This is a truly exciting conversation, and I appreciate being in the presence of such a diverse group of experts on this broad and complex discussion.
We’ve talked a lot about how to identify climate-smart wood, and how to communicate to designers and building owners how and why to choose climate smart forest products. I want to bring up the pressure of relying a high-risk, competitive building market to accept a premium for adopting a climate-change mitigation strategy ahead of regulatory requirements to do so. This behavioral and economic factor is important to consider because we are necessarily speculating about these actions happening at scale - potentially 17,000 buildings per year, as has been cited several times on this thread.
Relying on the behavior of building industry investors to support climate smart premiums will require them to make a decision to either (a) pass on premiums to building occupants or (b) reduce projected returns. In the case of passing along premiums, that creates higher rents for housing, retail, office space, which in turn creates higher costs for goods and services, etc, in addition to adding risk to the venture for the developer (higher rents = slower lease-up). In such a high-risk industry, would enough developers be willing to accept a reduced target ROI, and pay these premiums to push the market in a meaningful way? How does this contribute to livability/affordability in the US? Who is really taking on the premiums?
Ultimately, I think we’d agree that all forestry should eventually be climate smart (however you get there). To transition the market away from anything less-than-smart, there needs to be a clear path identified to balance costs, which could happen at the forest level (subsidies for transitioning to CS), at the forest products level (buy CS, get carbon credits), or incentives at the building dev level (incentives for low- or net-zero carbon construction).
Or, framed as a question: How does the premium/risk equation balance for maximum uptake of climate smart wood in the building industry?
This all overlaps quite a bit with Collective Action, but is important for our Procurement group to consider as well.
This is definitely more of a collective action question, but: What is the most climate- and market- effective way for “carbon credits” to be applied, presuming that it is climate smart to build buildings out of CS wood? At the forest level, or the building level? We need an economist!