As energy and environmental impact gain importance, commercial real estate professionals are helping clients navigate ever more complex property transactions. Land sales, in particular, are affected by the presence of carbon, oil and gas, solar power, wind turbines, mining, broadband, cell towers, and conservation easements.

Drone view of Wind Farm

© Justin Paget / DigitalVision / Getty Images

Benefits to Landowners

One way that corporations can meet tightening government environmental regulations is by financing carbon removal and reduction projects to offset carbon emissions. The projects can be done on privately owned property, earning money for landowners. Free estimators, like Land-Gate’s Carbon LandEstimate, can quantify the value of selling carbon credits from carbon offsets.

Carbon offsets and credits can be combined with other environmental options. Landowners could receive royalties from a wind farm on their land while receiving carbon credits from carbon offsets and using regenerative grazing techniques to feed cattle. Or they could earn carbon credits by managing their land and also receive royalties from a solar farm, while also growing flowers for bees. Carbon offsets don’t tie up land, so the land can still be used for a variety of surface activities.

The number of carbon credits that can be earned will depend mainly on the area of land, soil conditions, and tree cover, because trees store carbon dioxide. Climate factors, such as temperature and moisture, also play a large role. For example, rainfall helps increase the carbon input into the soil.

A carbon credit is a certificate representing the reduction of one metric ton of CO2 or its equivalent of other greenhouse gases. As of July 2021, carbon credits traded for about $16 per metric ton of carbon dioxide stored. Pricing is predicted to increase tenfold by 2030.

What You Need To Know

When you’re involved in a land transaction, it’s important to be able to:

  • Identify the types of land resources on a property.
  • Estimate a plot’s market value based on energy-related resources.
  • Understand mineral and surface rights.
  • Know why landowners may want one or more conservation easements on their property.

The REALTORS® Land Institute partnered with LandGate to develop a new course, “Valuation and Transactions of Energy and Environmental Assets.” The LANDU virtual course will help you value environmental assets as they roll up into an overall listing price or buyer’s offer. The course is open to members and nonmembers of RLI. Registrations details are available on the RLI website.

Editor’s note: Learn more about the use of carbon credit in Boost Your Income from Carbon Credits, published by RLI and written by RLI instructor Yoann Hispa. Hispa is CEO and co-founder of LandGate, an online marketplace and data solutions provider focused on U.S. commercial land resources.

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