The issue of carbon offsets is very important in Europe, and is slowly gaining ground in North America. In May of 2010 the public market for carbon offsets was around €16 Euros ($20 USD) per metric ton (2,204 lbs). I am going to show in this article why planting tropical trees is a much more cost effective method of carbon sequestration for a company or business seeking to offset its CO2 emissions, than is the purchase of carbon offsets in the public market. For that purpose I am going to use a hypothetical ABC Company that needs to purchase 10,000 metric tons (10,000,000 KG or 22,046,226 lbs) of carbon offsets every year to balance its emissions.

The average fast growing tropical tree, like Acacia mangium or Eucalyptus pellita,  sequesters 22.6 KG or 50 lbs of carbon per year. That means that one would have to plant 442,478 tropical trees to balance 10,000 metric tons of emissions every year. In order to account for any losses of trees planted to disease, pests, drought or fire, I am going to round up that number to 500,000 tropical trees, providing an ample safety margin for ABC Company's carbon offset requirements. The cost of planting and maintaining each tropical tree for carbon sequestration purposes for a period of 10 years is approximately €1 Euro per tree ($1.27 USD in May 2010). That means that ABC Company would have to spend €500,000 Euros or $635,000 USD to plant sufficient tropical trees to offset 10,000 metric tons of emissions every year for 10 years.

The reason for the 10 years is simply that the average tropical tree is most effective at carbon sequestration in the first 10 years of its life, after which its effectiveness declines. That is why organizations like CO2 Tropical Trees work and calculate how they balance emissions on the basis of a 10 year cycle. ABC Company may have one other additional expense of approximately $30,000 USD or €23,630 Euros to obtain carbon certification of the trees planted, should it require the same for legal, political or tax reasons. Needless to say, planting tropical trees in the Orinoco or Amazon basins of South America provides ABC Company with excellent public relations and advertising value as well, given increased consumer demand for "green" business conduct.

Now let's compare these numbers to the cost of purchasing carbon offsets from the public  markets. At €16 Euros per metric ton, ABC Company would have to spend €160,000 Euros every year for 10 years to offset its carbon emissions, for a total of €1,600,000 Euros ($2,032,000 USD). That is an amount that is more than 3 times higher than the cost of planting tropical trees to offset its emissions. This means that funding the planting of tropical trees is not only more cost effective than purchasing carbon offsets in the public markets, it is also better for the environment, as trees will seed clouds, expand wildlife habitat, and have a significant impact on socio-economic growth in developing countries like Colombia, Venezuela or Brazil. Tropical trees also remove a number of pollutants other than carbon from the atmosphere, and depending on the species used can greatly enhance soil fertility for permaculture activities. Organizations like CO2 Tropical Trees and Amazonia Reforestation, when planting for carbon sequestration purposes, also plant native tree species, whose conservation enhances global biodiversity.