General Mills, ADM, Cargill, McDonalds and The Nature Conservancy are amoung 10 companies and nonprofit organisations that are forming a national market by 2022 to incentivise the adoption of farming practices that build soil carbon and improve water conservation.
Talks for the Ecosystem Services Market Consortium were convened two years ago by the Nobel Research Institute which has committed over $2 million to the endeavour with additional support from General Mills Foundation, Walton Family Foundation and McKnight Foundations. The aim of the venture is to develop protocols and a market framework to issue greenhouse gas reduction credits to farmers who adopt conservation practices.
The market will work in two ways. First farmers will receive credits for the amount of carbon they sequester in the soil or water quality they improve, giving farmers a new and potentially significant income stream; companies can then buy those credits to meet their climate or water goals. Secondly the market will offer companies a way to account for greenhouse gas emissions reductions, water quality and water use reduction to satisfy broader supply chain reporting requirements.
The new consortium is, arguably the most ambitious market to reduce carbon emissions and improve water quality in the agricutlural sector.
"The Consortium will help stand up this market to provide incentives to producers and reward them for providing these ecosystem benefits," says Jerry Lynch, vice president and chief sustainability officer for General Mills. A market, he notes, has the ability to speed adoption at the scale needed to dramatically improve soil health over millions of acres.
"We've been scaling (efforts to improve soil health) in our own supply chain. It's intensive and it's slow going," says Lynch. Earlier this week, "we made a public committment to advance regenerative practices on 1 million acres by 2030. This market is a mechanism that can help us do that much more effectively."
Previous carbon markets have had minimal uptake in agriculture because it proved difficult to adapt carbon measures, which had focused on point sources of pollution such as power plants. But agriculture is a non-point source of pollution and soil carbon levels vary quite a bit. As a result the burden on farmers to verify and report their carbon storage was extremely high, says Sean Penrith, CEO of Gordian Knot Strategies who has helped guide formation of the Ecosystem Service Market Consortium. Those previous attempts spent around 70% of the cost of a credit on verification - for example, repeated farm visits to ensure compliance, leaving little benefit for the farmer, says executive director Debbie Reed.
Landowners will conduct a soil carbon test when they enroll and again before they seek a credit for the carbon sequestered. But, Reed adds, "we're looking at advanced analytics to bring down monitoring costs." For example, they are testing protocols to link remote sensing satellite imagery to traditional soil carbon measures. Over time, Reed says, verification costs are expected to decline.
Unlike previous attempts, "we started from an agricultural perspective and then created the market, rather than trying to fit agriculture into an existing carbon trading system." says Pipa Elias, soil health strategy manager at The Nature Conservancy, who has been invovled since talks began. "We're creating a system that gives growers the flexibility to do what works for their farm, but still generates a societal benefit," she says.
The biggest challenge, says Elias, will be matching the supply and demand for credits. "If demand is there, I have all the confidence in the world that farmers and ranchers will figure out how to make the supply," she says. The timing is ripe, says Elias. "Companies have dug into their own supply chains and can't meet ambitious (greenhouse gas emissions reduction) goals set without helping farmers and ranchers create those water quality and soil carbon storage benefits on the farm," she says.
National Farmers Union spokesman Tom Driscoll is enthusiastic about the prospects of a reliable stable payment for carbon stored on farmland. Having watched ecosystem markets evolve over the years he says the consortium's approach is the "best crack at it from everything I've seen," he adds. "There's a lot happening to make farmers receptive to this type of market," says Driscoll, including volatility in markets for global products, changing consumer demands and extreme weather.
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