Valuing one of the most biodiverse areas on earth -The Los Cedros Reserve Carbon Stocks

How can we really put a price on nature? It is impossible to value the intrinsic worth. We are fixated on valuing a forest only with a crude carbon calculation. Still areas of high biodiversity can not be valued for what they are truly worth.

When the case of the Los Cedros Biological Reserve went to the Constitutional Court of Ecuador we had to put a value on it. Threatened with mining for gold and copper could we show that the value was worth more above ground than below?

This paper was written for the court case and in monetary terms is an assessment of existing carbon stocks,  the existing capital of the forest.

For more information on what can be found and can’t be monetized see Los Cedros Reserve


Valuing Los Cedros Reserve Carbon Stocks



In this document, we value the CO2 sequestration by the Los Cedros Reserve. We estimate the existing stocks of carbon at Los Cedros to be worth $210,054,121 or $39,972 per hectare. We also use these calculations from Los Cedros to estimate the general potential value of the Bosque Protector system in carbon credits if a program of reforestation were implemented across all bosques protectores. We estimate that a reforestation program with the yearly goal of 1% reforestation (or 1% reduction in deforestation) at each bosque protector could result in $919 Million worth of carbon credits per year. Ecuador could potentially sell carbon offsets to governments or companies interested in offsetting their carbon footprint.

We start by valuing the CO2 in the Los Cedros Reserves. There are two parts to the estimate of  the valuation of CO2 sequestration: 1) the CO2 in trees and 2) the CO2 in the topsoil. This CO2 is valued using the price of carbon credits in the EU ETS for 2019.  We use this estimate to evaluate the CO2 in all the BP.[1] Finally, we discuss how Ecuador would go about selling carbon offset credits to companies wanting to obtain net zero carbon emissions by 2040.




Valuation of above ground CO2 storage

The valuation starts with the 5,255 hectares in the Los Cedros Reserve. To establish the value of CO2 sequestered above ground at Los Cedros, we need to have an estimate of the CO2 sequestration.  Available models are calibrated using lowland Amazonian forest sites, and as with soil estimates below, probably underestimate tropical montane sites like Los Cedros. Higher tree densities are reported in the closest pertinent Andean forest site than in comparable Amazonian sites[2], and cooler climates lower decomposition rates for litter and downed woody debris (Waring 2012). Additionally, most sites used to calibrate carbon models are non-primary forests, with lower structural complexity than primary forests such as Los Cedros. Older, more complex forests are reported to store more carbon and are still increasing their storage rates (Moomaw 2019).  However, we are here reporting minimum estimates of carbon storage. As such, we use the most best currently available models and report that the carbon content in the Los Cedros Reserve above ground is estimated at 235 metric tons per hectare.[3]  Following the calculations  in Table 1, CO2 in the Los Cedros Reserve is found by multiplying 235 metric tons of carbon by 11/3 to convert to CO2 and multiplying this result by the 5,255 hectares. This yields 4,528,058 metric tons of CO2 above ground in the Los Cedros Reserve.[4]

The monetary value of the CO2 of the Los Cedros Reserve is established by looking at the market for carbon credits. The most liquid market is the European Union ETS. In this market the average price in 2019 was $24.72 per metric ton of CO2. In this case, a carbon offset can be purchased for the sequestration of one metric ton of CO2 per year.  One carbon offset can be purchased for $24.72. This carbon offset gives the holder the right to reduce their tax base in the calculation of  their carbon tax by one metric ton of CO2. The ETS would have to certify the CO2 content of the Reserve, so that offsets can be issued and sold to companies on the EU ETS to offset their carbon tax base. Alternately, the credit could be sold to a company which wants to offset their CO2 emissions for the year and become a net zero emitter of CO2 for the year. This would reduce the net amount of CO2 in the atmosphere, since somewhere between 12 and 29% of CO2 emissions come from deforestation.[5] Thus, the value of the CO2 above ground in the Los Cedros Reserve is estimated at  .

Valuation of the CO2 in topsoil

We obtained the CO2 content of one hectare below ground following the article by Cook-Patton et. al. (2020). This article provides a data set which estimates the carbon content for all forests in the world.   The software and data are available from the Global Forest Watch (GFW) web site   According to GFW, there are 206 metric tons of carbon per hectare in the top 30 cm of soil for the Imbabura region, within the province of Cotacachi, Ecuador. The Los Cedros Reserve is within this region.  We can safely say that estimates of carbon from only the top 30 cm of soil at Reserva Los Cedros yield an overall underestimate of the underground storage of carbon at los Cedros, as our preliminary observations a single site have found significant organic matter in soil up to 100 cm. This unusually rich soil is probably due to cooler climatic conditions and the minimal disturbance of soils at the reserve, in comparison to lower elevation tropical forests. However, we are presenting minimum estimates at this time. Consequently, we report that the topsoil of this Reserve sequesters at least 3,969,277 metric tons of CO2. The CO2 can be sold as a carbon offset for $24.72 per hectare, just as in the case of the trees. Thus, the CO2 sequestred in the topsoil of the Los Cedros Reserve is worth $98,120,519.


Total Value of CO2 Sequestration.

We can then add the CO2 sequestered in the trees and topsoil for the Los Cedros Reserve to obtain 8,497,335 metric tons of CO2. The monetary value of CO2  is established by looking at the market price for carbon credits per year. This means the sequestration of CO2 within trees and topsoil of the Los Cedros Reserve is worth $210,054,121 or $39,972 per hectare.[6]


Realizing Carbon Credits

Under the REDD+ program a country establishes an estimate of its Forest Reference Emissions Level (FREL) which represents the carbon stock of its forest.[7]  A carbon credit would occur when there is an increase in the carbon stock of its forest. This carbon credit is multiplied by 11/3 to convert to CO2, and represents a net decrease of CO2 in the atmosphere. Thus, reforestation could be quite valuable for Ecuador.

For example, the Los Cedros Reserve reforested 2,000 hectares over the last thirty years through its natural growth over time. This corresponds to a 2% absorption of CO2 per year since 66.7 hectares were reforested in each year. This would lead to carbon credits worth $2,664,816 per year. Any project that would deforest 66.7 hectares would reduce the carbon credits by this amount, so we have to look at the net increase in reforestation for the year.

We can generalize our results from Reserva Los Cedros to all Bosque Protectores. Reserva Los Cedros is one of 173 Bosques Protectores (BP) registered by the Ecuadorian Ministry of the Environment as of 2015. In total, the network of all Ecuadorian BPs comprises approximately 2.3 Million hectares. If 1% of the total area of the BP network (amounting to 23,000 hectares) is reforested per year, at the value of almost $40,000 per hectare, and if the BP has a CO2 content similar to the Los Cedros Reserves, then the reforestation of the BP would be $39,972 per hectare times 23,000 hectares = $919,361,520.[8] Thus, Ecuador can sell $919 Million worth of carbon credits per year.[9] These funds would be a net income increase for Ecuador per year since they would be receiving a payment from foreign countries.[10]

This would increase the foreign reserves of Ecuador, or reduce its national debt by $919 million per year. Alternatively, if Ecuador would carry out this program of 1% reforestation per year for 30 years, the present value would be $20.6 Billion at an interest rate of 2%. This would also imply that 30% of the BP would be reforested.[11]

The carbon credits need to be sold to someone, who wants to reduce their carbon footprint. For example, the multinational company Amazon has pledged to become a Net Zero firm by 2040.[12] They will accomplish some of this reduction by reducing their reliance on fossil fuels, however they would still have some carbon emission in 2040. To become a Net Zero firm by 2040, they will have to purchase carbon credits from someone each year, who can certify a reduction in carbon in the atmosphere equal to their excess carbon emissions.[13] This leads to a Net Zero position for the company, since it cancels out its excess CO2 emissions.   All the firms who will pledge to be Net Zero will add their need for carbon credits to the demand for the net reduction in CO2. This increase in demand for carbon credits will also lead to a higher price, which is then used in the valuation done here.

Additionally, the International Monetary Fund (IMF) has expressed increased interest in valuing existing stocks of sequestered carbon. Finance and Development, the IMF “flagship magazine” has featured articles on the valuation of carbon in new and creative ways[14], [15]. Managing director of the IMF, Dr. Kristalina Georgieva, has recently expressed support for the valuation of natural capital to capture the benefits of nature to economic well-being[16]. She emphasized that “natural capital” – such as carbon capture by forests – provides additional wealth, especially for low income and developing countries, which in turn can be used in a number of ways, such as debt-for-nature swaps. She has suggested that global financial and development communities need to invest in nature not only as a mitigating factor in fighting climate change but also to ensure the sustainability of our economic systems, and that investment in natural capital needs to be on “equal footing” as investments in human and physical capital. This language very well applies to Ecuador and its forests.


Table 1

Hectares in Los Cedros Reserve 52555
Above Ground Biomass  
Metric tons of Carbon Above Ground Biomass per Hectare[17] 235.00
Total metric tons of CO2 Above Ground (1/3 x C x Hectares in the Reserves) 4,528,058
Average Price of CO2 per  metric ton in 2019 $24.72
Total Value of Above Ground Biomass $111,933,602
Below Ground Biomass  
Tons of Carbon content of topsoil per Hectare[18] 206.00
Total metric tons of CO2 Below Ground 3,969,277
Total Value of topsoil CO2 $98,120,519
Total Value of Above and Below Ground Biomass $210,054,121




Thomas F. Cosimano – Professor Emeritus University of Notre Dame

Connel Fullenkamp – Professor of the Practice of Economics Duke University

Nicola Peel – Solutionist and Environmentalist

Daniel Thomas – Research Scientist Whitman College





Asner, G.P., “Measuring Carbon Emissions from Tropical Deforestation: An Overview, Downloaded October 15, 2020 from–An_Overview.pdf


Avitable, V., et. al., “An Integrated Pan-Tropical Biomass Map using Multiple Reference Data Sets,” Global Change Biology, 2016, 22,1406-1420.


Cook-Patton et. al.,”Mapping Carbon Accumulation Potential from Global Natural Forest Regrowth,” Nature September 24, 2020.


Moomaw, W. R., et al., “ Intact Forests in the United States: Proforestation Mitigates Climate Change and Serves the Greatest Good,” Frontiers in Forests and Global Change, 2019.


REDD+ “Ecuador’s Forest References Emission for Deforestation,” UN (2014) Downloaded from WWW October 15, 2020.


Saatchi, S.S.,, “Distribution of Aboveground Live Biomass in the Amazon Basin,” Global Change Biology, 2007,  13, 816-837.


Waring, Bonnie G. “A meta-analysis of climatic and chemical controls on leaf litter decay rates in tropical forests.” Ecosystems, 2012, 15.6, 999-1009.


[1] A detailed estimate for the BP can be executed using the inventory  from the MAE, which has been collected to meet the regulations of the UN REDD+ project.

[2] See

[3] Carbon content above grown comes  from Table 6 of Saatchi et. al. (2007) is the mean metric ton per hectare for a dense forest. It is  272.5 with 95% confidence interval of +/- 37.3. 235 metric tons of carbon per hectare is the lower bound of the confidence interval. This data is updated by Avitable, V., et. al. and is available at The above ground biomass is 246.116 metric tons of carbon per hectare, so that 235 metric tons is a conservative estimate of the Carbon content of one hectare in the Los Cedros Reserve. See Asner (2020) for an overview of mapping deforestation.

[4] We switch from Carbon to CO2, since the price of credits is in terms of one Metric Ton of CO2 per year.

[5] See Butler, Rhett August 2009 “Big REDD” Washington Monthly and Wikipedia downloaded October 15, 2020.

[6] The ETS would have to certify the CO2 content of the Reserve, so that offsets can be issued and sold to companies on the EU ETS to offset their carbon tax base. If credits are sold to a company, then the sequestration of the CO2 would also have to be certify. MAE has experience in this certification as in REDD+ (2014).

[7] See REDD+ for an example for Ecuador.

[8] The reforestation would have to be measured each year by calculating the increase in the FREL for the BP.

[9] Some of these funds may be needed to finance the reforestation effort. For example, according to farmers close to the Los Cedros Reserve one hectare can support one cow which leads to a profit of $300 to $400 per year. This means it would cost about $400 per hectare times 23,000 hectare  = $9,200,000 per year to compensate farmers who stop farming the area vacated by the farmers.

[10] Any payment to farmers would not impact Ecuador’s foreign reserves, since the money is spent within the country.

[11] 2000 hectares of the 5255 hectares of the Los Cedros Reserve has been reforested over the last 30 years, which amounts to a 2% increase in reforested hectares per year.

[12] See

[13] This sale may have to be carried out by a private contract, since the reforestation project may not be homogenous. This means that the carbon reduction must be negotiated in the contract.




[17] Taken from Table 6 of Saatchi et. al. (2007) is  the mean metric ton per hectare for a dense forest. It is  272.5 with 95% confidence interval of +/- 37.3. 235 metric tons of carbon per hectare is the lower bound of the confidence interval. This data is updated by Avitable, V., et. al. and is available at for longitude -78.8 and Latitude 0.31, which is the closest observation to the location of the Los Cedros Reserve longitude -72.2 and Latitude 0.302. The above ground biomass is 246.116 metric tons of carbon per hectare. See Asner (2020) for an overview of mapping deforestation.

[18] This observation is based on Cook-Patton et. al. (2020) and downloaded from under Climate/CarbonDensity/SoilCarbonDensity.