No matter what some may think about the arguments regarding climate change, there’s a global movement among companies and governments to reduce greenhouse gas emissions. One tactic is to seek ways to offset carbon dioxide emissions by purchasing credits as tradable certificates.
The idea is that the cost of those credits works as an incentive for some companies to evolve practices that reduce carbon emissions, and it incentivizes others to reduce their emissions by creating a way to monetize those efforts.
By practicing sustainable, regenerative land management, farmers can increase the amount of carbon sequestered in their soils, and decrease greenhouse gas emissions using other agricultural practices, including reducing equipment passes over each field. The idea is that in the carbon market, they can sell those ecosystem services as agriculture carbon credits for added revenue. Groups are working on ways to formalize that effort and bring income back to the farm.
“The environmental footprint of agriculture is important to socially conscientious food brands, such as General Mills,” says Debbie Reed, executive director, Ecosystem Services Market Consortium. “It costs farmers and ranchers money to provide these ecosystem services that we ask of them. It’s another product that they provide for us. We should pay them for it. A way to do that is through carbon credits.”
There are established markets for carbon credits generated by forestry and renewable energy (wind, solar, methane digesters, etc.). Ag carbon credits, specifically for cropland and pastureland or rangeland agriculture, are newer additions to the carbon market. “Ag carbon credits provide benefits not available with, say, renewable energies,” says Lill Erickson, executive director, Western Sustainability Exchange. “Grassland credits, for land grazed by livestock, provide greater biodiversity, more wildlife habitat and cleaner water. Companies value grassland credits higher, because of their side benefits.”
Both the Ecosystem Services Market Consortium and Western Sustainability Exchange are piloting the ag carbon credit process with select producers. “We want to know how this works, and how much it costs,” Reed says. “Scientists still question how quickly carbon accumulates in soils, and how long it stays there.”
Valuing carbon in pasture and range
Pasturelands and rangeland are a huge potential market for carbon credits. Deeded range and pasturelands, according to the USDA Natural Resources Conservation Service, make up more than 27% (528 million acres) of the total acreage of the contiguous 48 states — exceeding both forestland (21%) and cropland (18%). The Western Sustainability Exchange partners with NativeEnergy, a carbon offset provider, to bring online — in Montana— the second-largest grasslands carbon project in the world (the current largest project is in Kenya).
“We work with ranchers to implement adaptive grazing practices to increase the amount of carbon dioxide drawn out of the atmosphere,” Erickson says. “In this process, the carbon atom moves through the plant’s photosynthesis process to the root system deep underground, where it’s sequestered. When that happens, the stored carbon becomes an asset that holds value as a tradable commodity.”
Many producers work with USDA to fund conservation practices, which can increase carbon sequestration on their lands. The 2008 Farm Bill implemented a USDA policy to prepare farmers and ranchers to participate in carbon markets. USDA later adopted a policy that producers own their ecological assets, even if those assets were partially funded by a federal government program.
“There are some markets that will not give credit for ecological services if someone, other than the producer, paid for their development,” Reed explains. “That now shifts in our market. If it’s important, and we want it, why wouldn’t we allow a farmer or rancher to utilize whatever financing helps them achieve the ecological outcomes? The [Ecosystem Services Market Consortium] urge[s] farmers and ranchers to participate in government cost-share programs, since they provide a form of upfront financing.”
Quantifying carbon-saving practices
Carbon credits must be measured and verified before their sale. To begin, soil samples are taken — down to 30 centimeters, or about 12 inches — to establish the carbon baseline. The Ecosystem Services Market Consortium invests in tools to ease the process, such as handheld devices for producers to pull soil samples themselves; and the use of satellite imagery and remote sensing technologies to supplement the producers’ monitoring. After the initial tests, soil samples are collected every five years to assess changes in soil carbon stocks.
The carbon baseline measured through soil samples feeds into models that predict the amount of additional carbon that may be sequestered annually by regenerative ag practices. The Western Sustainability Exchange works with individual ranchers to plan the management practices they will use, and on what types and numbers of acres. This data is then entered into a predictive model created by Syracuse, N.Y.-based Soils for the Future and Burlington, Vt.-based NativeEnergy. The modeled approach, combined with the field measurements to field-truth information, validate one another.
Once producers know how many carbon credits that their land potentially holds, they negotiate payments based on per ton, per acre of carbon sequestered. The Western Sustainability Exchange’s inaugural tranche consists of four ranch families, in Montana, that manage 34,000 acres. The ranches signed 30-year carbon credit contracts with NativeEnergy, and many chose an upfront payment for five years’ worth of carbon credits followed by annual offset installments.
The Western Sustainability Exchange doesn’t publish remuneration, though Erickson says, “The ranchers find the payment for carbon credits to be compelling.”
Ranchers put carbon credit funds to work
The Montana ranchers taking part in the trial carbon sequestration program have mainly used the money to implement adaptive grazing methods, such as building permanent and temporary fences, improving water systems, and hiring more people to rotate livestock. These management practices increase ranch profitability and enhance soil health to sequester even more carbon. There is a chance that, after five years have passed and soil samples are repulled, there won’t be a positive net change in soil carbon.
“There is no risk to the rancher if the carbon amounts go down,” assures Chris Mehus, ranch program director, Western Sustainability Exchange. “It’s stipulated right in the contract. The science behind measuring existing carbon, and measuring change over time, is still in the development stage.”
Mehus adds that the contract is “a relationship between the company and the producer. Through it, the company learns how the ranch has changed its practices to benefit the environment. There may be a greater diversity of plant and wildlife species, and better infiltration rates in the soil. There are different measurements of other results to supplement that carbon measurement.”
The entire process is rancher-driven. “We ask, ‘What do you want to do with your land?’” Erickson says. “We then help ranchers develop a detailed plan that intensively grazes livestock in a pasture, followed by long rest periods. The plan goes to NativeEnergy to determine, using a predictive model, if the changes to the grazing management will lead to greater levels of sequestered carbon. If the potential levels are significant enough, the rancher and NativeEnergy negotiate a long-term contract to outline payment amounts and schedules. NativeEnergy then sells carbon offset credits to interested buyers.”
The Western Sustainability Exchange’s first buyer of ag carbon credits, Xanterra Parks and Resorts, is the primary concessionaire for Montana's two national parks: Yellowstone and Glacier. Xanterra also sources much of the food it serves in the parks from Montana producers.
“Xanterra appreciates the quality and nutritional value of sustainably produced, regional food,” Erickson says. “The company also wants to support its agricultural neighbors by increasing their financial ability to stay on the land. To continue to provide wide-open spaces, wildlife habitat and clean water valued by everyone.”
The carbon market allows companies, and their supply chain, to achieve their long-term sustainability goals. When fully developed, the market offers the potential for producers to benefit financially from their stewardship practices, while at the same time continuing to grow food and fiber.
Hemken writes from Lander, Wyo.