coordinator about the current status of the subject matter of a project/report.” 1 | P a g e            Greg Demille, Jesse Hodgins, Maryam Majidian, Mariko Molander, and Emilie Thy BUSINESS REPORT FOR MALCOLM KNAPP RESEARCH FOREST 2010   2   Business Report for Malcolm Knapp Research Forest 2010 Executive Summary  The recent economic downturn has had an overall adverse affect on market conditions, and the forest industry in particular has suffered as a result. The Malcolm Knapp Research Forest (MKRF) has been negatively affected by the decrease in log, timber, and wood product prices, and is seeking to explore financial prospects through the emerging carbon market while maintaining its current business endeavors.  This business plan has been prepared in conjunction with MKRF: Carbon Management Plan, with the objective of evaluating the economic feasibility of scenarios which have been developed by TreeTop Down Solutions. The scenarios were specifically developed in the management plan to pursue revenue- generating potentials within the emerging carbon market while maintaining and balancing several other objectives and interests, including log and timber sales. The three scenarios considered in this report include the following: No Harvest, Extended Rotation, and Select Seed. These scenarios are compared to the 2007 Base Case, which serves a datum to measure net change in carbon stocks (i.e. additionality). An overall positive gain in carbon pools leads to the generation of carbon credits, which can be sold to regulatory and voluntary carbon markets. It was determined that the Extended Rotation scenario best meets MKRF’s objectives and interest as well as being economically feasible. The financial analysis indicates that the net present value of this scenario yields approximately $8M in profits, using a 6% discount rate. A general overview of MKRF’s current business is provided, and timber and carbon market trends are discussed to provide the quantitative context for the financial analysis. To open up market opportunities within the regulatory market, third party certification through the Sustainable Forest Initiative (SFI) is considered.  Risks associated with the proposed ventures are also discussed. A financial analysis is presented for each scenario to evaluate the potential profit which can be generated within the carbon and/or timber market. Due to the uncertainty surrounding both of these markets, a sensitivity analysis is also provided to evaluate the effect on profit potential using different discount rates which are indicators for different levels of risk tolerance. Lastly, the current emissions of the University of British Columbia (UBC) are discussed and compared to the total number of carbon credits produced by each scenario.         3   Business Report for Malcolm Knapp Research Forest 2010 Contents Executive Summary ............................................................................................................................................ 2 List of Figures ..................................................................................................................................................... 4 List of Tables ...................................................................................................................................................... 4 Acronyms and Abbreviations ............................................................................................................................. 4 1.0 General Company Description ............................................................................................................... 5 1.1 Business Description .......................................................................................................................... 5 1.2 Key Objectives .................................................................................................................................... 5 1.3 Report organization ........................................................................................................................... 5 2.0 Markets .................................................................................................................................................. 6 2.1 Timber ................................................................................................................................................ 6 2.2 Carbon ................................................................................................................................................ 8 2.3 Market Opportunities ........................................................................................................................ 9 2.3.1 Third Party Certification ........................................................................................................... 10 3.0 Risks ..................................................................................................................................................... 11 3.1 UBC ................................................................................................................................................... 11 3.2 Opportunity costs – Increasing Prices .............................................................................................. 11 3.3 Abiotic and biotic disturbances ........................................................................................................ 11 3.4 Carbon modeling vs. ground verification ......................................................................................... 11 4.0 Scenario Financial Analysis .................................................................................................................. 12 4.1 Timber Analysis ................................................................................................................................ 12 4.2 Carbon Analysis ................................................................................................................................ 14 4.2.1 PCT ........................................................................................................................................... 15 4.2.2 Voluntary Carbon Market ........................................................................................................ 16 4.3 Combined Profit Analysis ................................................................................................................. 16 5.0 Sensitivity Analysis ............................................................................................................................... 17 6.0 Offsetting UBC’s Emissions .................................................................................................................. 18 7.0 Recommendation ................................................................................................................................. 19 8.0 References ........................................................................................................................................... 20 9.0 Appendix .............................................................................................................................................. 22 9.1 PCT Additionality to 2007 Base Case ............................................................................................... 22 8.2 VCS Additionality to 1990 Base Case ............................................................................................... 23   4   Business Report for Malcolm Knapp Research Forest 2010 List of Figures Figure 1: The US lumber prices per thousand board feet from 1985-2009 ....................................................... 6 Figure 2: Timber harvesting revenue 2002-2011 ............................................................................................... 7 Figure 3: Timber harvest volume (m3) 2002-2011 ............................................................................................. 7 Figure 4: Annual volumes (Mt CO2E) of project-based emission reductions transactions ................................ 8 Figure 5: Carbon response to the recession ...................................................................................................... 8 Figure 6: Credit price ranges and averages by project type .............................................................................. 9 Figure 7: Total ecosystem carbon stored over time ........................................................................................ 14  List of Tables Table 1: Total delivered log costs per cubic metre .......................................................................................... 13 Table 2: Net present value of profits generated by timber sales .................................................................... 13 Table 3: Costs associated with validation and verification .............................................................................. 14 Table 4: Costs associated with SFI certification ............................................................................................... 15 Table 5: Net present value of carbon profit for each scenario - PCT ............................................................... 15 Table 6: Net present value of carbon profit for the No Harvest scenario - VCM ............................................ 16 Table 7: Total scenario profit ........................................................................................................................... 17 Table 8: Sensitivity analysis of timber sales profit ........................................................................................... 17 Table 9: Sensitivity analysis for carbon profits - PCT ....................................................................................... 18 Table 10: Sensitivity analysis for carbon profits - VCM.................................................................................... 18 Table 11: Amount of carbon credits produced and the associated potential revenue ................................... 19 Acronyms and Abbreviations AFOLU  Voluntary Carbon Standard Guidance for Agriculture, Forestry, and Other Land Use Projects BC  British Columbia CBM-CFS3 Carbon Budget Model of the Canadian Forest Sector CO2E  Carbon Dioxide Equivalent CSA  Canadian Standards Association FPS-Atlas Forest Planning Studio-Atlas FSC  Forest Stewardship Council GHG  Greenhouse Gas MKRF  Malcolm Knapp Research Forest PCT  Pacific Carbon Trust  US  United States VCM  Voluntary Carbon Market  5   Business Report for Malcolm Knapp Research Forest 2010 1.0 General Company Description 1.1 Business Description Malcolm Knapp Research Forest (MKRF) is an operational forest located in Maple Ridge, British Columbia (BC). An area of approximately 5,136 hectares was granted by the Province of British Columbia in 1949 and remains in UBC’s private ownership. In order to maintain the deed, the University must maintain research and education opportunities at MKRF. A small staff –partly comprised of UBC alumni— aim to sustainably manage the research forest and its interests.  MRKF aims to balance forest operations, research opportunities, and educational facilities.  Log and timber sales previously dominated the research forest’s revenue stream, but have been less prevalent in recent years. In addition to log sales, milling is sub-contracted out to Gallant Enterprises who operates within the MKRF and strives to retain value through the milling and sales of value-added wood products. However, MKRF has suffered with the recent economic downturn, which has created a need for a shift in MKRF’s dependence on forest operations.  Recently, logging revenue has been supplemented by revenues generated from the Loon Lake Research and Education Centre. The facility and its services make up approximately half of MKRF’s revenue, and this is expected to increase with future developments (Lawson, Financing the Research Forests, 2010).  The Centre hosts a variety of events including children’s camps, conferences, tours and retreats.  Its most notable event is the Canadian Cancer Society’s Camp Goodtimes, which provides children and teens with a safe camp experience.  MKRF will continue to maintain the Loon Lake facility, and hopes to continue the generation of revenue through its log and timber sales; however, at this juncture, MKRF seeks to explore opportunities to further supplement its income through participation in the emerging carbon market.  1.2 Key Objectives TreeTop Down Solutions was given the task to investigate new management strategies and initiatives to increase MKRF’s current revenue stream. Through consultation with our clients, it was suggested that TreeTop Down explores the generation of carbon offset credits to boost MKRF’s economy. It is believed that carbon offsetting could provide MKRF with an additional source of revenue without compromising current forest operations, camp operations, or fulfillment of the research mandate. The objective of this document is to deliver an analysis of the financial benefits associated with entering into the carbon market, while balancing the other business interests and goals of MKRF.  1.3 Report organization Firstly, the market section discusses trends in the timber and carbon industries. Moreover, this section relates MKRF’s interests in these industries. The following section discusses the financial results of the 2007 Base Case and three carbon management scenarios. Viable scenarios include the No Harvest, Extended  6   Business Report for Malcolm Knapp Research Forest 2010 Rotation, and Select Seed scenarios. These scenarios have considered the economic, environmental and social constraints imposed on MKRF (see MKRF: Carbon Management Plan); however, but for the purpose of this report, an emphasis has been placed on the profitability and long-term flexibility of the scenarios. Thirdly, due to the considerable risks associated with the proposed ventures, a sensitivity analysis was developed to enable the client to evaluate their risk tolerance. Finally, UBC’s carbon neutrality targets and associated offset requirements are considered and related to the offsets produced by the carbon management scenarios.  It should be noted that Loon Lake Research and Education Centre is excluded from this financial analysis, as it is independent of the commercial forest operations or carbon offset projects.   2.0 Markets  Both timber and carbon markets have been considered due to the synergy that exist between the two fields. The following section demonstrates the combined net benefit of managing these two resources.  2.1 Timber  BC’s forest industry is highly dependent on its neighbors to the south in the United States (US). Approximately 81% of the industry’s wood products (i.e. lumber and logs) are exported to the US; remaining exports are shared between Asia, Europe and other countries (Woodbridge Associates, 2009). In recent history, lumber and log prices have been in steady decline. Figure 1 shows that lumber prices have decreased from about $360/mbf to $250/mbf in 2009 (TD Economics, 2009).   Figure 1: The US lumber prices per thousand board feet from 1985-2009 (TD Economics, 2009)   7   Business Report for Malcolm Knapp Research Forest 2010 Both commodity-based forest companies and small scale value-added producers have been subject to market fluctuations. MKRF is among the producers that are suffering through the challenging economic period. It is expected that these prices will remain at current levels in the future –“we are now in a new normal” (Lawson, 2010). Figure 2 demonstrates how MKRF harvesting income fluctuates with the market conditions as illustrated in Figure 1. Note that despite increased harvest levels (see Figure 3); the revenue from this operation has not increased.  Figure 2: Timber harvesting revenue 2002-2011 (Lawson, 2010)   Figure 3: Timber harvest volume (m 3 ) 2002-2011 (Lawson, 2010) If current trends persist, commercial forest operations will not be able to continue as a viable business strategy for MKRF. It is therefore necessary for MKRF to diversify its current forest practices so alternative forms of revenue can be derived from the forest. $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 - 5,000 10,000 15,000 20,000 25,000 30,000 35,000  8   Business Report for Malcolm Knapp Research Forest 2010 2.2 Carbon Carbon credits resemble a commodity product; however, projects implemented to reduce emissions are very diverse. They range from afforestation projects to clean energy initiatives. Carbon credits can be purchased anywhere in the world with the intent of offsetting emissions. Projects fixed in one country may still attract the interest of nations, businesses and individuals abroad. For this reason as well as a the increasing environmental awareness, the carbon industry has experienced rapid growth (see Figure 4).   Figure 4: Annual volumes (Mt CO2E) of project-based emission reductions transactions (Capoor & Ambrosi, 2009) Moreover, interest is expected to grow as local and international governments develop compulsory regulations for the public and private business sectors. Namely BC’s Greenhouse Gas Reduction Target Act requires that the public sector reach carbon neutrality by 2010. By 2012, non-compliant agencies will be required to pay a tax of $30 per tonne of carbon dioxide equivalent (CO2E) in excess of set targets (BC Provincial Government, 2007). It is uncertain if the same obligation will be required of BC’s private sector; nevertheless, businesses have voluntarily positioned themselves within the carbon industry in anticipation of similar developments or simply to further their own green initiatives. The price of project-based emission reductions has paralleled the growth of the carbon industry. International prices were hovering between $10-25 per tCO2E prior to the 2009 recession (see Figure 5) (Capoor & Ambrosi, 2009). Although there has been a decrease in value, the price per tonne is expected to return with economic growth and global demand (Capoor & Ambrosi, 2009).   Figure 5: Carbon response to the recession (Capoor & Ambrosi, 2009)  9   Business Report for Malcolm Knapp Research Forest 2010 Meanwhile, North American markets developed under the Voluntary Carbon Standards indicate that carbon credits—specific to forest management projects—are currently valued in the $4-10.50 price range (see Figure 6) (Hamilton et al., 2009).  Although the BC Provincial Government has set the carbon tax at $30 per tCO2E, it is expected that the Pacific Carbon Trust (PCT)—a Crown corporation of the BC Provincial Government— will purchase credits for $20 (Carr, 2010).   Figure 6: Credit price ranges and averages by project type (Hamilton et al., 2009)   2.3 Market Opportunities MKRF has the opportunity and ability to capitalize on the developing carbon industry while simultaneously maintaining its enterprise in forest operations and research/education.  The following outlines the positive factors of success:  private ownership ensures that MKRF would be entitled to the carbon rights and the accompanying financial remuneration  MKRF’s experienced staff provides the institutional capacity to carry out a carbon management plan   major investments in infrastructure have already been delivered for forestry purposes and thus can be used as an asset in a carbon management scenario  10   Business Report for Malcolm Knapp Research Forest 2010 Based on the accompanying document –MKRF: Carbon Management Plan— three scenarios were developed to increase carbon stocks (i.e. additionality), thereby producing carbon credits eligible for sale. These scenarios include:  No Harvest  Extended Rotation  Select Seed The scenarios were intended to meet the requirements of several carbon standards applicable to both BC’s regulatory and voluntary carbon markets. Management strategies consider the anticipated release of PCT’s Forestry Protocol. Summarized below are the potential markets where economic opportunities exist to sell carbon credits.  Pacific Carbon Trust: PCT is a provincial government agency that is responsible for purchasing carbon offsets for BC’s public sector. Projects eligible for registration under PCT must begin commercial operations after November 29, 2007, and must comply with the BC Emission Offsets Regulation (EOR) (Pacific Carbon Trust, 2010). Currently, PCT has not adopted any standards— however, it is expected that PCT will follow standards similar to the California Action Reserve Forest Project Verification Protocol Version 3.0 (CAR). CAR accepts forest improvement projects that increase and/or conserve forest carbon stocks, and which are third-party approved through either Forest Stewardship Council or Sustainable Forest Initiative requirements.   Voluntary Carbon Market (VCM): The Voluntary Carbon Standard Guidance for Agriculture, Forestry, and Other Land Use Projects (AFOLU) accepts improved forest management projects and extended rotations of evenly aged managed forests for the creation of carbon offsets (Voluntary Carbon Standard, 2007). Projects are required to use a 1990 datum for baseline comparisons. VCS does not currently require third-party certification.  2.3.1 Third Party Certification There are three sustainable forest certifications recognized in Canada. They are as follows:  Forest Stewardship Council (FSC)  Canadian Standards Association (CSA)   Sustainable Forestry Initiative (SFI) The financial commitments needed to achieve approval for these certification schemes vary significantly. Start-up and auditing costs associated with FSC are beyond the financial means of the MKRF (Lawson, 2010); furthermore, current research projects at MKRF do not meet FSC standards.   Although the MKRF meets both CSA and SFI sustainable forest management criteria, only SFI is recognized under the CAR carbon standards. Moreover, the costs associated with SFI certification are significantly lower than those associated with CSA.  At this time, SFI certification is therefore considered to be the most feasible certification option for MKRF.  11   Business Report for Malcolm Knapp Research Forest 2010 3.0 Risks  Carbon markets are associated with considerable risks. Five apparent risks to a MKRF carbon project are identified below; however, this list is not comprehensive as unforeseeable changes could occur in the future.   3.1 UBC As a public institution, UBC is required to offset its carbon emissions by 2010. There is a potential that UBC could use MKRF carbon stocks as removals from the University’s Greenhouse Gas (GHG) inventory. However, there are currently no indications that UBC would use MKRF’s stocks as a carbon sink for their own benefit without adequately compensating MKRF.  3.2 Opportunity costs – Increasing Prices Participation in the carbon market will require MKRF to maintain their verified and accounted stocks for a period of 100 years. The opportunity cost associated with a long-term carbon contract is significant. For example, although the price of lumber may increase, MKRF will not be able to increase their harvest activities accordingly to capture a greater share of this market. Similarly, MKRF may not be able to pursue more lucrative carbon markets in the future.  3.3 Abiotic and biotic disturbances  Abiotic and biotic disturbances are naturally occurring events that cannot be predicted and may significantly alter the forest composition, and accordingly, the amount of carbon stored. In order to mitigate such losses, MKRF must participate in a buffer pool and may also purchase insurance against such events.  3.4 Carbon modeling vs. ground verification Carbon-based models are used to predict the total amount of carbon sequestered in a forest over a 100 year period, based on specific carbon management strategies. However, the model may not accurately portray the actual carbon stored, as determined by ground verification surveys. If over-estimations are produced by the carbon based model, this may compromise the economic feasibility of MKRF’s carbon management plan.    12   Business Report for Malcolm Knapp Research Forest 2010 4.0 Scenario Financial Analysis Four alternative scenarios were proposed in the MKRF: Carbon Management Plan, and are as followed:   2007 Base Case o Harvest level: 26,000m3/year o Used to set 2007 Baseline  No Harvest  Extended Rotation o Harvest level: 13,000m3/year o 30 year extension to minimum harvest age  Select Seed o Harvest level: 26,000m3/year o Use of 100% select seed In addition, the 1990 Baseline was modeled to evaluate the additionality and number of carbon credits produced under the VCM. The three alternative scenarios – No Harvest, Extended Rotation, and Select Seed – pursue different carbon management strategies and were developed to rely on the timber market, the carbon market, or a combination of the two to varying degrees.  This section will provide a financial analysis for each scenario, including profits generated from the timber market and/or the carbon market (both PCT and VCM). All analyses are presented in net present values (before taxes), based on a 100 year planning period, and use a discount rate of 6%.    4.1 Timber Analysis Timber prices used in this financial analysis were set at $78.71 based on MKRF’s overall short-term historical averages. Logs harvested from previously thinned stands are assigned a premium-grade of 20% more than the normal log price at $94.451. The modeling program – Forest Planning Studio-Atlas (FPS- Atlas) was used to determine the actual long-term harvesting flow.                                                               1  These logs are assigned premiums based on conservative recommendations made by Paul Lawson (2010). Note also that the first premium logs will be harvested in 30 years. 2  Although the genetic gain is expected to increase for the stock, it is assumed that the price for these seedlings will  13   Business Report for Malcolm Knapp Research Forest 2010 The Operational costs associated with harvesting activities can be seen in Table 1 below. Table 1: Total delivered log costs per cubic metre Total Delivered Log Costs   Direct Costs      Stump to Dump  $                 45.82    Silviculture  $                    3.27  Indirect Costs      Road Construction  $                    8.05    Road Maintenance  $                    2.22    Head Office & Administration  $                 10.62  Total    $                 69.98   To calculate the total profit generated on the timber market, the following assumptions were made:  timber prices remain stable over the 100 year period  operational expenses are determined on a per cubic metre basis, except for the No Harvest scenario where annual administration and road maintenance costs of $128,400 are applied  an additional cost of $0.05 per seedling is added to the stock used in the Select Seed scenario2  no premium is assigned to the logs produced by the Select Seed scenario as it is currently difficult to predict its effect on log grade—a conservative estimate is used in this scenario   As seen in Table 2 below, the highest profit from timber harvesting is generated by the 2007 Base Case scenario, followed closely by the Select Seed scenario. Although both scenarios have similar harvest levels, the Select Seed scenario incurs greater silvicultural costs through the 100% usage of genetically improved stock. The Extended Rotation scenario generates about $1.5M. However, the No Harvest scenario operates at a loss under the timber profit because revenue is only generated from carbon management activities, and administration and maintenance costs are accounted for under the operational expenses. Table 2: Net present value of profits generated by timber sales Scenario Harvesting Revenue Operational Costs Total Profit 2007 Base Case  $         26,471,571  -$      23,104,644   $           3,366,927  No Harvest  $                            -    -$            161,878  -$              161,878  Extended Rotation  $         13,331,049  -$      11,824,854   $           1,506,194  Select Seed  $         26,471,571  -$      23,154,168   $           3,317,403                                                             2  Although the genetic gain is expected to increase for the stock, it is assumed that the price for these seedlings will remain relatively constant over time, as breeding and production costs are expected to remain constant.  14   Business Report for Malcolm Knapp Research Forest 2010 4.2 Carbon Analysis The proposed scenarios incorporate different carbon management strategies that store different amounts of carbon in MKRF over time. In the first part of this analysis, the carbon credits produced by the scenarios will follow the standards set by CAR, and be sold to PCT. The second part will adhere to the VCS and will be sold on the voluntary market. The Carbon Budget Model of the Canadian Forest Sector (CBM-CFS3) was used to determine the amount of carbon credits produced by each scenario. The additionality was modeled for a 100 year period, and verification and payments from carbon credits were assumed to occur on a ten-year basis (see Figure 7).       Figure 7: Total ecosystem carbon stored over time  Costs associated with validation of the carbon management plan, annual desktop approval of the activities, and ten-year verification of carbon credits produced are shown in Table 3. The costs are applied regardless of which carbon market is pursued. Internal costs associated with validation and verification have not been included in this analysis as they are hard to estimate; however, these additional costs should be considered if a carbon management plan is adopted. Table 3: Costs associated with validation and verification Validation & Verification   External Costs      Initial Validation   $                    20,000     Annual Desk Top Approval   $                      4,000     5 Year Verification   $                    10,000    3,000 3,200 3,400 3,600 3,800 4,000 4,200 4,400 4,600 0 2 4 6 8 10 12 14 16 18 20 22 24 to n n e s o f C  (x100 0 ) Periods (10 yrs.) 1990 Base Case 2007 Base Case No Harvest Scenario Extended Rotation Scenario Select Seed Scenario 15   Business Report for Malcolm Knapp Research Forest 2010 4.2.1 PCT Carbon credits sold to PCT were given a value of $20 per CO2E for the entire length of the planning period.  In addition to validation and verification costs, MKRF must become third-party certified in order to meet the requirements of PCT. The costs associated with SFI certification can be seen in Table 4. The external costs were provided by Dave Eaket from PricewaterhouseCoopers (2010), while the internal costs are rough estimates.  Table 4: Costs associated with SFI certification SFI Certification   External Costs      Initial Certification   $    8,000     Annual Auditing   $    4,000  Internal Costs      Initial Document Preparation   $  16,000     Annual Survey/Monitoring/Reporting    $    8,000   The carbon profit calculations were based on the following assumptions:  carbon credit price remains constant over the next 100 years  16.8% of the credits produced are deducted from the total sales and put into a “buffer pool” to account for risk of non-permanence  MKRF will not encounter any non-permanence issues, and will therefore receive a “payback” of all the “buffer pool” credits at the end of the 100 year planning period  Table 5 below displays the total profit generated for each scenario when selling carbon credits to the PCT. As expected, the No Harvest scenario produces the largest amount of additionality and therefore has the most carbon credits available to sell. The estimated profit generated for this scenario is $13M. The Extended Rotation scenario generates about half the profit of the No Harvest scenario, while the Select Seed scenario generates about $4M in profit. The 2007 Base Case does not create any carbon credits as this scenario represents the 2007 baseline against which all the other scenarios are compared. Table 5: Net present value of carbon profit for each scenario - PCT Scenario $/Ton CO2E Carbon Revenue Validation & Verification Costs Certification Costs Total Profit 2007 Base Case  $       20.00   $                      -                    $              -  $                 -     $                          -    No Harvest  $       20.00   $   12,633,891  -$          117,988  -$   415,186   $       13,167,066  Extended Rotation  $       20.00   $      6,149,004  -$          117,988 -$   415,186   $         6,682,180  Select Seed  $       20.00   $      3,827,234  -$          117,988  -$    415,186   $         4,360,410     16   Business Report for Malcolm Knapp Research Forest 2010 4.2.2 Voluntary Carbon Market The voluntary carbon market is a more volatile market than the regulatory market, and prices paid per carbon credit vary depending on the buyer and market conditions at any given time. Based on recent publications about current market trends, a low price of $4 and a high price of $10.50 per carbon credit were used in this financial analysis (Hamilton et al., 2009). VCS requires a 1990 baseline, and as a result, the No Harvest scenario is the only carbon management strategy that creates additionality. The carbon profit calculations were based on the following assumptions:  27.5% of the credits produced are deducted from total sales and put into a “buffer pool” to account for risk of non-permanence  MKRF will not encounter any non-permanence issues, and will therefore receive a “payback” of all the “buffer pool” credits at the end of the 100 year planning period Since No Harvest is the only scenario applicable to VCS, other scenarios are excluded from this analysis. Based on the maximum and minimum price per carbon credit, the No Harvest scenario generates a maximum of $1M and minimum of $0.2M (see Table 6). Table 6: Net present value of carbon profit for the No Harvest scenario - VCM Scenario High ($10.50)/Low ($4) Estimated Carbon Credit Price Carbon Revenue Validation & Verification Costs Admin/Maintenance Costs Total Profit No Harvest  High   $      1,299,527  -$      117,988  -$      161,878   $1,019,659   Low   $         495,058  -$      117,988  -$      161,878   $   215,190    4.3 Combined Profit Analysis The two previous sections independently explored the profit generated by timber and carbon. This section will combine both sources of revenue and show the total profit generated by each scenario. The carbon profit used in this comparison assumes that PCT is the buyer, as this produced the greatest profit margin, despite the extra cost incurred by SFI certification. Table 7 shows the total profit generated by each scenario. All scenarios generate profit; however the profit margins differ. The No Harvest scenario produces a profit of almost $13M, while the Extended Rotation scenario produce about $8M, Select Seed around $7.5M, and the 2007 Base Case generates a net present value of profit of $3.5M.    17   Business Report for Malcolm Knapp Research Forest 2010   Table 7: Total scenario profit Scenario Harvesting Profit Carbon Profit Total Profit 2007 Base Case  $        3,366,927   $                         -     $         3,366,927  No Harvest -$           161,878   $      12,905,192   $       12,743,313  Extended Rotation  $        1,506,194   $        6,440,824   $         7,947,019  Select Seed  $        3,317,403   $        4,261,503   $         7,578,906   5.0 Sensitivity Analysis  Two potential market opportunities exist to generate revenue (i.e. timber and carbon). Both of these sources of revenue are associated with considerable risk, and they have therefore been analyzed to determine sensitivities around different risk tolerances. The long-term commitment required by both markets, creates a level of uncertainty surrounding potential profits. To assess risk tolerance, a variety of discount rates were applied to produce net present values and present a sensitivity of potential profit. A higher discount rate indicates a low risk tolerance and a lower discount rate reflects high risk tolerance.   Table 8 shows the effect of varying discount rates on the potential timber profit under each scenario. Using three different discounts rates (i.e. 3%, 6%, and 9%), a range of potential timber profits can be seen. The 2007 Base Case and Select Seed scenarios have the largest range of values for profit due to the higher volume rates (26,000m3/year) in each of the scenarios. The Extended Rotation scenario profit range is roughly half of the other two scenarios due to the fact that the timber volume harvested is half of the previous two scenarios (13,000 m3/year). Table 8: Sensitivity analysis of timber sales profit Scenario  Discount Rate  3% 6% 9% 2007 Base Case  $  7,772,019   $    3,366,927   $    1,901,084  No Harvest -$     353,920  -$        161,878  -$          93,886  Extended Rotation  $  3,416,102   $    1,506,194   $       869,296  Select Seed  $  7,663,717   $    3,317,403   $    1,872,373   Table 9 shows the effects that various discount rates have on the future potential profit of the carbon revenue generated by each scenario. In this table, the carbon credits produced are sold to the PCT. As previously outlined, the 2007 Base Case represents the baseline and therefore does not generate any carbon credits. Similar to the timber revenue, the largest range of potential profits occurs in the No Harvest  18   Business Report for Malcolm Knapp Research Forest 2010 scenario which generates the greatest revenue. Depending on the scenario, the potential profit could range roughly from as low as $2M to as high as $22M.  Table 9: Sensitivity analysis for carbon profits - PCT Scenario  Discount Rate  3% 6% 9% 2007 Base Case  $                    -     $                        -     $                       -    No Harvest  $  22,932,994   $     12,328,497   $       7,913,601  Extended Rotation  $  10,219,066   $        5,843,610   $       3,833,689  Select Seed  $     5,922,492   $        3,521,840   $       2,325,589   Table 10 shows the effects that the discount rates have on the high and low price profit calculations for the No Harvest scenario. Credits generated by this scenario are sold under the Voluntary Carbon Standard.  Table 10: Sensitivity analysis for carbon profits - VCM Scenario High ($10.50)/Low ($4) Estimated Carbon Credit Price 3% Discount Rate ______________ 6% 9% No Harvest High  $    2,247,677   $  1,229,543   $     820,137  Low      $       783,217       $      425,074     $      279,969   6.0 Offsetting UBC’s Emissions An option exists for MKRF to sell their offset credits to UBC. Currently, UBC’s total GHG emissions in 2008 were 62,670 tCO2 E (Henderson, 2010). This puts the university in a position where it will be required to purchase offset credits in order to meet its requirement to become carbon neutral by 2010 under the Greenhouse Gas Reduction Act. MKRF will therefore be in a position to negotiate with UBC about directly purchasing its credits.  Table 11 lists the carbon credits produced by each scenario. As the current purchasing price for offset credits by PCT is $20, this price was used to determine the potential revenue per year if selling to UBC. It should be noted that MKRF would still have to validate and verify their project by an applicable carbon standard to ensure that the credits produced are of high quality. It should be noted that the costs of validation and verification—as well as certification costs—have been excluded from this analysis, and can be found in the previous financial analysis section.     19   Business Report for Malcolm Knapp Research Forest 2010 Table 11: Amount of carbon credits produced and the associated potential revenue   Total Number of Carbon Credits Produced Number of Carbon Credits Per Year Potential Revenue per year ($20 negotiated price) Scenario No Harvest 3,442,766 34,427 $     688,540 Extended Rotation 1,370,772 13,707             $    274,140 Select Seed 762,486 7,624            $    152,480  7.0 Recommendation As previously stated, successful scenarios will meet the following criteria:  maximize revenue flow  maintain long-term flexibility  balance MKRF’s other enterprises Based on these criteria and MKRF’s overall objectives, it has been determined that Extended Rotation is the recommended scenario. This scenario successfully fulfills the research mandate, while meeting timber and carbon objectives. Although the financial analysis indicates that the No Harvest scenario will generate the largest profit margin, this scenario is not a viable option. It does not adequately meet the interests and objectives of MKRF, particularly because it does not fulfill the research mandate and is deemed to have low long-term flexibility.             20   Business Report for Malcolm Knapp Research Forest 2010 8.0 References  BC Provincial Government. (2007). Bill 44 - Greenhouse Gas Reduction Target Act. Victoria, BC.  Bull, G. (2010). The Development of Forest Carbon Standards in North America: Institutions, Regulations,  Modalities and Issues. (G. Bull, Performer) Vancouver, BC.  Capoor, K., & Ambrosi, P. (2009). State and Trends of the Carbon Market 2009. Washington D.C.: World  Bank.  Carr, A. (2010, April 13). Pacific Carbon Trust. Retrieved April 21, 2010, from Corporate Presentations:  http://www.pacificcarbontrust.com/Publications/CorporatePresentations/tabid/124/Default.aspx  Dufour, D. (2009). The Canadian Lumber Industry: Recent Trends. Ottawa: Statistics Canada.  Greig, M., & Bull, G. (2009). Carbon Management in British Columbia's Forests: Opportunities and  Challenges.  Hamilton, K., Sjardin, M., Shapiro, A., & Marcello, T. (2009). State of the Voluntary Carbon Markets 2009.  Washington D.C.: Ecosystem Marketplace and New Carbon Finance.  Juniper, T. (2007, December 12). The great carbon trading scam? Retrieved April 19, 2010, from  Guardian.co.uk: http://www.guardian.co.uk/commentisfree/2007/dec/12/thegreatcarbontradings cam  Lawson, P. (2010, January 4). Financing the Research Forests. Vancouver.  Malcolm Knapp Research Forest. (2009). Retrieved January 28, 2010, from Malcolm Knapp Research Forest:  http://www.mkrf.forestry.ubc.ca/  Malcolm Knapp Research Forest. (2010). Retrieved January 28, 2010, from Malcolm Knapp Research Forest:  http://www.mkrf.forestry.ubc.ca/  OpenCarbonWorld. (2009, Februaru 6). DoubleCounting. Retrieved April 18, 2010, from Open Carbon  World: Tools for Change in the Carbon Age: http://www.opencarbonworld.com/wiki/double- counting.html  Pacific Carbon Trust. (2010). FAQs. Retrieved March 31, 2010, from Pacific Carbon Trust:  http://www.pacificcarbontrust.com/FAQs/tabid/61/Default.aspx#SellingOffsetstoPCT  TD Economics. (2009). Lumber markets poised for recovery. Toronto: TD Bank Financial Group.  UBC Malcolm Knapp Research Forest. (2009, September 19). Maple Ridge. Retrieved January 27, 2010,  from Maple Ridge: http://www.mapleridge.ca/assets/Default/Engineering/pdfs/ malcolm_knapp.pdf#search="watershed"   21   Business Report for Malcolm Knapp Research Forest 2010 Voluntary Carbon Standard. (2007, November 19). Voluntary Carbon Standard Guidance for Agriculture,  Forestry and Other Land Use Projects. Retrieved March 24, 2010, from Voluntary Carbon Standard:  http://www.v-c-s.org/docs/Guidance%20for%20AFOLU%20Project.pdf  Woodbridge Associates. (2009). Opportunity BC 2020 BC's Forest Industry. Vancouver: Business Council of  British Columbia.                        22   Business Report for Malcolm Knapp Research Forest 2010 9.0 Appendix  9.1 PCT Additionality to 2007 Base Case    2007 Base Case No Harvest       Year Tonnes of Carbon Tonnes of Carbon Carbon Additionality Carbon Additionality CO2E 10 Year Carbon Credits 0 3,686,472  3,686,472  0 0 0 10 3,496,212  3,733,003  236,791 868,313 868,313 20 3,441,543  3,793,068  351,525 1,289,042 420,730 30 3,420,705  3,857,161  436,456 1,600,484 311,442 40 3,362,389  3,923,088  560,699 2,056,083 455,599 50 3,310,901  3,988,531  677,630 2,484,869 428,786 60 3,271,849  4,050,355  778,506 2,854,782 369,912 70 3,233,582  4,106,345  872,763 3,200,422 345,640 80 3,217,306  4,156,157  938,851 3,442,767 242,345 90 3,277,399  4,200,471  923,072 3,384,905 0 100 3,318,778  4,238,743  919,965 3,373,512 0      2007 Base Case Extended Rotation (T)     Year Tonnes of Carbon Tonnes of Carbon Carbon Additionality Carbon Additionality CO2E 10 Year Carbon Credits 0 3,686,472 3,686,472 0 0 0 10 3,496,212 3,617,860 121,648 446,083 446,083 20 3,441,543 3,619,956 178,413 654,240 208,157 30 3,420,705 3,624,566 203,861 747,558 93,318 40 3,362,389 3,631,854 269,465 988,128 240,570 50 3,310,901 3,633,751 322,850 1,183,891 195,763 60 3,271,849 3,622,211 350,362 1,284,777 100,887 70 3,233,582 3,605,312 371,730 1,363,134 78,356 80 3,217,306 3,591,119 373,813 1,370,772 7,638 90 3,277,399 3,621,325 343,926 1,261,177 0 100 3,318,778 3,631,499 312,721 1,146,748 0   23   Business Report for Malcolm Knapp Research Forest 2010     2007 Base Case Select Seed (T)     Year Tonnes of Carbon Tonnes of Carbon Carbon Additionality Carbon Additionality CO2E 10 Year Carbon Credits 0 3,686,472 3,686,472        0 0 0 10 3,496,212 3,571,704    75,492 276,829 276,829 20 3,441,543 3,552,697 111,154 407,602 130,773 30 3,420,705 3,562,614 141,909 520,380 112,779 40 3,362,389 3,536,080 173,691 636,925 116,545 50 3,310,901 3,485,484 174,583 640,196 3,271 60 3,271,849 3,466,367 194,518 713,298 73,102 70 3,233,582 3,441,514 207,932 762,487 49,189 80 3,217,306 3,418,149 200,843 736,491 0 90 3,277,399 3,469,823 192,424 705,619 0 100 3,318,778 3,498,666 179,888 659,649 0    8.2 VCS Additionality to 1990 Base Case   1990 Base Case No Harvest     Year Tonnes of Carbon Harvest Volume Carbon Additionality Carbon Additionality CO2E 10 Year Carbon Credits 0 3,686,472 3,686,472 0 0 0 10 3,672,538 3,733,003 60,465 221,725 221,725 20 3,712,129 3,793,068 80,939 296,803 75,078 30 3,763,780 3,857,161 93,381 342,428 45,625 40 3,815,742 3,923,088 107,346 393,638 51,210 50 3,862,839 3,988,531 125,692 460,913 67,275 60 3,900,753 4,050,355 149,602 548,591 87,678 70 3,938,086 4,106,345 168,259 617,006 68,415 80 3,973,997 4,156,157 182,160 667,981 50,975 90 3,999,080 4,200,471 201,391 738,501 70,520 100 4,019,061 4,238,743 219,682 805,574 67,073  1 | P a g e       Greg Demille, Jesse Hodgins, Maryam Majidian, Mariko Molander, and Emilie Thy CARBON MANAGEMENT PLAN FOR MALCOLM KNAPP RESEARCH FOREST 2010   2   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Executive Summary The Malcolm Knapp Research Forest (MKRF) comprises a total area of 5,136 hectares and is located approximately 60km east of ?ancouver, British Columbia (BC). MKRF’s land base was placed in the control of the University of British Columbia (UBC) in 1949 in the form of Crown grants from the Provincial Government of BC, and has been privately maintained and operated by MKRF staff since that time. The following plan was developed with the intent of exploring potential financial prospects for MKRF through the emerging carbon market.  The significant drop in timber value over the last three years has resulted in a need for MKRF to pursue different financial markets for long-term revenue generation. TreeTop Down Solutions has developed this plan with the intent to explore new markets while continuing to fulfill MKRF’s research mandate and to maintain sustainable management practices. This plan investigates carbon standards and markets applicable to forest projects initiated by MKRF, and develops five scenarios to explore financial opportunities through the generation of carbon credits. This plan also seeks to meet and satisfy interest groups and their values through the establishment of a set of Criteria and Indicators.  Criteria were designed to fulfill the main values of interest groups and to ensure that sustainable forest practices are maintained. Goals, objectives, indicators, targets, and management strategies were identified for each of the nine established criteria. In accordance with these values and applicable carbon standards, two base cases and three carbon management scenarios were developed. They include the following:  1990 Base Case  2007 Base Case  No Harvest  Extended Rotation  Select Seed Each of the base cases and scenarios were modeled to generate carbon stock information. Scenarios were then compared against the base cases to measure the carbon additionality gained through the implementation of carbon management strategies. A multi-criteria analysis was also conducted to evaluate the scenarios according to the criteria and indicators identified for MKRF—this provided the basis for our final recommendation. Issues relating to leakage, non-permanence, and risk were also discussed. Based on the results of our modeling and analysis, it was determined that the Extended Rotation scenario best suits the needs of MRKF.      3   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Table of Contents Executive Summary ............................................................................................................................................ 2 List of Figures ..................................................................................................................................................... 7 List of Tables ...................................................................................................................................................... 8 List of Appendices .............................................................................................................................................. 8 Acronyms and Abbreviations ............................................................................................................................. 9 Prologue ........................................................................................................................................................... 10 1.0 Introduction ......................................................................................................................................... 11 1.1 Context ............................................................................................................................................. 11 1.2  Purpose and Objectives .................................................................................................................. 11 1.3  Location and Geographical Information .......................................................................................... 11 1.4  Climate and Forest Ecology .............................................................................................................. 12 1.5  History .............................................................................................................................................. 13 1.6 Land Management and Interest Groups .......................................................................................... 13 1.7  Plan Organization ............................................................................................................................. 15 2.0  Carbon Markets and Standards ........................................................................................................... 15 2.1  ISO 14064 ......................................................................................................................................... 16 2.2  Regulatory Markets .......................................................................................................................... 16 2.3 Voluntary Markets ........................................................................................................................... 16 2.4 Certification ...................................................................................................................................... 16 3.0 Criteria and Indicators.......................................................................................................................... 18 3.1 Criterion 1: Biological Diversity ........................................................................................................ 18 3.1.1 Objective 1: Ecosystem Diversity ............................................................................................. 19 3.1.2 Objective 2: Species Diversity .................................................................................................. 19 3.1.3 Objective 3: Genetic Diversity .................................................................................................. 20 3.1.4  Management Strategies ........................................................................................................... 20 3.2 Criterion 2: Carbon Storage ............................................................................................................. 20 3.2.1 Objective 1: Carbon Emissions ................................................................................................. 21 3.2.2 Objective 2: Carbon Sequestration .......................................................................................... 21 3.2.3  Management Strategies ........................................................................................................... 21 3.3 Criterion 3: Economic Benefits from Current Activities ................................................................... 22 3.3.1 Objective 1: Maintain or increase revenue generated by MKRF ............................................. 23  4   Carbon Management Plan for Malcolm Knapp Research Forest 2010 3.3.2  Management Strategies ........................................................................................................... 23 3.4 Criterion 4: Social Benefits ............................................................................................................... 23 3.4.1 Objective 1: Maintain or increase employment rate in the forestry sector ............................ 24 3.4.2 Management Strategies ........................................................................................................... 24 3.5 Criterion 5: Responsibilities to First Nations .................................................................................... 24 3.5.1 Objective 1: First Nations ......................................................................................................... 24 3.5.2 Management Strategies ........................................................................................................... 25 3.6 Criterion 6: Responsibilities to Local Communities ......................................................................... 25 3.6.1 Objective 1:  Visual Quality ...................................................................................................... 25 3.6.2 Objective 2:  Public Contribution ............................................................................................. 26 3.6.3  Management Strategies ........................................................................................................... 26 3.7 Criterion 7: Soil and Water............................................................................................................... 26 3.7.1 Objective 1: Minimize soil degradation/compaction ............................................................... 27 3.7.2 Objective 2: Maintain suitable fish/riparian habitat ................................................................ 27 3.7.3 Management Strategies ........................................................................................................... 27 3.8 Criterion 8: Long-term Flexibility ..................................................................................................... 28 3.8.1 Objective 1: Sustain Gallant sawmill activities over time ........................................................ 28 3.8.2 Objective 2: Diversity of species in MKRF inventory ............................................................... 28 3.8.3 Management Strategies ........................................................................................................... 28 3.9 Criterion 9: Education and Research ............................................................................................... 29 3.9.1 Objective 1: Avoid increased constraints on research project types....................................... 29 3.9.2 Objective 2: Maintain camp and educational facilities ............................................................ 29 4.0 Scenario Modeling ............................................................................................................................... 29 4.1 FPS-Atlas........................................................................................................................................... 30 4.2 CBM-CFS3 ......................................................................................................................................... 30 4.3 Carbon Management Scenarios ....................................................................................................... 30 4.3.1 1990 Base Case ........................................................................................................................ 30 4.3.2 2007 Base Case ........................................................................................................................ 30 4.3.3 No Harvest ............................................................................................................................... 30 4.3.4 Extended Rotation ................................................................................................................... 31 4.3.5 Select Seed ............................................................................................................................... 31 4.3.6 Alternative scenarios ............................................................................................................... 31  5   Carbon Management Plan for Malcolm Knapp Research Forest 2010 4.4 Modeling Assumptions .................................................................................................................... 32 4.5 Model Constraints ............................................................................................................................ 32 4.6 Modeling and Results of Targets Associated with Criteria and Indicators ...................................... 33 4.6.1 Biological Diversity ................................................................................................................... 33 4.6.2 Carbon storage ......................................................................................................................... 36 4.6.3 Economic Benefits from Current Activities .............................................................................. 39 4.6.4 Long-term Flexibility ................................................................................................................ 40 5.0 Scenario Analysis .................................................................................................................................. 43 5.1 Ordinal Ranking ................................................................................................................................ 43 5.1.1 Biological Diversity ................................................................................................................... 44 5.1.2 Carbon Storage ........................................................................................................................ 45 5.1.3 Economic Benefits from Current Activities .............................................................................. 46 5.1.4 Social Benefits .......................................................................................................................... 46 5.1.5 Soil & Water ............................................................................................................................. 46 5.1.6 Long-Term Flexibility ................................................................................................................ 46 5.1.7 Education & Research .............................................................................................................. 47 5.2 Multi-Criteria Analysis ...................................................................................................................... 48 6.0 Recommendation ....................................................................................................................................... 49 7.0 Leakage and Permanence .......................................................................................................................... 49 7.1 Leakage ............................................................................................................................................ 49 7.2 Permanence ..................................................................................................................................... 50 8.0 Risk and Insurance ............................................................................................................................... 50 8.1 Non-Permanence Risk Analysis and Buffer Approach ..................................................................... 50 8.2 Risk Assessment for MKRF Management Strategies ....................................................................... 50 8.2.1 Climate Action Reserve Risk Assessment Model ..................................................................... 51 8.2.2 Voluntary Carbon Standard Risk Assessment Model ............................................................... 53 8.3 Insurance .......................................................................................................................................... 55 9.0 Appendices ........................................................................................................................................... 56 9.1 Appendix 1: Biogeoclimatic Distribution of MKRF ........................................................................... 56 9.2 Appendix 2: Tree Species Distribution in MKRF, 2010 ..................................................................... 57 9.3 Appendix 3: Age Class Distribution in MKRF, 2010 .......................................................................... 58 9.4 Appendix 4: Carbon Markets and Standards ................................................................................... 59  6   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.4.1 Kyoto Protocol and the Significance of Carbon ....................................................................... 59 9.4.2 Types of Carbon Markets ......................................................................................................... 59 9.4.3 Regulatory Markets: Western Climate Initiative and Pacific Carbon Trust ............................. 59 9.4.4 Voluntary Markets: Voluntary Carbon Market and Prospective Markets ............................... 61 9.5 Appendix 5: SFI Objectives ............................................................................................................... 63 9.6 Appendix 6: Identified Species at Risk ............................................................................................. 65 9.7 Appendix 7: Old Growth Reserves, 2010 ......................................................................................... 66 9.8 Appendix 8: Seral Stages in MKRF, 2010 .......................................................................................... 67 9.9  Appendix 9: Annual harvest levels for MKRF between 1952-2009 (Lawson, Financing the Research Forests, 2010) .............................................................................................................................................. 68 9.10 Appendix 10: Alternative scenarios ................................................................................................. 69 9.11 Appendix 11: Operability Cliques in MKRF (low operable areas, operable areas, reserves) ........... 71 9.12 Appendix 12: Thinning constraints and zones for scenarios ........................................................... 74 9.13 Appendix 13: Representation of all three BEC subzones in reserves .............................................. 75      9.14     Appendix 14: Sub-ordinal ranking of indicators????????????????????????????..76               7   Carbon Management Plan for Malcolm Knapp Research Forest 2010  List of Figures Figure 1: Location of MKRF ......................................................................................................................... 11 Figure 2: MKRF interest groups .................................................................................................................. 14 Figure 3: Estimated net revenue from three main revenue-generating activities at MKRF in 2001 .......... 22 Figure 4: Seral stages (period 0) for base cases and scenarios ................................................................... 34 Figure 5: Seral stages (period 8) for base cases and scenarios ................................................................... 34 Figure 6: Seral stages (period 16) for base cases and scenarios ................................................................. 35 Figure 7: Seral stages (period 24) for base cases and scenarios ................................................................. 35 Figure 8: Area of old growth for base cases and scenarios ........................................................................ 36 Figure 9: Total ecosystem carbon from sources, sinks and reservoirs for base cases and scenarios ........ 36 Figure 10: Additionality of scenarios compared to 1990 Base Case ........................................................... 38 Figure 11: Additionality of scenarios compared to 2007 Base Case ........................................................... 38 Figure 12: Harvest volumes for base cases and scenarios .......................................................................... 39 Figure 13: Total growing stock for base cases and scenarios ..................................................................... 40 Figure 14: Area by leading species for 1990 Base Case .............................................................................. 41 Figure 15: Area by leading species for 2007 Base Case .............................................................................. 41 Figure 16: Area by leading species for No Harvest scenario ....................................................................... 42 Figure 17: Area by leading species for Extended Rotation scenario........................................................... 42 Figure 18: Area by leading species for Select Seed scenario ...................................................................... 43    8   Carbon Management Plan for Malcolm Knapp Research Forest 2010 List of Tables Table 1: Description of BEC subzones ......................................................................................................... 12 Table 2: Summary of carbon markets and applicable standards, including baseline year, project eligibility for MKRF, and ISO and certification requirements ..................................................................................... 17 Table 3: Summary of the scenarios ............................................................................................................. 31 Table 4: General assumptions used in modeling the scenarios .................................................................. 32 Table 5: Constraints used in modeling the scenarios ................................................................................. 32 Table 6: Modelable targets for various criteria and indicators .................................................................. 33 Table 7: Ordinal ranking key (degree of target fulfillment) ........................................................................ 43 Table 8: Ordinal ranking of 2007 Base Case and scenarios against criteria ................................................ 44 Table 9: Multi-criteria analysis .................................................................................................................... 48 Table 10: Forest project risk types under CAR ............................................................................................ 51 Table 11: Guidance on risk factors and ratings for improved forest management projects under VCS .... 53 Table 12: Risk categories and buffer pool requirements for VCS ............................................................... 54 Table 13: Risk classification ranges for VCS ................................................................................................ 54 List of Appendices Appendix 1: Biogeoclimatic Distribution of MKRF ...................................................................................... 56 Appendix 2: Tree Species Distribution in MKRF, 2010 ................................................................................ 57 Appendix 3: Age Class Distribtuion in MKRF, 2010 ..................................................................................... 58 Appendix 4: Carbon Markets and Standards .............................................................................................. 59 Appendix 5: SFI Objectives .......................................................................................................................... 63 Appendix 6: Identified Species at Risk ........................................................................................................ 65 Appendix 7: Old Growth Reserves, 2010 .................................................................................................... 66 Appendix 8: Seral Stages in MKRF, 2010 ..................................................................................................... 67 Appendix 9: Annual harvest levels for MKRF between 1952-2009 ............................................................ 68 Appendix 10: Alternative scenarios ............................................................................................................ 69 Appendix 11: Operability cliques in MKRF .................................................................................................. 71 Appendix 12: Thinning constraints and zones for scenarios ...................................................................... 74 Appendix 13: Representation of all three BEC subzones in reserves ......................................................... 75    9   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Acronyms and Abbreviations  ANSI  American National Standards Institute BC   British Columbia BEC  Biogeoclimatic CAR  California Action Reserve Forest Project Verification Protocol version 3.0 CBM-CFS2 Carbon Budget Model of the Canadian Forest Sector CCBA  Climate Community and Biodiversity Alliance CCFM  Canadian Council of Forest Ministers CCS  Canadian Cancer Society CDM  Clean Development Mechanism C&I  Criteria and Indicators CSA   Canadian Standards Association EOR   BC Emission Offsets Regulation ER   Emission Reduction ET   Emissions Trading FPS-Atlas Forest Planning Studio-Atlas FSC   Forest Stewardship Council GHG   Greenhouse Gas IFM   Improved Forest Management ISO   International Standard Organization JI   Joint Implementation MKRF  Malcolm Knapp Research Forest PCT     Pacific Carbon Trust SCC   Standards Council of Canada  SFI   Sustainable Forestry Initiatives  SFM   Sustainable Forest Management SSR  Sources, Sinks and Reservoirs UBC   University of British Columbia UNFCCC United Nations Framework Convention on Climate Change VCM  Voluntary Carbon Market VCS   Voluntary Carbon Standards for Agriculture, Forestry and Other land use projects WCI   Western Climate Initiatives WRI  World Resources Institute and World Business Council on Sustainable Development WWF     World Wildlife Fund       10   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Prologue  TreeTop Down Solutions was created at the University of British Columbia in response to the FRST 424 project management requirements.  Our group consists of the following members: Greg Demille, Jesse Hodgins, Maryam Majidian, Mariko Molander, and Emilie Thy. We have been offered the opportunity to develop a sustainable management plan for the Malcolm Knapp Research Forest with emphasis on pursuing potential financial prospects through the emerging carbon market.  The proposed goals, objectives, and management actions focus on fulfilling the main values of interest groups. The scope of the project entailed a comprehensive overview of existing carbon standards and markets, and sought to prepare a detailed management plan for implementation. Three scenarios have been developed and compared to 1990 and 2007 base cases in order assess the financial opportunities through the generation of carbon credits. A multi-criteria analysis was also conducted to evaluate the scenarios according to criteria and indicators identified for MKRF. However, due to time and knowledge constraints, the plan may require further improvements and amendments.  TreeTop Down Solutions would like to thank Dr. John Nelson and Dr. Stephen Mitchell for their continuous assistance throughout the project. We would also like to thank Dr. Gary Bull for his time and expertise, and Dr. Ronald Trosper for his guidance and support. Finally, we would like to thank the MKRF staff—Paul Lawson, Cheryl Power, and Ionut Aron—for their patience and on-going collaboration with the development of this plan.            11   Carbon Management Plan for Malcolm Knapp Research Forest 2010 1.0 Introduction  1.1 Context MKRF is a privately owned forest which covers an area of 5,136 hectares. The forest is managed by staff from the Faculty of Forestry at the University of British Columbia, and serves as an institution for research, demonstration, and education in forestry related fields. TreeTop Down Solutions’ management plan was developed to aid MKRF in future management of the forest to increase its revenue, and more specifically to explore the possibility of pursuing future financial prospects in the emerging carbon market.  1.2  Purpose and Objectives The purpose of the plan is to explore options for revenue generation while maintaining sustainable forest management practices and fulfilling MKRF’s research mandate. The project provides a comprehensive overview of existing carbon standards for regulatory and mandatory markets, and investigates certification as an option for MKRF to further increase the value of its carbon credits. The project seeks to satisfy interest groups and values by establishing a set of Criteria and Indicators, and models two base cases against three scenarios to illustrate increased financial opportunities for MKRF through the generation of carbon credits. A multi-criteria analysis is done to determine which scenario best fulfills the criteria for MKRF while producing sufficient carbon credits to generate significant revenue for the Forest. 1.3  Location and Geographical Information  MKRF is located approximately 60km east of Vancouver, British Columbia at the base of the Coast Mountains (Malcolm Knapp Research Forest, 2009). It reaches the Golden Ears Mountains from the north and east, and connects to the community of Maple Ridge from the west and south  (Malcolm Knapp Research Forest, 2009). Pitt Lake borders the north-west corner of the forest, and more than half of the Alouette watershed is located within the boundary of the forest (UBC Malcolm Knapp Research Forest, 2009). The 5,136 hectares of the Research Forest is 4km wide and 13km long.  Figure 1: Location of MKRF  (Malcolm Knapp Research Forest, 2009)   12   Carbon Management Plan for Malcolm Knapp Research Forest 2010 1.4  Climate and Forest Ecology MKRF is located in the lower Coastal region of BC and is influenced by the maritime environment. It is generally characterized by mild, wet winters and relatively dry summers. As a result of the large amount of precipitation (2200-3000mm/year) in the forest, MKRF has long growing seasons and high plant productivities (Malcolm Knapp Research Forest, 2009). Snow cover is typical for approximately four months of the year in the higher elevations of the forest to the north.  The lower elevation forest in MKRF falls within the Dry Maritime Coastal Western Hemlock biogeoclimatic Subzone (CWHdm) and the Very Wet Maritime Subzone Submontane Variant (CWHvm1). The higher elevation forest falls into the Very Wet Maritime Subzone Montane Variant (CWHvm2)  (Malcolm Knapp Research Forest, 2009). Refer to Table 1 below for a detailed descrition of each BEC subzone. Appendix 1 shows the biogeoclimatic distribution of MKRF by subzone. The climate influences the species composition of the forest, which consists of a substantial amount of Douglas-fir (Pseudotsuga menziesii), and lesser amounts of Western hemlock (Tsuga heterophylla) and Western redcedar (Thuja plicata) (Pojar, Klinka, & Demarchi, 1991). The main deciduous tree species are red alder (Alnus rubra) and big-leaf maple (Acer macrophyllum). Appendix 2 shows the tree species distribution for MKRF. The shrub and moss layers are typified by the presence of the following species: salal (Gaultheria shallon), dull Oregon-grape (Mahonia nervosa), red huckleberry (Vaccinium parvifolium), salmonberry (Rubus spectabilis), Oregon beaked moss (Kindbergia oreganum), stair step moss (Hylocomium splendens), lanky moss (Rhytidiadelphus loreus), and flat moss (Plagiothecium undulatum).  Table 1: Description of BEC subzones*   CWHdm  CWHvm1  CWHvm2  Distribution/Elevation Seal level (or above CWHxm if present) – 650m 0 – 400m 400 – 800m Climate Warm, relatively dry summers. Moist, mild winters with little snowfall. Wet, humid, mild maritime climate. Relatively little snow, with a long growing season. Cooler, with a short growing season. Heavier snowpack than CWHvm1. Dominant Tree Species Fd, Hw, Cw Hw, Cw, Hm Hw, Hm, Cw Understory Species Salal, red huckleberry, dull Oregon-grape, bracken fern, sword fern Salal, salmonberry, Devil’s club, deer fern, sword fern Salal, blueberry, salmonberry, foamflower, sword fern Area of MKRF  1887ha 2187ha 1046ha *Note: Based on information from Ministry of Forests and Range website  (Ministry of Forests and Range, 2008) The most common natural disturbance in this area is fire, which typically recurs every 200 years, and has resulted in the separate age class stands that exist in the forest today (Malcolm Knapp Research Forest, 2009).  Appendix 3 shows the current age class distribution for MKRF. The non-fire disturbed patches of MKRF consist of 400 year+ old growth. Half of the western side of the forest consists of 120 year-old stands, and most of the eastern half of the forest is comprised of 70 year-old stands. Harvesting is another  13   Carbon Management Plan for Malcolm Knapp Research Forest 2010 significant cause of disturbance in the forest. Historical and current harvesting operations have created a range of age classes throughout the forest. 1.5  History  UBC began leasing Crown Land from the Provincial Government in 1943 due to a need for forested areas suitable for the University’s research and training of future foresters (Hives & Heger). This land was removed from Garibaldi Park in Maple Ridge, and initially leased for twenty-one years to the University. In 1949, the forest was placed in the control of UBC in the form of Crown grants under the agreement that the forest continue to be used primarily for research and educational purposes (Lawson, 2010). With additional aid from the forest industry, the Research Forest developed into an educational facility, providing accommodations for instructors, students, and workers at Loon Lake (Hives & Heger) and resources for demonstrations and research experiments throughout the forest. In 1988, the forest was officially renamed the Malcolm Knapp/UBC Research Forest in honour of Professor Malcolm Knapp who was instrumental in the negotiations with the Province that led to the transfer of the land to UBC (Malcolm Knapp Research Forest, 2009). Today, MKRF is managed and operated by staff from UBC’s Faculty of Forestry. The forest continues to fulfill its mandate by providing appropriate facilities and resources for students and researchers (Malcolm Knapp Research Forest, 2009). More than 100 research projects are currently active on the land base and road systems are maintained throughout the forest to ensure accessibility. MKRF also operates its own sawmill in partnership with Gallant Enterprises (Malcolm Knapp Research Forest, 2009), and produces a variety of specialized and value-added products and structural lumber for sale to the general public. In order to sustain mill activities, harvest levels must be maintained at or above 11,000m3 per year (Lawson, 2010). Harvesting continues to be carried out yearly on a sustainable yield basis. MKRF also manages a 250 hectare woodlot on government-owned land directly adjacent to the forest, in efforts to promote sustainable community forest initiatives (Malcolm Knapp Research Forest, 2009). 1.6 Land Management and Interest Groups Interest groups place several constraints on MKRF’s current and future activities. The government- registered covenant against the deed of the property states that the granted land must be used “for the purpose of instruction and demonstration in the practices of forestry and forest engineering” (Lawson, 2010). MKRF is therefore obliged to fulfill its research mandate in accordance with this agreement with the Provincial Government and in connection with UBC. MKRF must also satisfy the interests of the Katzie First Nation, the Canadian Cancer Society, recreational users, and the community of Maple Ridge.       14   Carbon Management Plan for Malcolm Knapp Research Forest 2010  Figure 2 illustrates the various interest groups:  Figure 2: MKRF interest groups   UBC: Due to forest’s proximity to the urban community, demonstration and education helps educate the public about natural resources and sustainable management. UBC mainly designates the forest for research, demonstration and educational purposes while enabling the Research Forest to maintain its forestry practices and generate revenue as a private enterprise. Through MKRF, UBC is able to make connections to many researching organizations and universities from all over the world.    The Provincial Government  of BC: Although MKRF is privately owned, it must fulfill its research mandate in accordance with its agreement with the Provincial Government.  Moreover, the Crown grant provides MKRF with rights to operate as private land, but the forest itself must continue to be open for public use.   Katzie First Nation Communi ty: The traditional land of the Katzie First Nation Community extends into MKRF’s private land base. The Kat?ie do not claim title to the land but it is MKRF’s responsibility to ensure that all management activities and harvesting operations take the Katzie’s interests into consideration. MKRF works closely with this community to maintain the band’s values through continuous consultation and accommodation efforts. MKRF also employs members of the Katzie band in its operations, including harvesting and silviculture (Lawson et al., 2010).    Canadian Cancer Society:  The Canadian Cancer Society (CCS) is a sponsor of the Cadillac Fairview Trevor Linden Gymnasium at Loon Lake, which is used by Camp Goodtimes throughout the year (Carrick, 2007). In July 2004, the CCS celebrated the 20th anniversary of Camp Goodtimes at its new MKRF UBC Government Recreational Users Maple Ridge Katzie First Nation Canadian Cancer Society 15   Carbon Management Plan for Malcolm Knapp Research Forest 2010 location at Loon Lake (Dexter, 2004). Since then, the CCS has held Camp Goodtimes’ activities at MKRF. Revenues for the forest’s maintenance are derived largely from the use of Loon Lake’s facilities by the CCS (Lawson et al., 2010).    Recreational Users: The forest is managed for the local community by maintaining an extensive trail system for its recreational users. Approximately 55,000 local and out-of-town visitors use MKRF’s trails annually (Lawson et al., 2010).    Maple Ridge: MKRF is located at the forest-urban interface and must therefore uphold its visual quality standards and take into consideration municipal bylaws that may place limits on certain activities that affect the community of Maple Ridge, such as prescription burning and harvesting operations. The Alouette community watershed is also located within the Research Forest (UBC Malcolm Knapp Research Forest, 2009).  1.7  Plan Organization Carbon markets and standards applicable to MKRF’s potential project activities will be discussed in section 2.0, followed by a comprehensive overview of criteria and indicators in section 3.0. Criteria and indicators will be used to evaluate the scenarios which we have developed. Goals, objectives, indicators, targets and management strategies will be outlined for each of the nine criteria presented in this plan.  Section 4.0 will discuss the methods used in developing and modeling our two base cases and three carbon management scenarios. Assumptions and constraints associated with modeling will be highlighted, and the modeling results of targets associated with criteria and indicators will also be discussed.  An analysis of the scenarios will be done in section 5.0 through use of an ordinal ranking method and a multi-criteria analysis. Following a discussion of the analysis results, a final recommendation for MKRF will be made in section 6.0. Section 7.0 will summarize leakage and permanence issues associated with carbon project activities and section 8.0 will conclude the management plan with an assessment of risks associated with carbon management and investigate ways to mitigate such risks through participation in a buffer pool or through insurance.  2.0  Carbon Markets and Standards  Two types of markets currently exist for carbon offsets: regulatory/compliance markets and voluntary markets. Participation in both regulatory and voluntary markets is considered in our management plan, in order to provide MKRF with the flexibility and maximum potential for revenue generation through the sale of its carbon offsets. MKRF may sell a portion or the entirety of its offsets to offset buyers, such as the Pacific Carbon Trust (PCT) or to the Voluntary Carbon Market; however, offsets can only be sold once, and must be produced through forestry projects that meet the standards adopted by the purchasing organization. Appropriate standards have been selected for each market, and forestry projects initiated by MKRF will be eligible to sell its offsets to more than one buyer. Appendix 4 provides further information with regard to the development of the carbon market and standards that are relevant to this project.   16   Carbon Management Plan for Malcolm Knapp Research Forest 2010 2.1  ISO 14064 Both regulatory and voluntary markets recognize the International Organization Standard 14064 (ISO 14064) standard for greenhouse gas (GHG) emission verification, accreditation and trading systems. Projects initiated by MKRF should meet this standard, as well as standards appropriate for each respective market. This standard is internationally regulated and includes principles for determining project baseline scenarios, and for monitoring, qualifying and reporting project performance levels relative to the baseline scenario (Spence, 2009).  2.2  Regulatory Markets As a forestry-related mitigation initiative and Crown corporation of the Government of BC, PCT is expected to be the primary buyer of offsets if MKRF chooses to enter into this market. Although MKRF is operated as a private enterprise, its affiliation with UBC has led to discussions of the possibility of collaboration between the two organi?ations to offset UBC’s emissions. No plans are currently in place to formally establish such a relationship; however, UBC anticipates that MKRF offsets will either be sold directly to PCT or listed as “removals” from the University’s GHG inventory (Henderson, 2010).   Projects eligible for registration under the PCT must begin commercial operations after November 29, 2007, and must comply with the BC Emission Offsets Regulation (EOR) (Pacific Carbon Trust, 2010). Currently, PCT has not adopted any standards—however, it is expected that PCT will follow standards similar to the California Action Reserve Forest Project Verification Protocol Version 3.0 (CAR). CAR accepts forest improvement projects that increase and/or conserve forest carbon stocks, and which are third-party certified through either FSC or SFI. However, CAR does not approve projects which include broadcast fertilization.  2.3 Voluntary Markets This market has been growing considerably over the last few years and is expected to become a significant market for carbon offsets trading in the future. The Voluntary Carbon Standard Guidance for Agriculture, Forestry, and Other Land Use Projects (VCS) accepts improved forest management projects (Voluntary Carbon Standard, 2007). VCS does not currently require third-party certification. The Standards Council of Canada (SCC) and American National Standards Institute (ANSI) are currently preparing a voluntary North American standard—the Draft Forest Carbon Standard, which is expected to compete with standards established by regulatory North American standards. Projects that are likely to be approved by the Draft include improved forest management projects that seek to protect and/or enhance forests through sustainable forest management treatments and increase overall forest biomass (Forest Carbon Standards Committee, 2009). The project must be verified by according to ISO 14064 standards, and be third-party certified through CSA or SFI. 2.4 Certification Certain standards—e.g. CAR and SCC-ANSI—require third-party certification of forest projects in order to be eligible. Certification schemes in Canada are validated primarily through three organizations: the Forest Stewardship Council (FSC), the Canadian Standards Association (CSA), and the Sustainable Forestry Initiative (SFI). MKRF is not currently certified, and is unable to pursue certification under FSC due to costs  17   Carbon Management Plan for Malcolm Knapp Research Forest 2010 and overall ineligibility because of current and past research projects, such as the use of tree seedlings created by somatic embryogenesis (Lawson, Forest Certification, 2010). A cost-benefit analysis will be done to determine if proposed scenarios will benefit from certification, in which case SFI has been proposed as the certification scheme which would best suit MKRF’s objectives, financial constraints, and management practices.  Table 2 below provides a summary of carbon markets and standards applicable to MKRF, including baseline year, project eligibility, and ISO and certification requirements. Table 2: Summary of carbon markets and applicable standards, including baseline year, project eligibility for MKRF, and ISO a nd certification requirements  Market Buyer Standard Baseline Year Eligible Projects for MKRF  ISO 14064 Requirement  Third-Party Certification Regulatory Pacific Carbon Trust California Action Reserve Protocol Version 3.0 2007 Improved forest management ( an example maybe?)   Extended rotation Recommended FSC or SFI Voluntary (VCM) Voluntary Carbon Standard Guidance for Agriculture, Forestry and Other Land Use Projects 1990  Improved forest management  Extending the rotation age of evenly aged managed forests  Conversion of logged forests to protected forests Yes Not required Voluntary (VCM) SCC-ANSI Draft Forest Carbon Standard January 1 of enrollment year Improved forest management  Protection and/or enhancement of forest conditions through management treatments Yes CSA or SFI  SFI endorses Sustainable Forest Management (SFM), and is approved by the Canadian Council of Forest Ministers (CCFM) as a forest certification standard that meets its criteria (Canadian Council of Forest Ministers, 2008). Refer to Appendix 5 for detailed objectives endorsed by SFI to fulfill SFM standards and practices.  18   Carbon Management Plan for Malcolm Knapp Research Forest 2010 3.0 Criteria and Indicators  The Canadian Council of Forest Ministers’ (CCFM) Framework of Criteria and Indicators (Canadian Council of Forest Ministers, 2005) can be used to meet SFI certification standards, and has been adopted by TreeTop Down to ensure that sustainable management goals and objectives are fulfilled. The majority of the criteria presented here has been directly adopted from the CCFM framework and will be applied to measure the success of the management scenarios; however, additional criteria have been developed by TreeTop Down to accommodate the goals and objectives that are an integral part of a carbon management plan.  Nine criteria have been developed for this plan. Each criterion is outlined with a description of its significance and value within a forest management context, and states general goals that are specific to MKRF. Criteria are further outlined with objectives, targets, and management strategies that serve to ensure that the criteria are met.  Objectives: Objectives provide clearer goals that MKRF will incorporate into their management plan in order to sustain or enhance the stated criterion.  Indicators: In relation to the stated objectives, indicators identify specific scientific factors (CCFM C&I) that assess the state and progress of the forest over time.  Targets:  Targets are useful tools to evaluate whether or not objectives are met. They are assigned to each indicator and place thresholds on the acceptable levels of change over time; however, not every target can be modeled. In these instances, best predictions are used to evaluate how the targets are met.  Management Strategies: Suggested management strategies are provided to meet the general goals and objectives of each criterion. Management strategies should be periodically monitored and assessed for effectiveness.  3.1 Criterion 1: Biological Diversity  Biological diversity comprises all levels of variety among living organisms and the ecological complexes within which they exist. Biological levels range from “complete ecosystems to the chemical structures that are the basis of heredity” (Canadian Council of Forest Ministers, 2005), and can be classified in three broad categories, which are defined by the CCFM as follows: Ecosystem Diversity: the variety and relative abundance of ecosystems and their plant and animal communities Species Diversity: the number of different species, and species population levels and distribution throughout a particular area (Boyland et al., 2006) Genetic Diversity: the variation of genes within a particular species   19   Carbon Management Plan for Malcolm Knapp Research Forest 2010 The maintenance of the variety and quality of diversity within these levels is fundamental to the conservation of species and genetic variation within species, and is an important criterion to meet in any management plan. Any significant change or disturbance at the ecosystem level necessarily causes a change in species distributions and populations (Canadian Council of Forest Ministers, 2005); anthropogenic changes must therefore seek to conserve biodiversity at all levels in order to prevent or decrease the rate of species extirpation.  A list of Red and Blue listed species found in MKRF and their habitat requirements can be found in Appendix 6. Currently, 69.6 hectares of the forest have been reserved for Old Growth Management Areas (Appendix 7), and all seral stages are represented throughout the forest (Appendix 8). Old growth for MKRF is defined as forest stands older than 250 years (BC Ministry of Forests, 2001). For the purpose of evaluating suitable habitat, seral stages are defined as early seral (??0 years), mid seral (<120 years), mature seral (?120 years), and old seral (?250 years) (Boyland, Nelson, Bunnell, & D'Eon, 2006). General goals for the protection and enrichment of biological diversity at MKRF are to:  ensure that old growth areas and a significant representation of all seral stages are maintained to conserve habitats   ensure that management and operational activities have a positive or minimal level of impact on all levels of biodiversity  reduce the overall number of invasive species in the forest to protect and conserve unique habitats  promote the conservation of current levels of genetic diversity in plant and animal species  3.1.1 Objective 1: Ecosystem Diversity  Through management, maintain and conserve a variety of naturally occurring ecosystems, biotic communities, and habitats with no net loss in biodiversity.  Indicator: Representation of all three BEC subzones in reserves  Target: Maintain representation  3.1.2 Objective 2: Species Diversity  Maintain current species diversity by incurring no net loss of biodiversity, and maintain or increase the population level of species at risk (both red- and blue-listed).  Indicator: Significant representation of all seral stages in the forest  Target: Maintain representation  Indicator: Area of old growth  Target: Increase, or maintain at current levels     20   Carbon Management Plan for Malcolm Knapp Research Forest 2010 3.1.3 Objective 3: Genetic Diversity  Maintain and/or enhance natural and regenerated stand genetic diversity in all age classes, while conserving existing mechanisms for natural genetic flow. Indicator: Genetic diversity of reforested stock  Target: No net loss  3.1.4  Management Strategies Ecosystem Diversity:    maintain old growth reserves throughout MKRF  place adjacency constraints on harvest activities to ensure adequate representation of seral stages  through regeneration strategies, ensure a variety of naturally occurring forest cover types throughout the forest  minimize regeneration delay  Species Diversity:  ensure old growth reserves and seral stages are adequately represented  use a coarse filter approach to ensure the protection of species at risk in MKRF   monitor populations of red- and blue-listed species (see Appendix 6). If populations are in decline (beyond variation in natural cycles), initiate fine filter approach to ensure increased protection of suitable habitat areas   manage species diversity through seed selection and planting  Genetic Diversity:  ensure that Class A seedlings originate from orchards that guarantee a high level of genetic diversity   3.2 Criterion 2: Carbon Storage Forests act both as sinks and sources in the global carbon cycle, and play a fundamental role in the mitigation of climate change and the reduction of greenhouse gas emissions into the atmosphere (Greig & Bull, 2009). Forests sequester carbon by storing atmospheric carbon in above- and below-ground plant biomass and soil (e.g. carbon pools); forests can also emit carbon through decomposition, disturbances (e.g. fire and insect damage), and operational activities. Through carbon management activities, a forest’s natural capacity to store carbon may be enhanced, contributing in the long-term to a positive carbon balance in the global carbon cycle (Canadian Council of Forest Ministers, 2005)     21   Carbon Management Plan for Malcolm Knapp Research Forest 2010 MKRF should seek to contribute positively to the global carbon cycle by meeting the following general goals in its carbon management plan:  maintain and enhance the forest’s ability to sequester above- and below-ground biomass and soil carbon  maximi?e the number of carbon credits produced by MKRF’s management strategies  reduce the forest’s carbon emissions and emissions associated with forest operations activities  maintain forest conditions that contribute to long-term sequestration, while maintaining ecosystem health and biodiversity  3.2.1 Objective 1: Carbon Emissions  Ensure that forest management and operations activities are not contributing disproportionately to global carbon emissions (CCFM). Indicator: Net change in total emissions from MKRF and related operations  Target: Maximum 5% increase from current levels  3.2.2 Objective 2: Carbon Sequestration  Increase and/or accelerate carbon sequestration in forest stands. Indicator: Net change in carbon sequestration from SSRs   Target: Increase by minimum 10% above base cases  Indicator: Number of carbon credits produced  Target: Increase by minimum 10% from current levels  Indicator: Conversion of forested land base to non-forest development   Target: 0% loss   3.2.3  Management Strategies Carbon Emissions:  increase focus on fire and pest management  limit prescribed fires  limit emissions associated with harvesting activities  salvage merchantable dead wood outside old growth reserves  encourage harvesting activities that do not increase wood debris in harvested areas  implement continuous monitoring program of carbon emitted     22   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Carbon Sequestration:  reforest harvested areas promptly  encourage planting of fast-growing tree species  reforest de-activated roads with red alder  maintain area of forested land base   incorporate management activities that increase carbon sequestration (e.g. fertilization, select seed use, longer rotations)  implement continuous monitoring program of carbon sequestered   3.3 Criterion 3: Economic Benefits from Current Activities  MKRF generates revenue from forest management activities and the use of camp facilities by various organi?ations. Currently, the majority of revenue is generated from the use of Loon Lake’s camp facilities by the Canadian Cancer society. The second largest source of revenue is from value-added forest products such as cedar poles and house logs. Approximately a quarter of the revenue is from timber sales (5 year average ~ 1M/year) (Figure 3). An important aspect of MKRF’s management strategies is the maintenance or enhancement of these activities, which could help ensure long-term economic well-being.   Figure 3: Estimated net revenue from three main revenue-generating activities at MKRF in 2001  (Lawson, Financing the Research Forests, 2010)  General goals for the management of current economic benefits are as follows:  provide a balance between economic benefits derived from timber harvesting and carbon management  minimize impacts of management strategies on different interest groups      23   Carbon Management Plan for Malcolm Knapp Research Forest 2010 3.3.1 Objective 1: Maintain or increase revenue generated by MKRF  Maximize revenue of all profit-generating activities in MKRF from use of educational/camp facilities and timber sales. Indicator: Number of camp days  Target: No decrease from current levels  Indicator: Timber sales  Target: Maintain harvest levels at minimum 11,000m3/year   Indicator: Total growing stock  Target: Long-term, non-declining even flow  3.3.2  Management Strategies  Management activities should not conflict with the Loon Lake Camp facilities   Continuous research into new market opportunities for MKRF products (e.g. timber, carbon credits)   Manage for valuable species and high quality timber  Increase focus on value-added products  3.4 Criterion 4: Social Benefits MKRF’s management strategies seek to ensure the maintenance or enhancement of long-term social well- being. Social benefits are acquired through the employment of local forest workers, including members of the Katzie First Nation. Traditional use of the forest by the Katzie is encouraged by MKRF. MKRF further contributes to the Katzie by providing them with a year-round supply of firewood. Neighboring communities also benefit from the use of the forest—due to MKRF’s proximity to Maple Ridge, the forest is heavily visited by local recreational users. Visitor days per year are estimated to be approximately 50,000. However, since MKRF does not charge for the use of its trails, trail-building and maintenance is not considered a priority. Donations are occasionally made for trail improvements, and volunteers are encouraged to participate. General goals for the management of current economic benefits are as follows:  provide a balance between social benefits derived from timber harvesting and carbon management  maintain or increase local employment   manage recreation in accordance with other resource objectives of MKRF  create a user-friendly environment for different user groups  continue educational efforts to inform users about considerate use of the forest      24   Carbon Management Plan for Malcolm Knapp Research Forest 2010 3.4.1 Objective 1: Maintain or increase employment rate in the forestry sector  Ensure minimal impact on local and First Nation’s employment levels due to management strategies Indicator: Number of local people employed in forestry related positions  Target: No decrease from current levels  3.4.2 Management Strategies Social Benefits:  continue provision of employment opportunities at MKRF for the Katzie First Nation and local community members  encourage the local community to participate in trail maintenance days  3.5 Criterion 5: Responsibilities to First Nations  The traditional territory of the Kat?ie First Nation extends into MKRF’s private land base, and although the Katzie do not claim title to the lands, it is nevertheless MKRF’s responsibility to ensure that all management activities take the Kat?ie’s interests into consideration. MKRF must fulfill its obligations to consult with and accommodate the band prior to the adoption of a new plan, and should work closely with the community to uphold and respect its values. As good stewards, MKRF should continue to seek to employ members of the Kat?ie throughout the year, and strategically manage the forest to preserve the Kat?ie’s values and interests in the land.  MKRF should seek to uphold its responsibilities to the Katzie First Nation by meeting the following general goals in its carbon management plan:   continue to maintain a positive relationship with the Katzie First Nation through consultation and accommodation  encourage Katzie participation in development of management plans  prioritize Katzie members for job opportunities  3.5.1 Objective 1: First Nations  Maintain a positive relationship with the Katzie First Nation Indicator: Appropriate consultation and accommodation prior to plan modifications or  adoption of a new plan  Target: Consult with representatives of the Katzie First Nation  Indicator: Employment opportunities for members of the Katzie First Nation  Target: Increase, or maintain current levels  Indicator: Respect the interests and traditional values of the Katzie First Nation  Target: 100% compliance  25   Carbon Management Plan for Malcolm Knapp Research Forest 2010 3.5.2 Management Strategies  hold periodical meetings with Katzie representatives  consider all concerns put forth by the Katzie First Nation  document and keep records of all Kat?ie’s concerns and ideas for management of MKRF   respond to the Kat?ie’s concerns in a timely manner  3.6 Criterion 6:  Responsibilities to Local Communities As good stewards of the forest, MKRF makes commitments to the community of Maple Ridge to uphold visual quality standards, ensure public health and safety through strategic forest management techniques, and maintain open communication channels with the general public. MKRF is adjacent to Maple Ridge, and must therefore ensure that harvesting operations are carried out to minimize visual impacts; efforts must also be made to ensure that MKRF activities do not negatively affect the Alouette watershed, which is located within the boundary of the MKRF land base. Smoke and fire management is also paramount. MKRF does not currently conduct any slash burning, and prescription burns are conducted only under appropriate conditions (e.g. during unstable atmospheric conditions, and favorable wind conditions). Several water reservoirs have been constructed throughout the forest to facilitate access to water in the event of fire. MKRF’s extensive road network also serves to facilitate quick access. The forest is also heavily patrolled during fire season to ensure the safety of its recreational users and adjacent communities. MKRF also seeks to maintain open communication with the community through conducting public meetings, and facilitating access to annual reports and management plans.  MKRF should seek to uphold its various social responsibilities and commitments by meeting the following general goals in its carbon management plan:   continue to maintain a positive relationship with the local communities  uphold visual quality standards through strategic management techniques   maintain high smoke and fire management standards to ensure the safety and health of neighboring communities   encourage public input and facilitate access to public documents  3.6.1 Objective 1:  Visual Quality  Minimize visual impacts of harvest in cut blocks and other areas through strategic harvesting techniques Indicator: Tactical harvesting methods that maintain visual quality  Target: 100% compliance  Indicator: Area of in-block retention  Target: Minimum 20% for low operability areas and 10% for operable areas     26   Carbon Management Plan for Malcolm Knapp Research Forest 2010 3.6.2 Objective 2:  Public Contributio n Maintain and encourage public input through meetings and access to public documents  Indicator: Public access to the projects  Target: Increase, or maintain at current levels  Indicator: Periodic public meetings  Target: Increase, or maintain at current levels  3.6.3  Management Strategies Visual Quality:  continue designing small cutblocks to increase visual quality   prior to implementation, conduct Visual Impact Assessments of proposed roads and cut-blocks   ensure that Visual Impact Assessments can be reviewed and commented on by interested community members and advisory committee members  apply adjacency constraints to harvesting schedule and limit regeneration delay   retain select windfirm trees in cutblocks to promote visual quality  Public Contribution:  maintain periodical public meetings   document and keep records of interest group concerns and ideas for management of MKRF  regularly update MKRF website    3.7 Criterion 7: Soil and Water  Soils at MKRF are predominantly podzols that have been formed in colluviums or ablation till. These soils overlie basil till or granitic bedrock, and have average depths of one metre (HydroEcological Landscapes and Processes, 2009). Forest management practices at MKRF should pay careful attention to minimize soil disturbance and compaction. Failure to do so can lead to a decrease in productivity of the forests, and problems related to erosions and mass wasting. Erosion usually leads to loss of aquatic ecosystem productivity and a decline in drinking water quality. Mass wasting can result from improper road building activities, particularly in wet climates and on steeper slopes. It can lead to a loss of productive area, the degradation of stream channel morphology and fish habitat, and road washout. Management considerations related to soil conservation is therefore an important part of maintaining forest productivity, biodiversity, and water resources.  General goals for the protection of values associated with soil and water in MKRF are to:  maintain and conserve unique soil characteristics  prevent soil erosion and mass wasting  maintain soil productivity  maintain water quality and quantity  maintain suitable fish/riparian habitat  27   Carbon Management Plan for Malcolm Knapp Research Forest 2010 3.7.1 Objective 1: Minimize soil degradation/compaction  Minimize soil degradation and compaction to maintain or improve soil structure and stability, and thereby avoid or minimize soil erosion and mass wasting; soil disturbance will also be minimized, and soil productivity will be maintained.  Indicator: Percent of disturbed forest floor classified as having very high soil sensitivity  Target: 100% compliance with FRPA  Indicator: Percent of disturbed forest floor classified as having moderate and low soil sensitivity  Target: 100% compliance with FRPA  3.7.2 Objective 2: Maintain suitable fish/riparian habitat  Through management, maintain suitable fish/riparian habitat by keeping sediment levels at current or lower than current levels to maintain acceptable levels of water quality. The quantity and temperature of water should also remain at near current levels.  Indicator: Area of riparian buffers around lakes/streams, especially on steeper slopes (≥30%)  Target: 100% compliance with BC Forest Practices Code  Indicator: Temperature of water in streams/lakes   Target: No net change  Indicator: Amount of sediment in stream/lakes  Target: No net change  Indicator: Net area of riparian habitat  Target: No net change  3.7.3 Management Strategies Soil:   harvesting activities on sensitive sites should be conducted mainly during the drier periods in late summer to minimize soil disturbance  increase focus on low impact harvesting methods overall  low impact harvesting methods should be utilized in areas classified as having high soil sensitivity  re-plant slopes to increase soil stability  develop plans for road deactivation, rehabilitation, and restoration  Water:  establish procedures for sediment control in road construction and reactivation   continue to incorporate stream buffers and management zones in relevant cutblocks  implement careful harvesting on steep slopes and areas upslope from important riparian habitat  monitor water quality closely to evaluate the effects of fertilization  28   Carbon Management Plan for Malcolm Knapp Research Forest 2010 3.8 Criterion 8: Long - term Flexibility Forest management requires long-term planning and must therefore be flexible to account for varying social, economic, and environmental conditions. The recent economic downturn and the subsequent drop in demand for lumber have caused economic hardship for many licensees and private landowners. To mitigate the effects of such unforeseeable events, forest management should strive to diversify its activities and sources of revenue. MKRF is already more diversified than most land owners as it generates revenue from a variety of activities through the use of the Loon Lake camp facilities, timber sales, and value-added product sales.  When venturing into a new and relatively uncertain market such as the carbon market, emphasis on diversification becomes increasingly important. MKRF must continuously strive for flexibility in order to meet its economic goals, regardless of varying market conditions for carbon and log and lumber prices.  General goals for securing long-term flexibility in the MKRF carbon management plan are to:   ensure acceptable levels of revenue are maintained regardless of changes in market conditions  ensure that the recommended scenario has the potential for adaptability should the primary market collapse (e.g. shift focus from primary carbon market to secondary timber markets)   3.8.1 Objective 1: Sustain Gallant saw mill activities over time  Indicator: Harvest levels  Target: Maintain harvest levels about 11,000m3/year  3.8.2 Objective 2: Diversity of species in MKRF inventory   Indicator: Number of different species in log inventory  Target: Maintain four species   3.8.3 Management Strategies  maintain a balance between carbon and timber objectives  continue research into new market opportunities, diversification of products with an emphasis on value added product development   plant a variety of economic species to account for changes in market demand  continue use and improvement of Loon Lake camp facilities   29   Carbon Management Plan for Malcolm Knapp Research Forest 2010 3.9 Criterion 9: Education and Research In 1949, MKRF was officially granted their land by the Crown on the condition that education and research are their primary mandates1. To uphold this legal constraint, management activities must continue to cater to education and research objectives. Researchers (both local and international) are accommodated in the establishment of their projects, and accommodation for researchers and students is provided if needed.  Currently, more than 100 research projects are active within MKRF, and other activities such as harvesting are carefully planned to avoid interference with any of these projects. It is critical for MKRF to continue to fulfill its research mandate, in order to continue ownership of the land. General goals for fulfilling the education and research mandate in the MKRF carbon management plan are to:   continue to permit a wide range of research projects within the forest  maintain Loon Lake facilities to ensure available accommodation for researchers  3.9.1 Objective 1: Avoid increased constraints on research project types  Indicator: Average number of research projects  Target: Maintain historical average of research projects 3.9.2 Objective 2:  Maintain camp and educational facilities  Indicator: Number of educational tours and camp days  Target: Maintain or increase from current levels  4.0 Scenario Modeling  The purpose of this management plan is to explore options for MKRF to generate revenue, utilizing both harvesting and carbon sequestration strategies. Two base case scenarios were developed for 1990 and 2007 to represent “business as usual” baselines2. Three additional scenarios were created which aim to increase carbon sequestration in MKRF through improved forest management and conservation techniques. The scenarios were modeled using Forest Planning Studio-Atlas (FPS-Atlas) with carbon stock information generated in the Carbon Budget Model of the Canadian Forest Sector (CBM-CFS3) to interpret the effects of adjusting current practices to meet carbon and/or timber revenue objectives.                                                           1  As dictated by the restrictive covenant on the 1949 Crown grant (Powers, 2010). 2  1990 is the baseline required by the Voluntary Carbon Standard, whereas 2007 is the baseline required for BC’s regulatory market. The baseline for the future North American voluntary market is January 1 of the project enrollment year.  30   Carbon Management Plan for Malcolm Knapp Research Forest 2010 4.1 FPS- Atlas All of the management scenarios were modeled using FPS-Atlas. FPS-Atlas is a forest- level harvesting model that is designed to schedule harvests according to a range of spatial and temporal objectives (Nelson, 2003).  Polygons in the model contain critical attribute information and are vital for the operation of the model .Each polygon in the model was assigned to a stand group with particular carbon stock information. The model is then able to display the total carbon stock of the forest landscape over 240 years according to management assumptions. 4.2 CBM- CFS3  CBM-CFS3 was used to generate carbon stock information and analyze sequestration capabilities of stand structures in MKRF. CBM-CFS3 is an aspatial, stand and landscape-level modeling framework used to simulate the dynamics of all forest carbon (Natural Resources Canada, 2009). The carbon model generates carbon curves for each of the different stand groups used in the FPS-Atlas model.  Once the carbon stock information is generated, it is imported to the FPS-Atlas model to generate changes in total carbon stock over time.  For the purposes of the scenario modeling a harvesting projection of 240 years was used. 4.3 Carbon Management Scenarios 4.3.1 1990 Base Case This scenario was developed to reflect 1990 forest management practices. In this scenario harvest levels were set according to a five year historical average from 1988-1992—this average was taken from MKRF’s annual harvest levels (Appendix 9), and resulted in a harvest flow of 8,400m3/year. Conventional harvesting methods were mainly employed using a clearcut silvicultural system and did not incorporate any in-block retention. This particular scenario is not a viable option for MKRF to pursue as it incorporates practices that are no longer relevant to MKRF’s management goals—however, this scenario was developed to provide a baseline against which other scenarios can be compared to measure additionality. Additionality is the carbon that is generated by management activities in addition to the business-as-usual scenario (Greig & Bull, 2009). 4.3.2 2007 Base Case This scenario reflects 2007 forest management practices. Harvest levels were set according to a five-year historical average from 2005-2009 (Appendix 9), and resulted in a harvest flow of 26,000m3/year. Conventional harvesting methods were mainly employed using a clearcut silvicultural system. In-block retention was utilized as a method of creating wild life tree patches. Commercial thinning operations were incorporated to manage for higher grade timber. Maximum thinning constraints were set at 30% since a lower setting would have resulted in the model not being able to maintain the harvest flow. 4.3.3 No Harvest  This scenario does not permit any timber harvesting activities within MKRF. It focuses solely on revenue generated from carbon sequestration, and the objective of this scenario is to demonstrate the maximum carbon sequestration level that might be obtained.   31   Carbon Management Plan for Malcolm Knapp Research Forest 2010 4.3.4 Extended Rotation  The objective of this scenario was to balance timber harvesting and increased carbon sequestration activities and pursue revenues from both markets. Minimum harvest ages were increased by 30 years, while the harvest level was decreased to 13,000m3/year. Commercial thinning operations were continued but at a proportion lower than the 2007 Base Case, to better reflect the actual five-year average of 21% thinning relative to the total harvest.  4.3.5 Select Seed This scenario was developed to maximize timber revenue while increasing carbon sequestration through the 100% usage of genetically improved seed stock3. The harvest flow, commercial thinning practices, and other model constraints from this scenario were identical to those of the 2007 Base Case. This allowed for the effect of select seed on carbon sequestration to be better evaluated.  4.3.6 Alternative scenarios Three other scenarios were also explored, but were not fully developed for this plan due to several limitations and/or lack of significant additionality produced. However, the modeling results for these scenarios can be seen in Appendix 10. These scenarios will not be included in any further analyses. Table 3 provides a summary and description of base cases and scenarios, including total harvest levels. Table 3: Summary of the scenarios Scenario Description Total Harvest Level (m3/yr) Base Case 1990  Harvest level maintained at 1990 levels  Model constraints reflect 1990 forest management practices 8,400 Base Case 2007  Harvest level maintained at 2007 levels  Model constraints reflect 2007 forest management practices  Commercial thinning operations maintained 26,000 No Harvest  Timber harvesting ceased in MKRF  Manage for maximum carbon sequestration 0 Extended Rotation  Minimum harvest ages extended by 30 years  Lower harvest levels compared to current practice  Manage for timber and carbon objectives  Decrease in proportion of commercial thinning operations relative to the overall harvest  13,000 Select Seed  Increase carbon sequestration through 100% usage of genetically improved seed stock  Maintain current practice harvest levels  Continue commercial thinning operations 26,000                                                           3  Class A orchard seed with the following gains were used: Cw (14.5%), Hw (15.9%), Fd (18.0%). The estimated levels of gain and production for each species were taken from The Forest Genetics Council of British Columbia Business Plan 2009-2010 (Woods, 2009) and correlate with the elevation levels at MKRF.  32   Carbon Management Plan for Malcolm Knapp Research Forest 2010 4.4 Modeling Assumptions The assumptions used in the carbon management scenarios are described in Table 4. Table 4: General assumptions used in modeling the s cenarios General  Assumptions used in Modeling  #  Model Description 1 FPS-Atlas, CBM-CFS3 Large-scale disturbances such as forest fires, windthrow and disease/insect infestation do not occur. 2 FPS-Atlas, CBM-CFS3 Yield curves beyond 200 years were assumed to remain constant. 3 FPS-Atlas Fertilization has been only used for research to date and is therefore negligible. 4 CBM-CFS3 Stands have been mapped based on the leading species only and values do not change for mix species stands. 5 FPS-Atlas Harvest levels have been adopted from a 5-year average and were assumed to represent future levels. 6 FPS-Atlas, CBM-CFS3 Yield tables that were aggregated to simplify total number of stand groups do not have a significant impact on results of project. 7 FPS-Atlas Cutblock adjacency was not determined to play a significant role in impacting harvest levels, and was therefore not considered. 8 FPS-Atlas, CBM-CFS3 Select seed use prior to 2007 was negligible and can be ignored. 4.5 Model Constraints The constraints used in modeling the carbon management scenarios are described in Table 5. See Appendix 11 for a map indicating the operable, low operable, reserves, and riparian buffer areas. Along with the map in Appendix 11, tables are provided showing the area of different site conditions and stand group categories within MKRF.  Appendix 12 shows the thinning constraints and zones for the scenarios.  Table 5: Constraints used in modeling the scenarios Scenario Model Constraints Location Applied 1990 Base Case No harvest Reserve clique 2007 Base Case 8000m3/yr max thinning 10% retention 20% retention No harvest Thinning Zone  Operability clique  Low operability cliques Reserve clique Select Seed 8000m3/yr max thinning 10% retention 20% retention No harvest Thinning Zone  Operability clique Low operability cliques Reserve clique  Extended Rotation 2700m3/yr max thinning 10% retention 20% retention No harvest Thinning Zone  Operability clique Low operability cliques Reserve clique No Harvesting No harvest Whole forest All Scenarios Modeled to period 24 (i.e. 240 years) Harvest priority: oldest stands first Whole forest THLB  33   Carbon Management Plan for Malcolm Knapp Research Forest 2010 4.6 Modeling and Results of Targets Associated with Criteria and Indicators  The FPS-Atlas model did not allow for modeling of all indicators and targets associated with various criteria. Table 6 shows the indicators and targets that were successfully modeled using FPS-ATLAS.  Table 6: Modelable targets for various criteria and indicators  Criteria Indicator Target Biological Diversity  Significant representation of all three BEC subzones in reserves Maintain representation Significant representation of all seral stages in the forest Maintain representation Area of old growth Increase, or maintain at current levels Carbon Storage  Net change in carbon sequestration from SSR’s Increase by minimum 10% above base cases Number of carbon credits produced Increase by minimum 10% from current levels Economic Benefits from Current Activities  Harvest levels Maintain harvest levels at minimum 11,000m3/year Total growing stock Long-term, non-declining even flow Long-term Flexibility Number of different species in log inventory Maintain four species  Scenario comparisons for each modelable indicator and target are discussed below in relation to criteria. 4.6.1 Biological Diversity The first objective for biological diversity relates to ecosystem diversity (3.1.1).The indicator is significant representation of all three BEC subzones in reserves, and the target is to maintain representation of these subzones. Table 1 provides a description of the BEC subzones within MKRF, and Appendix 13 shows the distribution of these subzones within the reserves. The reserves are maintained for all scenarios, and all subzones are maintained in roughly equal proportions. All scenarios meet this target, as reserves are maintained in perpetuity over 240 years. The second objective for biological diversity relates to species diversity (3.1.2), and is associated with two indicators. The first indicator is significant representation of all seral stages in the forest, and the target is to maintain representation. Figures 4, 5, 6, 7, and 8 show the seral stages for base cases and scenarios for periods 0, 8, 16, and 24, respectively. With the exception of the No Harvest scenario, all base cases and scenarios meet this target. The No Harvest scenario has an underrepresentation of early and mid seral stages. However, this scenario has the greatest representation of old seral stages.       34   Carbon Management Plan for Malcolm Knapp Research Forest 2010     Figure 4: Seral stages (period 0) for base cases and scenarios    Figure 5: Seral stages (period 8) for base cases and scenarios    0 500 1000 1500 2000 2500 3000 3500 4000 4500 Early Seral Mid Seral Mature Seral Old Seral A re a (h a) Period 0 1990 Base Case 2007 Base Case No Harvest Scenario Extended Rotation Scenario Select Seed Scenario 0 500 1000 1500 2000 2500 3000 3500 4000 4500 Early Seral Mid Seral Mature Seral Old Seral A rea  ( h a) Period 8 1990 Base Case 2007 Base Case No Harvest Scenario Extended Rotation Scenario Select Seed Scenario 35   Carbon Management Plan for Malcolm Knapp Research Forest 2010      Figure 6: Seral stages (period 16) for base cases and scenarios     Figure 7: Seral stages (period 24) for base cases and scenarios  0 500 1000 1500 2000 2500 3000 3500 4000 4500 Early Seral Mid Seral Mature Seral Old Seral A re a (h a) Period 16 1990 Base Case 2007 Base Case No Harvest Scenario Extended Rotation Scenario Select Seed Scenario 0 500 1000 1500 2000 2500 3000 3500 4000 4500 Early Seral Mid Seral Mature Seral Old Seral A re a (h a) Period 24 1990 Base Case 2007 Base Case No Harvest Scenario Extended Rotation Scenario Select Seed Scenario 36   Carbon Management Plan for Malcolm Knapp Research Forest 2010 The second indicator for this objective is area of old growth, and the target is to increase or maintain this area at current levels. Figure 8 shows the area of old growth for base cases and scenarios for the 240 year period. All base cases and scenarios meet this target, and show an increase in the total area of old growth within the MKRF land base.  Figure 8: Area of old growth for base cases and scenarios  4.6.2 Carbon storage Objective 3.2.2 is carbon sequestration, and is associated with two indicators. The first indicator is net change in carbon sequestration from sources, sinks, and reservoirs (SSRs). The target is to increase SSRs by a minimum of 10% above base cases. Figure 9 shows the total ecosystem carbon sequestered from SSRs. All scenarios meet this target since levels of carbon sequestered are above the 2007 Base Case. The No Harvest scenario is the only scenario which exceeds the level of carbon sequestered above the 1990 Base Case.  Figure 9: Total ecosystem carbon from sources, sinks and reservoirs for base cases and scenarios 0 1000 2000 3000 4000 5000 0 8 16 24 A re a (h a) Periods (10 yrs.) 2007 Base Case Select Seed Scenario 1990 Base Case Extended Rotation Scenario No Harvest Scenario 3,000 3,200 3,400 3,600 3,800 4,000 4,200 4,400 4,600 0 2 4 6 8 10 12 14 16 18 20 22 24 to n n e s o f C  (x100 0 ) Periods (10 yrs.) 1990 Base Case 2007 Base Case No Harvest Scenario Extended Rotation Scenario Select Seed Scenario 37   Carbon Management Plan for Malcolm Knapp Research Forest 2010 The second indicator for objective 3.2.2 is the number of carbon credits produced, and the target is a 10% minimum increase from current levels. Carbon credits are measured by addition carbon sequestered compared to the base line. Business-as-usual scenarios for our plan are the 1990 and 2007 Base Cases. Figure 10 shows the additionality produced by scenarios compared to the 1990 Base Case. Only the No Harvest scenario produces additionality—approximately 200,000 tonnes—above the Base Case. Figure 11 shows the additionality produced by scenarios compared to the 2007 Base Case—all scenarios meet the target, with the No Harvest scenario producing the greatest additionality. The No Harvest scenario sequesters approximately 1,100,000 tonnes of carbon, while the Extended Rotation and Select Seed4 scenarios sequester between 150,000 tonnes and 200,000 tonnes in relation to the 2007 Base Case.                                                              4  Note that Select Seed scenario results are an over-estimation of the carbon stocks. Genetic gains were applied to all managed stands, including those which are currently growing. However, genetic gains would not come into effect until those stands are reforested. The estimated actual genetic gain is 11%, using 100% select seed reforestation.     38   Carbon Management Plan for Malcolm Knapp Research Forest 2010     Figure 10: Additionality of scenarios compared to 1990 Base Case   Figure 11: Additionality of scenarios compared to 2007 Base Case   -1,000 -800 -600 -400 -200 0 200 400 0 2 4 6 8 10 12 14 16 18 20 22 24 A d d iti o n ality  - to n n e s o f C  ( x 10 0 0 ) Periods (10 yrs.) No Harvest Scenario Extended Rotation Scenario Select Seed Scenario 0 500 1000 1500 2000 2500 3000 3500 4000 4500 0 2 4 6 8 10 12 14 16 18 20 22 24 A d d itio n al ity  - to n n e s o f C02 E  (x100 0 ) Periods (10 yrs.) No Harvest Scenario Extended Rotation Scenario Select Seed Scenario 39   Carbon Management Plan for Malcolm Knapp Research Forest 2010 4.6.3 Economic Benefits from Current Activities To sustain and incur economic benefits from current activities, our plan’s objective is to maintain or increase the revenue that is generated by MKRF. Two indicators are identified to meet this objective. The first indicator is timber sales, and the target is to maintain harvest levels at a minimum of 11,000m3/year. This harvest volume would permit the Gallant sawmill to continue its activities over time and thereby generate revenue through timber sales.  Harvest flow patterns were established for each scenario, as outlined in Table 3. Each scenario was then run through the model to establish harvest volumes, which can be seen in Figure 12. For each scenario, there is no significant deviation from the harvest levels. However, only the 2007 Base Case, and Select Seed and Extended Rotation scenarios meet the target for this indicator. The 1990 Base Case and No Harvest Scenario do not have harvest volumes high enough to sustain harvest levels of 11,000m3/year.  Figure 12: Harvest volumes for base cases and scenarios   - 50,000 100,000 150,000 200,000 250,000 300,000 0 2 4 6 8 10 12 14 16 18 20 22 24 H ar ve st  ( m 3 ) Periods (10 yrs.) 1990 Base Case 2007 Base Case No Harvest Scenario Extended Rotation Scenario Select Seed Scenario 40   Carbon Management Plan for Malcolm Knapp Research Forest 2010 The second indicator for this criterion is the total growing stock in MKRF, and the target is a long-term, non-declining even flow to ensure a continuous supply of growing stock. Results for total growing stock for the base cases and scenarios can be seen in Figure 13. All scenarios meet the target in the long-term. As expected, the No Harvest scenario generates the highest total growing stock, and is followed by the 1990 Base Case and the Extended Rotation scenario. If figures 12 and 13 are compared, it can be seen that there is an inverse relationship between harvest volumes and total growing stock. As harvest levels decrease, total growing stock increases.   Figure 13: Total growing stock for base cases and scenarios   4.6.4 Long- term Flexibility To ensure long-term flexibility, a diversity of species in the MKRF inventory will be sustained. The indicator for this objective is the number of different species in the log inventory, and the target is to maintain four. Figures 14, 15, 16, 17, and 18 show the area by leading species for the base cases and scenarios.  All base cases and scenarios meet this target. However, the 2007 Base Case and Select Seed scenario result in a substantial decrease in area of Hw as well as alder (Figures 15 and 18).    0 1000 2000 3000 4000 5000 6000 0 2 4 6 8 10 12 14 16 18 20 22 24 V o lu m e  ( m 3 x  100 0 ) Periods (10 yrs.) 1990 Base Case 2007 Base Case No Harvest Scenario Extended Rotation Scenario Select Seed Scenario 41   Carbon Management Plan for Malcolm Knapp Research Forest 2010     Figure 14: Area by leading species for 1990 Base Case     Figure 15: Area by leading species for 2007 Base Case 0 500 1000 1500 2000 2500 3000 0 8 16 24 A re a (h a) Periods (10 yrs.) Red alder Douglas fir W. Hemlock W. redcedar 0 500 1000 1500 2000 2500 3000 3500 4000 0 8 16 24 A re a (h a) Periods (10 yrs.) Red alder Douglas fir W. Hemlock W. redcedar 42   Carbon Management Plan for Malcolm Knapp Research Forest 2010    Figure 16: Area by leading species for No Harvest scenario     Figure 17: Area by leading species for Extended Rotation scenario   0 500 1000 1500 2000 2500 3000 0 8 16 24 A re a (h a) Periods (10 yrs.) Red alder Douglas fir W. Hemlock W. redcedar 0 500 1000 1500 2000 2500 3000 3500 0 8 16 24 A re a (h a) Periods (10 yrs.) Red alder Douglas fir W. Hemlock W. redcedar 43   Carbon Management Plan for Malcolm Knapp Research Forest 2010     Figure 18: Area by leading species for Select Seed scenario  5.0 Scenario Analysis The 1990 Base Case was not included in the scenario analysis, as it incorporates management practices that are no longer relevant to MKRF’s management goals; the 1??0 Base Case will therefore not be considered nor recommended as an option for MKRF to pursue. The remaining scenarios—2007 Base Case, No Harvest, Extended Rotation, and Select Seed—are included in the scenario analysis to determine how each scenario fulfills the established criteria. The ordinal ranking method and multi-criteria analysis presented below will provide the basis for a recommendation.  5.1 Ordinal Ranking The ordinal ranking method was used to compare the 2007 Base Case and carbon management scenarios in terms of their abilities to meet each of the outlined criterion and their indicators, and to assess the effectiveness of the management strategies regarding these values. To indicate the degree to which each scenario satisfies a particular criterion, each scenario was assigned a ranking number from one to four, in order from worst to best (see Table 7). Table 7: Ordinal ranking key (degree of target fulfillment) Worst    Best 1 2 3 4  Ranking of scenarios was based either on the scenario’s ability to meet targets based on modeling results of the indicators, or by estimations relying on literature reviews, consultation with interest groups, and/or personal experience.  0 500 1000 1500 2000 2500 3000 3500 0 8 16 24 A re a (h a) Periods (10 yrs.) Red alder Douglas fir W. Hemlock W. redcedar 44   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Assumptions of the ordinal ranking system are as follows:  Scenarios that are equal in their fulfillment of a particular criterion are assigned the same ranking number  Increments between ranks are equal  Two criteria—“Responsibilities to First Nations” and “Responsibilities to Local Communities”—were excluded from this analysis, as all scenarios meet the indicator targets equally. Table 8 below shows the ranking of all scenarios (excluding the 1990 Base Case) against relevant criteria.  Table 8: Ordinal ranking of 2007 Base Case and scenarios against criteria. *Indicates Criteria which are weighed double, based on consultation with our client.  2007 Base Case No Harvest Extended Rotation Select Seed C ri ter ia  Biological Diversity 2 4 3 1 Carbon Storage 1 4 3 2 Economic Benefits from Current Activities 3 1 2 4 Social Benefits 4 1 2 4 Soil & Water 1 4 3 1 Long-Term Flexibility*  4 2 8 6 Education & Research*  8 2 4 6  Total Score 24 18 25 24  Based on the ordinal ranking matrix, a quick comparison of the scenarios can be made according to the total score for each scenario, as listed in Table 8. When the numbers are tallied, the scores are as follows: Extended Rotation has the highest score with 25; Select Seed and the 2007 Base Case ties for second place with 24; and The No Harvest scenario gets fourth place with a score of 18. The discussion below illustrates how scenarios were ranked according to their fulfillment of the criteria. 5.1.1 Biological Diversity This criterion concerns ecosystem, species, and genetic diversity.  Ecosystem Diversity: Ecosystem diversity is unaffected by different scenarios, as reserves remain constant and all BEC subzones are represented within the reserves (see Appendix 13).  Species Diversity: Habitat requirements differ according to the species of concern, and species diversity can therefore be influenced by the representation of all seral stages as well as the area of old growth. According to the modeling results, all scenarios except the No Harvest have a significant representation of all seral stages through the next 240 years (Figures 4, 5, 6, and 7). Although the Extended Rotation scenario moves towards a higher representation of the old seral stage, the No Harvest scenario comprises only mature and old seral stages at year 160. However,  45   Carbon Management Plan for Malcolm Knapp Research Forest 2010 gap phase dynamics ensure that seral stages are represented throughout the forest in the No Harvest scenario.  Most blue- and red-listed species habitat requirements are for mature/old growth forests (see Appendix 6), and old growth area is therefore valued more highly than seral stage representation. The area of old growth is greatest in the No Harvest scenario, followed by Extended Rotation (Figure 8); the 2007 Base Case and Select Seed scenarios have the least area of old growth.  Genetic Diversity: Genetic diversity can be compromised by the use of orchard seed. The Select Seed scenario—100% usage of orchard seed—will therefore have an effect on the overall genetic diversity of tree species in MKRF. However, all scenarios meet the established target for genetic diversity, as appropriate genetic diversity of orchard seed is regulated through the BC Ministry of Forests and Range Policy Standards (Ministry of Forests and Range, 1998).   A “sub-ordinal ranking” of this criteria can be seen in Appendix 14. Based on the factors that influence biological diversity and the weighted importance of old growth areas, the highest ranked scenario for biological diversity is the No Harvest scenario. The Extended Rotation scenario is ranked second, followed by the 2007 Base Case, and lastly, the Select Seed scenario.       5.1.2 Carbon Storage MKRF’s contribution to the global carbon cycle is a function of sequestration minus emissions. Any activity that influences this balance will affect the total carbon storage.  Carbon Sequestration: A general overview of the overall tonnes of carbon sequestered for each scenario can be seen in Figure 9, which depicts total ecosystem carbon from SSRs. This figure shows that the No Harvest scenario sequesters the greatest amount of total carbon. This scenario is followed by the Extended Rotation scenario, then the Select Seed scenario and finally, the 2007 Base Case scenario. Carbon Emissions: Emissions associated with operational activities are assumed to correlate with the level of harvest activities. Harvest volumes for each scenario can be seen in Figure 12. Emissions are therefore projected to be lowest for the No Harvest scenario, followed by Extended Rotation. The highest level of emissions will stem from the 2007 Base Case and Select Seed scenarios. As these two scenarios involve similar harvest levels, they are assumed to have approximately the same levels of emissions. A “sub-ordinal ranking” of this criteria can be seen in Appendix 14. The total amount of carbon sequestered is used as the principal indicator to differentiate between the performances of different scenarios. As a result, the No Harvest scenario is ranked the highest as it sequesters the largest amount of carbon. Extended Rotation, Select Seed, and 2007 Base Case scenarios, respectively, sequester less carbon and are consequently ranked lower.  46   Carbon Management Plan for Malcolm Knapp Research Forest 2010 5.1.3 Economic Benefits from Current Activities Operations of the Loon Lake camp facilities will be continued with every scenario. The ranking under this criterion is therefore based on the ability of the scenario to meet growing stock targets and the quantity of timber harvested per year. All scenarios meet the growing stock targets by establishing long-term, non- declining even flows (Figure 13). However, the scenarios differ in terms of volume harvested. Figure 12 shows that harvest levels are the highest for the 2007 Base Case and the Select Seed scenarios, both of which have the highest volume of timber extraction per year. However, due to the genetic gain associated with the select seed and the subsequent increase in timber quality, the Select Seed scenario is ranked above the 2007 Base Case. The 2007 Base Case is therefore ranked second, followed by Extended Rotation, and finally, the No Harvest scenario.  5.1.4 Social Benefits Every scenario allows for continuous recreational usage of MKRF, and management activities will be implemented to maintain and/or expand the current trail network. However, local employment opportunities are expected to have a strong correlation with harvest levels, since most local employment is within the operational activities in MKRF.  Harvest levels can be seen in Figure 12. Based on this assumption, the highest ranked scenarios for this criterion are the 2007 Base Case and the Select Seed scenarios. The Extended Rotation and No Harvest scenarios have lower/no harvesting levels and are therefore ranked lower.  5.1.5 Soil & Water  To mitigate effects on soil and water, MKRF strives to implement techniques for careful harvesting whenever possible. MKRF will adhere to rules and regulations concerning riparian habitat protection for all scenarios that include harvesting activities. To evaluate the impacts on soil and water quality, it is assumed that effects on soil and water are directly related—and somewhat proportional—to the total area harvested. Harvest levels can be seen in Figure 12. Therefore, the 2007 Base Case and Select Seed scenarios—which include the highest harvest levels—receive the lowest ranking. Extended Rotation scenario is ranked second highest, and the No Harvest scenario is ranked first. 5.1.6 Long- Term Flexibility As previously discussed, all scenarios meet the target of maintaining four species in MKRF’s inventory.  Two scenarios depend exclusively on one market each: the 2007 Base Case scenario is restricted to the timber market, while the No Harvest scenario is restricted to the carbon market. Both scenarios will be faced with difficulties if their respective markets collapse. However, since long-term contracts are required to enter the carbon market, the No Harvest scenario will be limited if at a later period MKRF seeks to re- enter the timber market due to changing market conditions. On the other hand, since most regulatory carbon contracts (e.g. PCT) can ensure a constant price per tonne of carbon, this scenario may be considered “safer” than scenarios which rely on the volatile timber market.  Nevertheless, the carbon market is an emerging market and is therefore associated with a great deal of uncertainty. As a result, the No Harvest scenario is ranked lowest in terms of long-term flexibility since it relies completely on the emerging carbon market. The 2007 Base Case is ranked second lowest, based on previously discussed concerns. The Extended Rotation and Select Seed scenarios are dependent on both  47   Carbon Management Plan for Malcolm Knapp Research Forest 2010 the carbon and the timber market. However, extended rotations are recognized more widely than select seed use by carbon standards as a strategy to increase carbon. Moreover, actual gain in volume realized from select seed use is uncertain. As a result, the Extended Rotation scenario is ranked highest, followed by the Select Seed scenario.  5.1.7 Education & Research  The 2007 Base Case, which represents current management activities, fulfills MKRF’s research mandate through the accommodation of researchers and the maintenance of Loon Lake and other educational facilities. The proposed scenarios could potentially place constraints on research project establishment, simply due to the long-term contract requirements of carbon plans. The Select Seed scenario is similar to the 2007 Base Case, but incorporates the use of 100% genetically improved stock for regeneration purposes. Depending on the research activities, this could place some constraints on projects if researchers wish to regenerate with different stock. The Extended Rotation scenario lowers the harvest level and adds an additional 30 years to the minimum harvest age. Although the decrease in harvest level is not considered to limit research activities, the extended rotation will impede potential projects if, for example, researchers wish to study short rotation harvests.  The No Harvest scenario will greatly obstruct research projects, as the scenario does not permit any harvesting activities. Based on these justifications, the 2007 Base Case was ranked the highest, followed by the Select Seed, Extended Rotation, and the No harvest scenarios.    48   Carbon Management Plan for Malcolm Knapp Research Forest 2010 5.2 Multi- Criteria Analysis Although the ordinal ranking matrix provides a general comparison of the scenarios, it does not compare scenarios against each other to fully evaluate which scenario best meets the established criteria. A multi- criteria analysis—based on the values included in the ordinal ranking—can be done to compare proposed scenarios against each other to select the best alternative. This method is a helpful tool in decision-making when dealing with complex problems Table 9 illustrates how the scenarios are compared to one another. When comparing two scenarios for each criterion, the scenario with the higher score (i.e. ordinal ranking score) receives one vote. The votes for each comparison are then summed up in the “total votes for” column. Based on the total votes, each scenario is finally ranked according to the number of “total votes for.” Table 9: Multi-criteria Analysis  VOTES AGAINST  MAXIMUM OF THE MINIMUMS  FINAL RANK   2007 Base Case No Harvest Extended Rotation Select Seed V OT ES  FO R  2007 Base Case X  6 4 3 3 3 No Harvest 3 X  3 3 3 3 Extended Rotation 5 6 X  5 5 1 Select Seed 4 6 4 X  4 2  Based on the results of the ordinal ranking (see Table 8) and subsequent multi-criteria analysis (Table 9), it can be concluded that the Extended Rotation scenario is the majority winner. Although this scenario is ranked the highest for only one criteria—long-term flexibility—it is ranked second highest for biological diversity, carbon storage, soil ? water, and education and research. This scenario meets MKRF’s timber and carbon objectives by keeping harvest levels high enough to sustain the Gallant Enterprises sawmill located in MKRF, as well as producing a large quantity of carbon credits. It is assumed that this scenario will be able to fulfill MKRF’s education and research mandate, although some adjustments to the carbon management plan might be necessary to avoid constraints on proposed research projects. The Select Seed scenario receives the second highest number of votes in the multi-criteria analysis, followed by the No Harvest scenario and the 2007 Base Case, which tie for third place.    Based on both the ordinal ranking method and the multi-criteria analysis, the Extended Rotation scenario is superior to all the other scenarios. Taking into consideration both methods of scenario evaluation, the  49   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Select Seed scenario receives second place, closely followed by the 2007 Base Case. The No Harvest scenario comes in at last place.  6.0 Recommendation This management plan modeled five different scenarios, and compared four of them—excluding the 1990 Base Case as an option—through the ordinal ranking method and a multi-criteria analysis. Based on these methods of analysis, it was determined that Extended Rotation is the recommended scenario. Criteria and indicators compared in the multi-criteria analysis were developed through the use and adaptation of the CCFM’s Framework of Criteria and Indicators, and meet sustainable forest management requirements for SFI certification.  Although the multi-criteria analysis is a valuable tool for forest managers in the decision-making process, the “winning” scenario does not necessarily need to be adopted. Other factors can influence management actions, and it is common for forest managers to incorporate strategies from different scenarios in their plans. Moreover, the implementation of any scenario requires continuous monitoring of the indicators and associated targets to ensure that the criteria are fulfilled. On-going changes and improvements to the management plan should be made as values and objectives change.  The economic feasibility of a plan is important since adequate revenue flow is necessary to sustain management activities. In addition to this carbon management plan, a business report was produced to evaluate the financial aspects of each of the four scenarios.   7.0 Leakage and Permanence To be eligible, a project must be verified to ensure that it adheres to standard requirements. The verification process requires that forest project data is reviewed and assessed by a qualified third-party verifier to ensure that project developers have addressed issues regarding the ways in which carbon is accounted. Some of these issues include leakage, permanence, and risk. 7.1 Leakage Leakage is the decrease in carbon sequestration or increase in emissions outside the project area boundary as a result of project activities. Internal leakage may occur if a portion of the owner’s total land base is in a sequestration project, and emitting activities are moved to another area within the land base. External leakage may occur if market conditions change and carbon losses occur in other areas as a result—for instance, if MKRF reduces their harvest, harvesting activities may increase in other forests to satisfy demand. Leakage is difficult to monitor and can change over time; however, periodic re-evaluations should be undertaken to offset any estimated leakage that may occur as a result of project activities (Forest Carbon Standards Committee, 2009).  50   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Management actions to prevent or minimize internal and external leakage are listed below. Internal leakage No net change in activities should take place at MKRF that would increase GHG emissions within the project area boundary (e.g. no net increase in machinery use).  Moreover, sustainable forest management and careful site selection at MKRF will help ensure that internal leakage is minimized (Schwarze, et al., 2002). MKRF will further provide documentation to verify that offsets are free of leakage (Lewandrowski, 2008), and will periodically re-assess and update project leakage to ensure compliance to verification standards (Beane, et al., 2008). External leakage No Harvest and Extended Rotations scenarios may result in external leakage. However, MKRF’s share of the market at a national and international level is small due to the scale of its harvesting operations. External leakage for such operations is unlikely to have significant effects on the market, as overall timber prices are not affected by preservation projects—these operations will not likely have an effect on harvest incentives elsewhere in the country (Murray, et al., 2004). External leakage is not anticipated for the scenario involving select seed use, as harvest levels will be maintained from the base case 2007 scenario.  7.2 Permanence Permanence refers to the stability of carbon stocks within the project zone for the duration of the project. This requirement is met by ensuring that the carbon involved in GHG reduction remains stored for at least 100 years (Climate Action Reserve, 2009).To meet this requirement, non-permanence concerns are addressed by the risk assessment mandated by the carbon standards.   8.0 Risk and Insurance 8.1 Non - Permanence Risk Analysis and Buffer Approach  Risk of non-permanence is the potential of reversibility of sequestered/protected carbon .To address the potential loss of carbon during a project most carbon standards require the creation of buffer reserves of non-tradable carbon credits. These reserves are usually held in a single pooled buffer account.  The determination of the number of buffer credits that a given project must contribute to the associated buffer pool is determined by a risk assessment of the project activity. Although each carbon standard differs in its approach to calculating buffer pool contributions, the following categories are generally used to assess project risk: Financial Risk, Social Risk, Natural Disturbance Potential, and Over-Harvesting potential.  8.2 Risk Assessment for MKRF Management Strategies As mentioned above, each carbon standard uses its own set of criteria to assess the risk of non- permanence. For the purposes of this report, risk assessment models for the CAR and VCS standards will be used to assess MKRF’s risk potentials.   51   Carbon Management Plan for Malcolm Knapp Research Forest 2010 8.2.1 Climate Action Reserve Risk Assessment Model Although the CAR standard will not be the official standard used by the province of BC to implement carbon sequestration projects, it is assumed that it will be similar to those that will eventually be adopted. Therefore the risk assessment performed under this standard may be similar to the standard that the province will require. Table 10 summarizes the series of categories used in this standard to assess the risk factors on the project site. Each category contains a risk percentage that is assigned based on standardized information or criteria specific to the project site. The risk percentage that is standard for all projects occurs under the Financial, Management (Over-harvesting) and Social (Policy) categories. The remaining categories are assigned a percentage based on a combination of historical site data and calculated risk analysis. The values used do not represent the true values that would be assessed; however, these values may provide guidance as to what kind of buffer pool contributions may be required by MKRF. Table 10: Forest project risk types under CAR (Climate Action Reserve, 2009) Risk Category Risk Type Description Contribution to Total Risk Assessment Financial Financial failure leading to bankruptcy Financial failure leading to bankruptcy and alternative management decisions to generate income resulting in loss of carbon 1.0% Management Over-harvesting Exercising timber value at expense of carbon project 2.0% Research Loss of project carbon to research projects 1.0% Conversion to Non- Forest Uses Future development of infrastructure 1.0% Social Social Risks Governmental policy changes concerning Carbon and/or Forest Management 2.0% Change in First Nation Land Usage Principles 1.0% Natural Disturbances Wildfire Loss of carbon from wildfire 8.0% Episodic Loss of carbon from windthrow 1.0% Disease Loss of carbon from insect and/or disease 1.0% Catastrophic Events Snow Ice Flooding 0.5%     Total Assessed Risk*  16.8% * note Total Assessed Risk is based on the following equation: Total Assessed Risk = 100%-[(1 -Financial %)*(1 -Overharvest%)*(1 -Research %)*(1 -Conversion %)*(1 -Social %)*(1 -Wildfire %)*(1 - Episodic %)*(1 -Disease/insect %)*(1 -Castastropic Events %)]   52   Carbon Management Plan for Malcolm Knapp Research Forest 2010 For the purposes of this plan, the non-standardized categories were estimated, and do not necessarily reflect the actual percentages that would be applied. As can be seen in Table 10 the greatest risk to the forest is in the wildfire risk type. This is due to the fact that there is a high perceived risk of a fire starting from public use of the forest. This number would be higher if fire mitigation procedures were not already in place at MKRF. The 8 percent fire risk number is estimated using similar results from other carbon projects. It is not necessarily reflective of the actual number that would be used by MKRF to assess fire risk.   Using the risk assessment model provided by the CAR Standard, MKRF would have to maintain an estimated 16.8% of its additionality of carbon sequestered in a buffer pool. In this standard it is possible to reduce the total buffer reserve percentage over time, if it is determined that the overall risk to the project diminishes throughout the project duration. However, for this plan, the risk of non-permanence is assumed to remain constant until the completion of the project, at which time buffer pool credits will be returned to the additionality pool and paid out.    53   Carbon Management Plan for Malcolm Knapp Research Forest 2010 8.2.2 Voluntary Carbon Standard Risk Assessment Model The VCS also requires the establishment of a buffer pool to balance the risk of non-permanence within a project.  This standard uses a ranking system to assess risk. Each risk factor is assigned a rank between “zero” and “high.” Each project type is then assigned a risk rating range according to applicable risk factors involved in the project. This can be seen below in Table 11.  Table 11: Guidance on risk factors and ratings for improved forest management projects under VCS (Voluntary Carbon Standard, 2007)     54   Carbon Management Plan for Malcolm Knapp Research Forest 2010  After establishing the range, an average risk range for the project is determined. The average risk range for project types can be seen in Table 12. A percentage of risk is then assigned from the total risk range of the project based on suggested risk ranges provided by VCS (Table 12). Table 12: Risk categories and buffer pool requirement for VCS  (Voluntary Carbon Standard, 2007) Risk Class Convert logged area to protected forest (No Harvest) Extended rotation (30 years) Devastating Fire Potential Medium Medium High Timber Value Medium Low Illegal Logging Potential Low Zero  Unemployment Potential Low Low Overall Risk Medium Low Buffer Reserve % Required  27.5%*  10%*  *Note that a median number was chosen between the risk range in Table 13.  After establishing the range, an average risk range for the project is determined. The average risk range as well as the overall risk for project types can be seen in Table 12. A percentage of risk is then assigned to the overall risk, using the risk classification range established by VCS. The risk classification range can be seen in Table 13. A median number was chosen for each applicable risk range, and this number stipulates the percentage of buffer reserve required to protect the project owner from risk. During a projection approval process, the actual risk percentage that is assigned from the risk range will be based on the recommendations of two independent certified verifiers.  Table 13: Risk classification ranges for VCS (Voluntary Carbon Standard, 2007)    55   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Table 12 shows the final percentage that would be assigned to each project category. Of the two project scenarios, the No Harvesting scenario requires the largest buffer (i.e. 27.5%). This is due to the higher risk ranking that was given to the project. The higher ranking is also due to the increase of timber value over time and the risk that management may decide to try to capture some of this value by harvesting and thereby decreasing total sequestered carbon. According to this risk assessment model, extended rotation would only require a 10% reserve buffer pool (Table 12).   8.3 Insurance  The buffer pool is created to protect against the risk of non-permanence. It does not protect the owner of the project against financial failure due to a sudden loss of carbon due to a large natural disturbance (e.g. through fire or insect infestation). If a project owner wishes to guard against the risk of a catastrophic loss of carbon, some form of external insurance would be required outside of the relevant carbon standard. The owner may wish to connect with a private insurance company to purchase insurance and safeguard against failure of the project—this may be similar to crop insurance that is held by farmers. However, due to the emerging nature of the carbon market, it is difficult to estimate the cost of such an insurance policy. If any project is created in the future, protective insurance is important due to the large amount of forest inventory that is involved in a carbon plan, as well as the long length of carbon contracts.    56   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.0 Appendices 9.1 Appendix 1: Biogeoclimatic Distribution of MKRF   57   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.2 Appendix 2: Tree Species Distribution in MKRF, 2010    58   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.3 Appendix 3: Age Class Distribution in MKRF, 2010    59   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.4 Appendix 4: Carbon Markets and Standards 9.4.1 Kyoto Protocol and the Significance of Carbon Carbon emissions and reduction play significant roles in the mitigation of climate change. Forests have a great potential for sequestering carbon, and forest management practices can therefore affect the global carbon balance. In order to account for these changes, many actions have been taken by international organizations and nations to increase carbon sequestration and reduce GHG emissions. The Kyoto Protocol is an environmental treaty between nations, produced to reduce and stabilize worldwide GHG emissions (United Nations, 1998). Canada and other nations adopted this protocol in 2005. Kyoto requires participating nations to reduce their emissions by at least 5% below 1990 levels (Greig & Bull, 2009). Although Canada failed to reduce its emission goals under the Kyoto Protocol for 2012, Canada announced the introduction of mandatory regulations to reduce emissions by 20% by 2020, and by 60-70% by 2050 (Greig & Bull, 2009)(Environment Canada, 2008). These carbon reductions can be credited as carbon offsets, which can be traded in carbon markets.  9.4.2 Types of Carbon Markets There are two kinds of international carbon markets—regulatory/mandatory markets and voluntary markets.  Regulatory markets follow mechanisms established under Kyoto to reduce emissions; these mechanisms include the Clean Development Mechanism (CDM), Joint Implementation (JI), and Emissions Trading (ET). Emissions Trading allows for carbon offsets to be sold in international markets. Voluntary markets have been created by nations that have not adopted the Kyoto Protocol (e.g. the United States and Australia), and have prescribed similar guidelines to those established by regulatory market. Other nations, such as China, have opted to develop their own carbon forest standards (Greig & Bull, 2009).  Although voluntary markets are currently smaller than regulatory markets, they show a stronger preference for forestry projects (Greig & Bull, 2009). However, both regulatory and voluntary markets require participatory nations or companies to adopt and follow certain standards in order to generate revenue through the sale of their offsets. Participation in both regulatory and voluntary markets has been considered for the MKRF carbon management plan.  9.4.3 Regulatory Markets: Western Climate Initiative and Pacific Carbon Trust  The Western Climate Initiative (WCI) is an independent carbon trading initiative that was developed by several states and provinces in North America to address climate changes issues. BC joined the WCI in 2007, and developed the Pacific Carbon Trust (PCT) to assist the public sector in meeting its carbon neutrality goals. As a forestry-related mitigation initiative and Crown corporation of the Government of BC, the PCT delivers high-quality BC-based carbon offsets through a variety of methods, and will likely include forestry projects that increase terrestrial carbon sequestration through carbon capture and storage (Pacific Carbon Trust, 2010). PCT ensures that offsets sold to clients comply with the BC Emission Offsets Regulation (EOR) and meet internationally recognized standards for carbon credit production.  PCT is currently seeking to supply 1,000,000 annual tonnes of offsets to meet the demands of BC companies. Although PCT is seeking to solicit forestry offsets, the Ministry of Forests and Range is still in the process of reviewing the BC Forest Offset Protocol; once finalized, the protocol would enable Forestry  60   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Emission Offset Projects to be pre-qualified for supplying GHG offsets to PCT for sale. PCT also recognizes other international quantification protocols and standards that are adapted for BC as long as they comply with EOR. For PCT to supply offsets, projects need to certify that a high quality of standards is met. These standards may have different applications, depending on the location and the bodies that govern the carbon markets (Greig & Bull, 2009).  This presents MKRF with the opportunity to produce forest-based offsets through the initiation of government-approved forestry projects. MKRF may initiate projects that meet the standards established by several organizations in order to enter desirable markets. A portion or the entirety of relevant offsets may be sold to PCT; this does not, however, preclude MKRF from selling offsets to other offset buyers. In order to be eligible, projects registered with the PCT must begin commercial operations after November 29, 2007 (Pacific Carbon Trust, 2010)—2007 is the baseline that is set for projects accepted under PCT. Projects that have been initiated prior to this date are not eligible.  On March 24, 2010, UBC announced its GHG reduction targets to address climate change (University of British Columbia, 2010), and by 2015 aims to reduce its GHG emissions by 33 percent below its 2007 levels. It sets further targets to reduce GHGs by 67 percent below 2007 levels by 2020 and 100 percent by 2050. Although MKRF is operated as a private enterprise, its affiliation with UBC has led to discussions of the possibility of collaboration between the two organi?ations to offset UBC’s emissions through MKRF. No plans are currently in place to formally establish such a relationship; however, UBC anticipates that MKRF offsets will either be sold directly to PCT or listed as “removals” from the University’s GHG inventory (Henderson, 2010).   Standards Applicable to Pacific Carbon Trust CAN/CSA ISO 14064 ISO 14064 is an international standard system that emerged from earlier standards created by three organizations: the World Wildlife Fund (WWF), the Climate, Community and Biodiversity Alliance (CCBA), and the World Resources Institute and World Business Council on Sustainable Development (WRI).  ISO 14064 is expected to be used in regulatory GHG emission verification, accreditation and trading systems, and promotes international consensus with regard to climate change (International Organization for Standardization, 2007). ISO 14064 focuses on GHG projects or project-based activities that are designed to reduce GHG emissions or increase GHG removals (Spence, 2009). This standard includes principles for determining project baseline scenarios and for monitoring, qualifying and reporting the performance relative to the baseline scenario (Spence, 2009). In addition, it specifies variable requirements of validation/verification bodies and validators/verifiers in providing assurance against GHG claims from organization (Spence, 2009).  Climate Action Reserve Forest Project Verification Protocol 3.0 (CAR) Under the California Climate Action Registry, the California Action Reserve Forest Project Verification Protocol Version 3.0 (CAR) has been produced to provide standards for project activities that remove and  61   Carbon Management Plan for Malcolm Knapp Research Forest 2010 reduce CO2 emissions through the increase and/or conservation of forest carbon stocks (Climate Action Reserve, 2009). However, all reports to the California Climate Action Registry are currently being transitioned to the Climate Registry—a non-profit North American collaboration of states, provinces, and territories that verify and report GHGs into a single registry (Climate Registry, 2010). As of March, 2010, each of the states and provinces of the Western Climate Initiative have joined the Climate Registry (Carbon Offset Research & Education, 2010). It is expected that CAR, once finalized, will be adopted by the Climate Registry and therefore be applicable to all WCI states and provinces—including BC—that choose to follow this or similar standards. As a partner of WCI, PCT is therefore likely to supply its clients with offsets that have been created through standards that are recognized by the Climate Registry. CAR is a national offsets program that develops, quantifies and verifies emissions, and issues carbon offset credits generated from projects that meet its standards. Forest projects that increase and/or conserve forest carbon stocks and are verified by CAR include the following: reforestation projects, avoided conversion projects, and improved forest management projects (Climate Action Reserve, 2009). MKRF may initiate a forest improvement project to be eligible under CAR’s established standards; however, CAR does not accept projects which include broadcast fertilization and furthermore requires third party certification under either FSC or SFI (see Appendix **). All projects under CAR, including the project baseline, require third-party verification to assess reported data and information.  9.4.4 Voluntary Markets: Voluntary Carbon Market and Prospective Markets  The Voluntary Carbon Market (VCM) is an international carbon trading market that is used to offset carbon emissions. This market has been growing considerably over the last few years and is expected to become a significant market for carbon offsets trading in the future. This market is accessible to those companies, individuals, and activities that are not subject to mandatory regulations and compliance markets and that are voluntarily seeking to purchase carbon offsets to reduce their GHG emissions (World Wildlife Fund, 2008).   Standards Applicable to Voluntary Markets CAN/CSA ISO 14064 As previously mentioned, ISO standards are regulated internationally and are expected to be used in providing standards for voluntary and regulatory GHG emission verification, accreditation and trading systems (International Organization for Standardization, 2007). ISO standards are therefore applicable to voluntary markets—MKRF’s management strategies align with these standards.  Voluntary Carbon Standard Guidance for Agriculture, Forestry and Other Land Use Projects The Voluntary Carbon Standard Guidance for Agriculture, Forestry and Other Land Use Projects (VCS) accepts the following project activities to increase carbon stocks: afforestation, reforestation and revegetation, agricultural land management, improved forest management, and reduced emissions from deforestation (Voluntary Carbon Standard, 2007). The standard for improved forest management activities is applicable to MKRF, and may be met through the implementation of the following management strategies: conversion from conventional logging to reduced impact logging, conversion of logged forest to  62   Carbon Management Plan for Malcolm Knapp Research Forest 2010 protected forests, extension of rotation age of evenly aged managed forests, and conversion of low- productive forests to productive forests (Voluntary Carbon Standard, 2007). Third-party certification is not presently required in project development to meet this standard. Given the possibility for MKRF to sell its offsets through the VCM, this standard may be used in developing forest projects to increase carbon stocks and produce carbon offsets for sale in the voluntary market.  Standard Applicable to Prospective Voluntary Markets SCC-ANSI Draft Forest Carbon Standard Carbon sequestration strategies adopted by MKRF should seek to meet a broad range of standards established by competing markets in order to increase its options in capturing revenues from the sale of offsets. Once finalized, the Draft Forest Carbon Standard prepared by the Standards Council of Canada (SCC) and American National Standards Institute (ANSI) is expected to compete with standards established by the Climate Registry. As a voluntary North American standard, the Draft Forest Carbon Standard seeks to measure, report and verify forest carbon emission reduction projects in Canada and the United States (Forest Carbon Standards Committee, 2009).  The Draft consolidates and revises currently existing and emerging forest carbon protocols to deliver a broadly applicable set of standards and forest carbon accounting rules for American states and Canadian provinces and territories. Forestry projects eligible under this standard include the following: afforestation, reforestation, avoided forest conversion, and improved forest management. Improved forest management projects must seek to protect and/or enhance forests through sustainable forest management treatments, and increase overall forest biomass (Forest Carbon Standards Committee, 2009). Forest carbon sequestration of standing biomass and carbon pools is quantified through sampling and measurement techniques, and the project must be verified according to ISO 14065 standards. The project must also be third-party certified by either CSA or SFI.  Currently, the Forest Carbon Standards Committee is undecided on baseline and additionality rules; however, baselines are likely to be established on January 1 of the project enrollment year.          63   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.5 Appendix 5: SFI Objectives   SFI Objectives used to fulfill sustainable forestry objectives (Sustainable Forestry Initiative, 2010) Objective General Descriptions  Forest Management Planning Ensure long-term forest productivity and yield (e.g. activities such as long term resource analysis, document annual harvest trends and periodic updates and inventory system, etc).  Forest Productivity Ensure forest productivity and carbon storage as well as conservation of forest resources through reforestation, soil conservation, afforestation, etc. (e.g. designating all harvest areas for either natural regeneration or planting, minimizing planting of exotic tree species, etc.) Protection and Maintenance of Water Resources Ensure water quality in streams, lakes and other bodies are maintained (e.g. implementing best management practices, designing plans addressing wet-weather events, etc.) Conservation of Biological Diversity Ensure the quality and distribution of wildlife habitats are maintained through diversity at stand & landscape levels (e.g. managing native, threatened, endangered species, and locating known sites, etc) Management of Visual Quality and Recreational Benefits Ensure the visual impacts are maintained (e.g. managing impacts of harvesting on visual quality, implementing green-up requirements & adjacency rules, etc.) Protection of Special Sites Ensure land is managed ecologically, geologically and culturally (e.g. identifying special sites and managing them appropriately) Efficient Use of Forest Resources Ensure the use of appropriate harvesting technology (e.g. ground skidder, etc.) Landowner Outreach Ensure that landowners are provided with adequate information for reforestation after harvest, for best management practices, etc. Use of Qualified Resource & Qualified Logging Professionals Ensure that landowners are encouraged to use services of forest management and harvesting professionals (e.g. use of certified logging professionals, etc.) Adhere to Best Management Practices Ensure that best management practices are being used to protect water quality (e.g. defining and implementing policies to ensure activities don’t compromise sustainable principles) Promote Conservation of Biological Diversity, Hotspots, High Biodiversity Wilderness Areas Ensure that fiber sourcing programs support principles of sustainable forestry (e.g. applying programs with direct suppliers to promote principles of sustainable forestry, etc.)  64   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Avoid Controversial Sources Ensure that illegal logging is prohibited (e.g. avoiding the use of controversial sources, and encouraging socially source practices, etc.) Legal and Regulatory Compliance Ensure there is a legal and regulatory compliance with applicable federal, provincial, state and local laws and regulations (e.g. taking steps to comply with forestry, social environmental laws and regulations, etc.) Support Forestry Research, Science, and Technology Ensure that individuals/cooperatively provide support/funding for forest research, health, productivity (e.g. research on genetically engineered trees adhere to applicable protocols & regulations, etc.) Training and Education Ensure that personnel and contractors have sufficient training (e.g. establish criteria for recognition of logger certification programs, etc.) Community Involvement Ensure that there is support and promotion for efforts that different groups put in to apply principles of sustainable forest management (e.g. holding periodic tours, seminars, etc.) Public Land Management Responsibilities Ensure the participation in developing of public land planning and management process while conferring with affected indigenous peoples Communications and Public Reporting Ensure to prepare a summary audit report after successful completion of a certification Management Review and Continual Improvement Ensure to promote continual improvement; monitor, measure, report performances through time            65   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.6 Appendix 6: Identified Species at Risk Identified BC species at risk, sourced from Species at Risk & Local Government (Pearson & Healey, 2010) unless otherwise indicated. Common Name Scientific Name Listed Status Habitat Requirement s ID’d Pacific Water Shrew Sorex bendirii Red  Most individuals are found within 25 m of streams in mature coniferous or mixed forests  Riparian areas Yes Northern Goshawk Martes pennanti Red  Mature and old forests, closed canopies (?50%), and relatively large diameter trees   Goshawks select nest trees with structural attributes that will support their relatively large stick nests (ca. 1-m diameter) and these often include trees with deformities and sometimes snags) Yes ?ohnson’s hairstreak Callophrys  johnsoni Red  Old Growth (Opler, Lotts, & Naberhaus, 2010)  n/a Grappletail Octogomphus specularis Red  Streams and Riparian areas along lakes; larvae require riffle,-pool section and adults perch along stream edge n/a Fisher Martes pennanti Blue   Old and large diameter trees are critical habitat features for fisher in managed landscapes that can be impacted by forest harvesting operations Yes Tailed frog Ascaphus truei Blue  6: mature forest (100–140 years)  7: old forest (>140 years)  Yes Red-legged frog Rana aurora Blue  Mature deciduous riparian forests with abundant woody debris.  Aquatic areas Yes Herons and Bitterns Ardea herodias Blue  5: young forest  6: mature forest  7: old forest  Riparian areas Yes Dolly Varden Salvelinus malma Blue  Large rivers  Riparian areas n/a Autumn meadowhawk Sympetrum vicinum Blue   It lives in ponds, slow flowing streams and lakes with dense stands of emergent plants.    Adults perch in riparian bushes. Females deposit eggs in moss or vegetation very close to the water, and they will not hatch until submerged.  n/a Beaverpond baskettail Epitheca canis Blue  Bushy riparian areas of lakes and small ponds n/a Coastal wood fern Dryopteris arguta Blue  It is most abundant on south facing slopes in open coastal forest under Douglas fir, Garry oak or arbutus trees, but also occurs on coastal cliffs if sufficient shade is present. Yes Menzies' burnet Sanguisorba menziesii Blue  It has been found in coastal bogs on the Olympic peninsula in moist soil. It is associated with sedges (Carex spp.). Yes Bigleaf sedge Carex amplifolia Blue  Swamps and bogs Yes   66   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.7 Appendix 7: Old Growth Reserves, 2010     67   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.8 Appendix 8: Seral Stages in MKRF, 2010    68   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.9  Appendix 9: Annual harvest levels for MKRF between 1952 - 2009 (Lawson, Financing the Research Forests, 2010)          MKRF Annual Harvests 1952-2009 0 10000 20000 30000 40000 50000 60000 19 52 19 54 19 56 19 58 19 60 19 62 19 64 19 66 19 68 19 70 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 Year Ha rv est (m3 ) Logging Thinning 69   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.10 Appendix 10: Alternative scenarios In addition to the alternative scenarios described in the report, three other alternative scenarios were explored. The alternative scenarios explored include the following: No Thinning, Fertilization, and Red Alder Plantations. These scenarios were not further analyzed due to the reasons mentioned in the table below. Alternative scenarios considered: Other Alternative Scenarios Description Reason for lack of further consideration No Thinning Cease all thinning operations  Has a significant impact in carbon sequestration capabilities but not currently endorsed by any carbon standard associations (see No Thinning scenario below) Fertilization Apply fertilizer to poor site index sites in the operable and low operable areas  Due to small scale and relativity small gain in yield no significant increase in carbon sequestration capabilities was found (see Fertilization scenario below)  Expensive to implement  Cost benefit unclear Red Alder Plantations Convert select super site index areas to alder plantations  Red Alder was found to have a similar carbon sequestration capabilities as Douglas Fir/Cedar stand (see Red Alder Plantation scenario below)  No financial gain and possible decrease in timber revenue   No Thinning scenario 3,000,000 3,200,000 3,400,000 3,600,000 3,800,000 4,000,000 4,200,000 4,400,000 0 2 4 6 8 10 12 14 16 18 20 22 24 to n n e s o f C Periods (10 yrs.) No Thinning Scenario 2007 Base Case 1990 Base Case 70   Carbon Management Plan for Malcolm Knapp Research Forest 2010   Fertilization scenario    Red Alder Plantation scenario 3000000 3200000 3400000 3600000 3800000 4000000 4200000 4400000 0 2 4 6 8 10 12 14 16 18 20 22 24 to n n e s o f C Periods (10 yrs.) Fertilization Scenario 2007 Baseline 2007 Buffer 1990 Baseline 1990 Buffer - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 0 2 4 6 8 10 12 14 16 18 20 22 24 to n n e s o f C Periods (10 yrs.) Base Case Alder Plantation Scenario 71   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.11 Appendix 11:  Operability Cliques in MKRF (low operable  areas, operable areas, reserves)    72   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Site index classes and area distribution per operability zone  (Moreira-Munoz, 2008)  Operability zone  Site Class SI class value SI class range Area (ha)  Operable        P 18  20    537.95  M 24 [21 – 26]  1,230.73  G 30 [27 – 32]  1,188.32  S 36  33    613.23   Low Operability    P 18  20    312.19  M 24 [21 – 26]     234.30  G 30 [27 – 32]       80.12   Reserve        P 18  20    201.72  M 24 [21 – 26]     131.92  G 30 [27 – 32]       69.51  S 36  33      23.16  Total 4,623.15    Area per operability zone (Moreira-Munoz, 2008)  Operability zone  ID Area (ha)   Operable  OPER 3,570.23   Low Operability  LOWO    626.61  Operable + Low Oper   4,196.84  Reserve  RESV    426.31  Total  4,623.15     73   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Area by stand condition (based on first harvests in 1950) (Moreira-Munoz, 2008)  Stand condition ID Area (ha) Natural      (Age > 59)  NAT 3,163.70  Managed  (Age   59) MAN 1,459.45  Total 4,623.15   Area distribution by operability zone and stand condition (Moreira-Munoz, 2008) . Clique   ID  Area (ha)   OPER     NAT   2,157.69   MAN   1,412.54   LOWO     NAT      604.80   MAN        21.81   RESV     NAT      401.21   MAN        25.10  Total   4,623.15       74   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.12 Appendix 12: Thinning constraints and zones for scenarios   75   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.13 Appendix 13: Representation of all three BEC subzones in reserves   76   Carbon Management Plan for Malcolm Knapp Research Forest 2010 9.14 Appendix 14: Sub- ordinal ranking of indicators    Sub-ordinal ranking of “Biological Diversity” C ri ter ia : Bi o lo gi cal D iv ers it y Indicator Scenario    2007 Base case No Harvest Extended Rotation Select Seed Representation of all seral stages in the forest 4 1 2 4 Area of old growth*  2 8 6 2 Genetic diversity of reforested stock 2 4 3 1 Total Score 8 13 12 7 * : This indicator is weighted double as the majority of blue and red-listed species have old growth habitat requirements (See Appendix 6)   Sub-ordinal ranking of “Carbon Storage” C ri ter ia : Car b o n  Indicator Scenario    2007 Base Case No Harvest Extended Rotation Select Seed Emissions from MKRF and related operations 1 4 3 1 Total carbon sequestered in ecosystem*  2 8 6 4 Total Score 3 12 9 5      1   Carbon Management Plan for Malcolm Knapp Research Forest 2010 Literature Cited  BC Ministry of Forests. (2001, October). Old growth forests, British Columbia, Canada. Retrieved March 17,  2010, from Legistlative Library | Legislative Assembly of British Columbia:  www.llbc.leg.bc.ca/public/pubdocs/bcdocs/358402/old_growth.pdf  Beane, J., Hagan, J., Whitman, A., and Gunn, J. (2008) Forest Carbon Offsets: A Scorecard for Evaluating  Project Quality. Manoment Center for Conservation Sciences. Maine.   Boyland, M., Nelson, J., Bunnell, F., & D'Eon, R. (2006). An application of fuzzy set theory for seral-class  constraints in forest planning models. Forest Ecology and Management , 223, 395-402.  Canadian Council of Forest Ministers. (2005). Criteria and Indicators of Sustainable Forest Management in  Canada - National Status 2005. Retrieved March 3, 2010, from Canadian Council of Forest  ministers: http://ccfm.org/pdf/C&I_e.pdf  Canadian Council of Forest Ministers. (2008). Statement on Forest Certification Standards in Canada.  Retrieved April 9, 2010, from Sustainable Forestry Initiative Newsroom:  http://www.ccfm.org/pdf/CCFM_Statement_FRandEN.pdf#page=2  Carbon Offset Research & Education. (2010). CORE: Western Climate Initiative. Retrieved April 2, 2010,  from Carbon Offset Research & Education (CORE):  http://www.co2offsetresearch.org/policy/WCI.html  Carrick, K. (2007, May 23). Trevor Linden featured in new cancer prevention campaign. Retrieved January  27, 2010, from Canadian Cancer Society: http://www.cancer.ca/British%20Columbia- Yukon/About%20us/Media%20centre/BC- Media%20releases/Trevor%20Linden%20featured%20in%20new%20cancer%20prevention%20cam paign.aspx?sc_lang=en   Climate Action Reserve. (2009, September 1). Climate Action Reserve Forest Project Protocol Version 3.0.  Retrieved March 24, 2010, from http://www.climateactionreserve.org/wp- content/uploads/2009/03/Forest-Project-Verification-Protocol-Version-3.0pdf  Climate Action Reserve. (2009, September 1). Forest Project Protocol Development. 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