Carbon credits have become an increasingly popular way for landowners to generate revenue while promoting environmental sustainability. But despite growing interest, misunderstandings about how carbon credit programs work persist, especially among private landowners who could benefit the most.

To help clarify what these programs really involve, MS Land Professional Keith Morris and Will Clayton, CEO of Sky Harvest, recently appeared on the National Land Podcast and explained the ins and outs of these programs while dispelling a few common misconceptions regarding carbon credits.

Here’s what to know!

#1: It’s a Government Program

While there are government tax credits available through compliance carbon markets, the majority of private landowners interact primarily with the voluntary carbon market. As Clayton explained, “In the voluntary carbon market, government is not involved. There are no tax credits or regulations driving it.” 

Instead, companies voluntarily buy carbon credits to meet sustainability goals, offset their carbon emissions, boost brand reputation, and align with customer values. These corporations pay landowners to defer activities like timber harvesting. As a result, carbon stays sequestered in forests, corporations can offset their excess emissions, and landowners get paid.

#2: They Have to be Long-Term

The traditional carbon credit market has long been dominated by lengthy, multi-decade contracts. These agreements, often running 40, 60, or even 100 years, can feel more like conservation easements than flexible income opportunities. Understandably, this has made many landowners hesitant.

In today’s market, however, companies like Sky Harvest are leading a movement toward shorter-term carbon agreements, with durations as brief as five years. This allows landowners to generate income now while maintaining future flexibility. As Clayton puts it, “We don’t believe landowners should lock up their heirs and heirs’ heirs for a quick buck today.”

These short-term contracts are designed to be renewable, giving landowners the option to continue or stop after each term. This also lets them benefit from rising carbon credit prices over time.

#3: You Need a Lot of Land to Qualify

Historically, carbon credit programs favored large landowners with tens of thousands of acres because of the high costs of forest inventory and administrative setup. But today’s market is far more accessible.

According to Clayton, “We work with landowners with as few as 70 acres. In fact, many of our participants are designated by the USDA as small acreage or underserved landowners.”

The key requirement is not land size, but active timber management. If you’re managing your land for timber, even on a small scale, and have a harvest history or professional management plan, you may qualify for carbon credits.

Ready to explore carbon credits as an avenue for passive income on your property? Get in touch with your local Land Professional today to learn more about whether your property could qualify!