Forest Carbon Enrollment Barriers and Contract Design: Evidence from the Southern Appalachians

Banya Roy, Charles Sims, Dale Manning, James Mingie and Seong-Hoon Cho

No 404475, 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri from Agricultural and Applied Economics Association

Abstract: Family forest owner enrollment in carbon programs remains below 0.1 percent in the United States despite growing policy interest. Prior work identifies the participation barriers qualitatively but does not measure them separately or connect them to contract design. This paper makes four contributions. First, it develops a landowner decision model that decomposes the minimum payment landowners require to enroll into an expected-value gap and a riskpremium gap. Second, it estimates minimum required support across six Southern Appalachian states, four parcel sizes, and four contract designs, producing county-level thresholds for spatially differentiated targeting. Third, it connects the barrier diagnosis to contract design, showing that instruments matched to the binding constraint outperform those that do not. Fourth, it translates model-implied thresholds into adoption-threshold curves that show what share of the modeled positive-carbon opportunity set becomes viable at alternative area-based and carbondenominated payment levels. We find the dominant barrier is an expected-return shortfall: in the baseline one-shot adoption framework, improved forest management is less risky than businessas- usual, but the expected returns are too low to make enrollment privately attractive without support. Under the 20-year baseline contract, minimum required support averages roughly $1,200 per acre as a present-value lump-sum equivalent for 20-acre parcels, but falls to about $215 per acre as a present-value lump-sum equivalent for 160-acre parcels, a nearly sixfold gap driven by fixed enrollment costs falling more heavily on smaller parcels. Support varies substantially across states, favoring county-level targeting over uniform payment schedules. Two-part contracts reduce required performance payments by 8-12 percent at baseline and by up to 21 percent under higher fixed-cost assumptions because the upfront component directly offsets fixed participation costs; modest price floors have limited effects because downside risk is not the binding constraint here. The adoption-threshold curves show that prevailing voluntary carbon prices leave many modeled opportunities above the viability threshold, especially for small parcels. These results imply that expanding participation requires payment structures matched to the obstacle that actually limits enrollment, not simply higher payments of any kind.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 87
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea26:404475

DOI: 10.22004/ag.econ.404475

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