Please note that the following applies to any circumstances of under-delivery. Examples include, but aren't limited to: underestimating a planned harvest, impacts from natural disturbances, and timber trespass cases.
If your Actual Deferrals (resulting deferrals at the end of the cycle) fall below your contracted amount (the number of credits that were accepted at the start of the cycle, also referred to as Accepted Deferrals), NCX will pay you for all Credited Deferrals (quantity of deferrals that the landowner was eligible to be paid for delivering) in an amount calculated as follows:
- If the Credited Deferrals are between 95% and 110% of the Contract Deferrals, NCX’s payment obligation shall be the Contract Price multiplied by the Credited Deferrals.
- If the Credited Deferrals are less than 95% of the Contract Deferrals, NCX’s payment obligation shall be the Contract Price multiplied by the Contract Deferrals multiplied by an adjustment factor (2% for each whole percentage point by which the Credited Deferrals is less than 95% of the Contract Deferrals).
- If the Credited Deferrals fall below 47% of the Contract Deferrals, no payment will be made.
- At this point, it's possible that additional penalties may be introduced. An exception here is made for under-delivery due to natural disturbances. You can read more here: What happens if I under-deliver due to a natural disturbance?
The above is outlined in our example Seller Agreement. The graph shown below is a visual representation available on page 17 on the Seller Agreement and demonstrates how payment is calculated based on the deferral commitment met: