Sampling Error, Permanence and Leakage

Sampling Error - Calculating the carbon content in a forest involves the use of professional judgment and is inherently subject to error. There are two main sources of sampling error:

  • It is impossible to accurately calculate the carbon content of a tree without destroying the tree. Instead, we utilize industry studies that have already calculated carbon content by tree species, diameter and height.

  • It is unfeasible to count every tree in a large forest. Instead, we count a random sampling of trees and use statistical mathematics to determine an approximate carbon content of the entire forest with a 95% confidence interval.

We can accurately estimate the sampling error using statistical mathematics and reduce the number of carbon offsets issued by the sampling error to provide Virtualcarbon owners the confidence that their asset is backed by the real carbon sequestration of the trees they have sponsored.

For a large forest with thirty-six 1/10 acre sampling plots, the sampling error is 15% with a 95% confidence interval. For simplicity, we reduce the # of Virtualcarbon issued by 15%.

Permanence - NFTs are one-time purchases that sponsor a parcel of land for a set period of time in the future. Those funds are paid to the landowner in advance. But what happens if a forest fire, pests, or illegal logging destroys the trees? CarbonHive has included a generous permanence buffer, which acts as a form of insurance against these types of incidents. When such an event occurs, the project developer will calculate the carbon impact, and burn the appropriate number of Virtualcarbon from the permanence pool. This act ensures that Virtualcarbon retains its integrity as a carbon sink, and NFT buyers are protected against the risk of forest fires destroying the value of their NFT.

The amount each project will contribute to the permanence buffer will depend on multiple factors but generally, be between 5-10% as determined by the project developer.

On a periodic basis, Proimagery will calculate the adequacy of the buffer. Excess Virtualcarbon beyond the needs of the permanence buffer will be sold with funds directed to the treasury reserve.

Leakage - Leakage refers to the shifting of carbon-intensive activity from countries with strong carbon policies to countries with lax carbon policies. It is impossible to accurately calculate leakage, and unreasonable to penalize forest owners who choose to partake in voluntary carbon offset projects by creating a leakage buffer. As a result, no leakage buffer has been included.

Last updated