ForestryBrief Professional #4 🌳💰

(This analysis uses composite examples based on verified academic research, industry transaction data, and documented forest owner experiences. Cost figures represent industry ranges from multiple sources. Individual results vary significantly by location, forest type, and market conditions. All specific examples are illustrative scenarios designed to demonstrate typical market dynamics.)

Last week, I showed you why a €1,000 carbon credit pays forest owners €200.

This week, I'm going to show you exactly where the other €800 goes. Name by name. Fee by fee. Cut by cut.

By the end of this investigation, you'll understand the entire money trail. More importantly, you'll know which costs you can avoid and which middlemen you can cut out entirely.

But first, let me tell you about Thomas.

Thomas manages 150 hectares of mixed forest in Bavaria. In 2022, he attended a carbon credit webinar that promised "premium prices for sustainable forestry." The presenter showed slides of €50 carbon credits. Simple math: 150 hectares × 7 tonnes CO2 per hectare × €50 = €52,500 annually.

Thomas spent €46,500 on verification and setup. He signed with an aggregator promising "industry-leading terms." He waited 18 months for his first payment.

The check was for €5,200.

Not €52,500. Not even €25,000. Just €5,200.

Here's what happened to Thomas's money. And why it's happening to nearly every forest owner in Europe.

(This is a Typical German Forest Owner Story: What 'Doing Everything Right' Really Costs. Thomas is the hypothetical hero of this issue, a composite example based on multiple forest owner experiences. Thomas represents what we see repeatedly across European forest carbon projects. This composite profile, drawn from industry data and multiple forest owner experiences, illustrates the financial reality facing most participants. This scenario reflects the typical experience documented in academic research and industry reports. While Thomas is a composite example, the financial outcomes are based on verified transaction data and forest owner payment studies.)

I've spent a while analyzing contracts, fee schedules, and transaction data. The pattern is always the same. Your carbon credit passes through seven stages before reaching the buyer. Each stage takes its cut.

Let me show you exactly what happens to every euro.

This is what you get paid. The trees you planted, managed, and protected for years. Your actual payment varies wildly, but Penn State Extension research confirms forest owners typically receive just $6.52-$13.08 per acre annually¹.

In credit terms, that's €5-12 per tonne of CO2. For doing the actual work.

Before you can sell a single credit, you need a Project Design Document. Consultants charge €10,000-30,000 to write this². They'll measure your trees, calculate baselines, and produce a 200-page document that essentially says "yes, these are trees and they capture carbon."

The consultants know you have no choice. No document, no credits.

Next, an auditor from companies like DNV or SGS reviews the consultant's work³. They charge €15,000-30,000 to confirm that yes, the consultant was right about your trees existing.

This is mandatory. The law requires it. There's no way around it.

Here's where the real extraction begins. Aggregators bundle small projects together. They promise to handle everything. What they actually do is take 30-60% of your revenue forever⁴.

Carbon Market Watch found that 90% of these intermediaries don't even disclose their fees⁵. The 10% that do? They average 15.5% commission. But that's just what they admit to. The real numbers, buried in contracts we've analyzed, range from 30-60%.

Verra charges $0.23 per credit just to track ownership⁶. That's about €0.21. Seems small, right? But it's a fee on every single credit you'll ever produce. Forever. No registry, no market access.

Even with an aggregator, you often need a broker to actually find buyers⁷. They take another 10-20%. Their value? They know people. That's it. They know people and you don't.

Finally, retailers package credits for small buyers⁸. Another 20-40% markup. By now, your €12 credit sells for €30-50.

Let me show you the money flow on a typical €40 credit:

The ranges are wide because the data is messy. Winrock International found transaction costs ranging from 0.3% to 270% of project income⁹. Yes, you read that right. Some projects spend $2.70 for every dollar they earn.

European projects sit at the high end of this range. Why? Stricter regulations. Higher labor costs. More monitoring requirements. Smaller project sizes.

Want to see exactly how your €40 becomes €6? Click through each stage in our interactive value chain tool below to discover which middlemen you can cut out and how much each one really takes. The percentages might shock you.

Interactive Carbon Credit Value Chain Flow

Now that you've seen where every euro goes, let me show you what this means for a real forest...

What really happens when you enter the carbon market...