Browsing by Subject "financial feasibility"

International attempts to mitigate climate change and the growth in atmospheric concentrations of greenhouse gases have resulted in the formation of global carbon markets, including markets for forest carbon projects. Forests are critical in mitigating the effects of global climate change because they are major carbon sinks, and activities that alter forests can release or sequester carbon dioxide (CO2), the most common greenhouse gas. Various forestry activities are acceptable for carbon offsets, and the evolving forest carbon markets offer new opportunities for investors. To better understand the forest carbon market and its current situation, this thesis has gathered up-to-date information on the different market areas of forest carbon. The objective of this study was to research global forest carbon markets as a private sector investment. The aim was to discover the barriers and the prerequisites that exist for investors. Furthermore, the study aimed to discover the opportunities and challenges of forest carbon. In addition, the financial characteristics and risks of the forest carbon projects were identified. Analyzing these factors provide insight into how the forest carbon markets function, what are the market entry recommendations for a private sector investor, and what are the prospects of the forest carbon market after 2012. This study employed a qualitative research design. Empirical data was gathered through semi-structured interviews with nine forest carbon professionals, who have extensive knowledge on the evolving forest carbon market. The findings from the interviews were triangulated with secondary data available in the public domain. The secondary data consisted of research articles, publications and Internet sources. The findings reveal that forest carbon projects may offer market opportunities, such as additional revenue and serve as “green investment”, but several issues have generated concerns and controversy. The main identified barrier is the uncertainty related to the global carbon market. In addition, there are other challenges creating barriers for entry for private investor, such as current measurement and monitoring practices, which are costly and time consuming. Project implementation in developing nations creates challenges related to the land tenure and carbon credit rights, just to mention a few. In many countries the legal and operational framework is not ready. Based on the study it can be concluded that the forest carbon should only be seen as extra revenue. The investment feasibility should not be based purely on carbon revenues; the cash flow needs to be generated from other forestry activities such as timber or non-wood forest products.