Overview
Effective retroactively to April 23, 2023, COTAP is pausing allocations to two of our partner projects – Taking Root’s CommuniTree reforestation project in Nicaragua and AMBIO’s Scolel’te reforestation project in Mexico.
Incoming donations specifying “all projects” will now be evenly allocated to COTAP’s four remaining active projects: Trees for Global Benefits (Uganda), Khasi Hills Community REDD+ Project (India), Drawa Rainforest Carbon Project (Fiji), and Bujang Raba Community Payments for Ecosystem Services (PES) Project (Indonesia).
No action is needed by COTAP donors. A handful of donors will receive revised donation acknowledgements reflecting this change, and, as we catch up on affected donations from 4/23, donors will receive delayed acknowledgements reflecting 4 projects instead of 6.
What’s Not Changing
- COTAP’s pricing of $15.00 per tonne and our margins of 10% will remain the same.
- COTAP is still 100% tax-deductible for U.S. residents.
- Our Terms of Use remain the same.
Background
Now the largest reforestation program in Nicaragua, CommuniTree continues to attract increased interest from larger and older buyers that have more resources than COTAP. One example is Arbor Day Foundation, a 51-year-old nonprofit that took in $119 million in donations in 2022 and bought 486,281 tonnes – or 49% of CommuniTree’s 2022 vintage.
At COTAP’s still-modest annual volume levels of 2K-5K tonnes per year, CommuniTree is now able to command prices significantly higher than COTAP’s $13.50/tonne. It is also able to achieve significantly higher prices at higher volumes.
We continue to strongly believe that every dollar per tonne not received by these projects is a permanent missed opportunity for poverty alleviation. Accordingly, we decided to pause allocations to CommuniTree for now.
Similarly, Cooperativa AMBIO, COTAP’s partner in Chiapas Mexico, recently informed us that it has streamlined its revenue-generating programs in order to focus solely on Scolel’te. Not only does Scolel’te now need to raise prices in order to support the entire AMBIO organization, like CommuniTree it is also enjoying increasing demand from a growing voluntary carbon market. And so we’ve decided to pause allocations to Scolel’te as well.
Pricing Rationale
COTAP’s pricing has not increased pricing since 2/1/20 and is arguably due for a price increase. That said, we feel that right now is not a good time. Reasons include:
- Our 2023 volumes so far have continue to be modest.
- COTAP’s price paid to projects ($13.50/tonne) remains sufficient for all of our remaining active partner projects (Uganda, India, Fiji, and Indonesia)
- COTAP’s donation rate of $15.00 per tonne remains on par with other U.S.-based offset providers.
- The global economy has entered a period of increased uncertainty.
- The voluntary carbon market outlook, despite unprecedented growth in recent years, remains highly uncertain.
Volumes and Project Portfolio Rationale
With regard to volumes, it’s important to remember that COTAP is a crowdfunder and not a traditional reseller. We don’t purchase inventory and then try to resell it, rather we collect donations of many sizes primarily from individuals and small businesses around the world – and then we periodically disburse funds to projects. Our volumes depend completely on our visibility and to what degree would-be donors find us and our projects compelling.
Further, we’ve also decided to hold off on replacing CommuniTree and Scolel’te with other projects certified by the Plan Vivo Foundation Carbon Standard. COTAP’s remaining partner projects are more than capable of handling our likely volumes through at least the remainder of 2023. Each of these partners will now receive 25% of tonnes when a donor chooses “all projects,” which is usually the case, instead of the 16.67% they’d receive if COTAP were still supporting 6 projects.
