Potential for Carbon Markets in Agriculture to Address Climate Change

Posted on Friday, June 26th, 2020 by Guest Blogger
Connor Magee and Ellee Igoe describing the importance of cover cropping during the Healthy Soils Demonstration event.

This blog is reposted from the National Sustainable Agriculture Coalition (NSAC), of which CalCAN is a member. NSAC advocates for federal policy reform for the sustainability of food systems, natural resources, and rural communities. See the original post here. Editor’s Note: This is the second blog in a series that will be focusing on specific provisions included in the Agriculture Resilience Act (ARA) introduced by Rep. Chellie Pingree (D-ME) in February 2020. ARA represents the first comprehensive piece of legislation introduced in the House of Representatives addressing climate change and agriculture. The first blog focused on the Goals and Action Plan sections of ARA.

This second blog focuses on carbon markets and ecosystem services, and it was co-authored by Tara Ritter, Senior Program Associate at the Institute for Agriculture & Trade Policy and Cristel Zoebisch, Climate Policy Associate at the National Sustainable Agriculture Coalition in partnership with the Organic Farming Research Foundation.

Farmers and ranchers work at the frontlines of climate change where they face increasingly extreme droughts, floods, temperatures, shifts in crop yields, and changing pest and disease pressures. The scientific community agrees that significant reductions in greenhouse gas emissions need to happen rapidly to avoid reaching the 2°C threshold level of global warming. Many land management practices can help reduce carbon dioxide, nitrous oxide, and methane emissions, while enhancing carbon uptake in our soils. As stewards of our land and natural resources, farmers and ranchers hold a unique position to sequester carbon in our country’s soils through best management practices for soil health, crop and livestock production, and agroforestry. Federal farm policy should go beyond conventional support for farmers and ranchers as they adapt to climate change pressures by seeking to provide them with new tools and resources to support their work to mitigate the effects of climate change through carbon sequestration and greenhouse gas emissions reductions.

The Agriculture Resilience Act (ARA), introduced by Rep. Chellie Pingree (D-ME) earlier this year, places farmers at the center of climate adaptation and mitigation and equips agricultural producers to be active leaders in our efforts to combat climate change. The ARA contains six primary building blocks that together form a foundation that supports farmers and ranchers in addressing climate change:

  • building soil health
  • increasing agricultural research
  • supporting pasture-based livestock
  • reducing food waste
  • promoting on-farm renewable energy
  • ensuring farmland preservation and viability

While most of the policy proposals in the ARA fall within these six topics, the ARA also explores other ideas to include agriculture in efforts to mitigate climate change, including how farmers and producers can participate in ecosystem service markets (including carbon markets).

Carbon markets have become a popular recommendation for climate policy proposals, but many questions remain regarding measurements, payment levels, beneficiaries, and permanence. Because of those questions, the ARA does not include a direct proposal to sanction or provide public subsidies for such markets. Instead, it directs the U.S. Department of Agriculture (USDA) to put in place the infrastructure that could serve as the basis for paying farmers for ecosystem services, including carbon storage, via public programs or private initiatives. It is absolutely essential to fully understand the implications of carbon markets before supporting them through direct public benefits.

Setting up the Infrastructure for Ecosystem Service Markets

The Natural Resources Conservation Service (NRCS) has been providing technical and financial assistance to farmers and ranchers to implement conservation practices since the 1930’s when the Dust Bowl threatened farmers across the Great Plains. NRCS continues that work through current farm bill programs that pay farmers for conservation activities that result in ecosystem benefits including the Conservation Stewardship Program (CSP) and the Environmental Quality Incentives Program (EQIP). The ARA includes several new proposals to enhance those programs (more on that in a later blog in this series – stay tuned!)

Ecosystem service markets aim to pay those carrying out ecosystem services to generate “credits,” which are then sold to buyers (individuals or companies) interested in reducing their environmental footprint. Carbon trading programs (carbon markets) and water-quality trading programs are common types of ecosystem service markets operating currently.

The 2008 Farm Bill established the USDA Office of Environmental Markets and directed the Secretary of Agriculture to establish standards to measure the ecosystem services provided by conservation and land management activities. The ARA would expand this work by establishing a Soil Health and Greenhouse Gas Federal Advisory Committee, directing the Secretary to evaluate and issue guidance on existing outcomes-based measurement systems of farm-level greenhouse gas emissions and soil carbon sequestration, creating a nationwide soil health and agricultural greenhouse gas emissions inventory, and establishing criteria for payments for ecosystem services that promote soil carbon sequestration or that reduce greenhouse gas emissions.

Photo Courtesy of Phil Foster

The Soil Health and Greenhouse Gas Federal Advisory Committee would be tasked with delivering recommendations to the Secretary of Agriculture on the feasibility of establishing reliable outcomes-based measurement systems, identifying consistent measurement technologies, and pinpointing gaps and shortcomings of existing measurement tools. Recommendations would include information gathered from existing measurement models (like COMET-Farm), remote sensing data and analysis, on-farm demonstration trials, and existing and emerging public and private environmental market measurement protocols. The advisory committee would also provide recommendations on standards for collection and dissemination of data, and considerations around farmer data management and privacy.

The makeup of the advisory committee would consist of a variety of stakeholders, including farmers, ranchers, organizations representing agricultural producers, scientists, environmental nonprofits, private sector carbon and ecosystem services market initiatives, businesses working to reduce greenhouse gas emissions in their supply chains, youth engaged in food and agriculture, Tribal communities, and relevant State and federal agriculture agencies.

The ARA also directs USDA to create a nationwide soil health and agricultural greenhouse gas emissions inventory using the best available data and science. The inventory database would display expected average performance for soil carbon sequestration and greenhouse gas emissions reduction by primary production type and production region. This accessible and interoperable database would be created in consultation with the advisory committee and the Environmental Protection Agency (EPA).

Finally, the ARA directs the Secretary of Agriculture to establish criteria for payments, credits, or other forms of incentives to inform policy and markets established to promote soil carbon sequestration and greenhouse gas emission reductions. The criteria need to have documented likelihood of providing long-term net climate benefits, prevent environmental degradation, and be based on environmental impact modeling of the changes resulting from shifting to new or improved agricultural practices.

Considerations on Carbon Markets

Federal investment in climate and agriculture must benefit farmers and meaningfully reduce overall greenhouse gas emissions. Carbon markets to-date have not resulted in overall greenhouse gas emissions reductions and may not be the best option to incentivize farmers to implement climate-friendly practices, for reasons we summarize briefly below.

Soil carbon storage is impermanent – any carbon sequestered in the soil can be released with a change in land management practices or through severe weather events. For instance, much of the carbon sequestered from no-till aggregates near the soil surface where it’s vulnerable to rapid oxidation after even a single tillage pass. Most no-till farmers till once every several years to deal with weeds, which releases much of the carbon stored. Even voluntary, long-term contracts that require land managers to use certain practices do not ensure permanence, since the carbon stored can be released back into the atmosphere once a contract expires if the land manager decides to implement less climate-friendly practices.

Although the science of soil carbon measurement is advancing, the tools required to measure soil carbon to the degree of accuracy needed to issue reliable offsets do not currently exist. Different measurement tools can yield different results on the same field, and soil carbon is extremely variable across different soil types, depths, climate conditions and time periods. Even in apparently uniform fields, soil carbon content can vary by as much as fivefold. Without adequate measurement tools, quantifying soil carbon to use in a carbon market becomes a guessing game and does not guarantee actual reductions in greenhouse gas emissions.

There are multiple benefits of a climate-friendly agricultural system, including healthier soils, clean water, wildlife habitat, and farm resilience to drought and flooding. Research shows that integrated systems of practices based on sound agroecological principles have the greatest potential to mitigate agricultural greenhouse gas emissions, sequester and stabilize soil carbon, and attain the full measure of a productive and resilient agricultural system. Single practices designed primarily to generate carbon credits look at agriculture too narrowly and will not lead to such innovative, holistic, and systems-based approaches.

Offset projects designed to meet the needs of a carbon market tend to work best for large-scale farms with enough land to implement practices that would generate a profit from generating carbon credits. This raises concerns that investment in carbon markets will contribute to further consolidation of agricultural land and disadvantage small to mid-sized farmers. The COVID-19 pandemic has highlighted the fragility of highly concentrated food and farming systems, particularly in the meat processing sector. Focusing on resilient agroecological systems rather than on the amount of carbon sequestered can benefit farmers of all sizes and the food system as a whole.

Some of the biggest backers of carbon markets are agribusiness companies and other major corporations, who hope to purchase carbon credits as a way to sidestep reducing their own greenhouse gas emissions. Without the ability to guarantee accurate measurements, permanency of soil carbon storage, and additionality of the practices generating carbon credits, offsets can allow companies to greenwash their operations without net carbon reductions.

What Comes Next?

Rangeland monitoring

Our country’s farmland has the capacity to store immense amounts of carbon in our soil, but more clarity is needed on which farming techniques sequester carbon, how much carbon they sequester, and whether such practices can be carried out over long enough periods of time to provide net climate benefits.

The ARA does not include a proposal sanctioning or subsidizing carbon markets, but it does direct USDA to further research ecosystem service markets and put infrastructure in place to facilitate farmers’ participation in public programs or private markets to provide carbon storage or other ecosystem services. The ARA includes provisions to expand conservation and soil health programs to reward farmers for ecosystem services without reliance on marketing schemes, but also takes a reasonable first step to assess market and trading-based regimes, ensuring that infrastructure, guidance, and criteria are in place before farmers and ranchers engage in these markets. Without infrastructure and clear standards, we risk overestimating carbon farming’s contribution to our efforts in combating climate change, and without appropriate protections and oversight, farmers and ranchers may not be the ultimate beneficiaries of ecosystem service markets.

NSAC applauds the ARA for taking a holistic view of farming and the many benefits that climate-smart practices bring in addition to carbon sequestration and greenhouse gas emissions reductions, such as improved water quality, soil health, wildlife habitat, and resilience. We await the report from the House Select Committee on the Climate Crisis later this summer and hope their report mirrors the ARA’s focus on providing farmers and ranchers with the tools and resources they need to contribute to our efforts in climate change mitigation and adaptation. Climate-smart agriculture consists of many practices coming together to sequester carbon, reduce greenhouse gas emissions, build soil health, and increase resilience in our food and farming systems.

As we continue to consider the role of agriculture in addressing climate change, policy solutions need to empower farmers and ranchers to implement practices on their lands that provide climate and environmental benefits and that build resilience into their operations and our larger food and agriculture system.

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