Climate markets are incredibly important to the future of agriculture – for growers, communities, and companies connected to agriculture – and play a significant role in the sustainability of our climate, global food supply, and home planet. While carbon markets have received the bulk of the attention, they are among a suite of ecosystem markets – such as water quality, water quantity, and biodiversity – available to growers.
At present, climate markets are fragmented, lack consistency, and have opaque standards which inhibit more widespread adoption and leads to the “wild west” descriptor used by many in the agricultural sector. To enable climate markets to operate at their highest, best use we need to ensure transparency.
Clear standards, definitions, and program comparisons will build trust among all actors and ensure that a robust shared framework for evaluating prices, performance, practices, and environmental outcomes exists.
The Soil and Water Outcomes Fund is one of 15 companies and organizations that comprise the Agricultural Climate Markets Collaborative – a voluntary group facilitated by the Keystone Policy Center to codify a set of precompetitive actions that can create more transparency and build trust in the marketplace. This will ultimately contribute to more robust agricultural climate and ecosystem markets that can scale towards broader impact.
The Collaborative recently released 11 core principles for transparency in agricultural climate markets that, if widely adopted, will enable market-based climate solutions for agriculture to grow by ensuring program developers provide clear, concise, and easily accessible information to growers and buyers about how they handle each of the following:
- Farm and entity eligibility for programs
- Contract obligations for program participants
- Asset types generated by a program
- Standards used by the program developer
- Data required from program participants
- Models used to generate credits
- Ownership and transferability of the credits generated
- Program participant financial obligations and payments
- Data ownership and privacy
- Contractual implications of noncompliance and acts of God
- Required relationship between program developer and participant
The Collaborative and its members are working to promote and evolve these principles by adopting them in our own organizations and engaging with stakeholders throughout the agricultural supply chain to continually improve on the elements. At the Sustainable Agriculture Summit on November 16, our organizations will participate in a session that builds on this dialogue with growers, program developers, corporations with supply chain sustainability programs, government, and related organizations.
As the Collaborative moves forward, it will tackle topics associated with standards for climate market accounting, additionality and permanence of environmental outcomes, and program enrollment. These are all areas that need further collaboration and input from growers, agricultural communities, commodity organizations, companies, and all levels of government.
Along with the efforts of groups like the Agricultural Climate Markets Collaborative, the USDA continues to play a critical role in advancing market-based approaches to climate in the agricultural sector. And the 2023 Farm Bill presents a significant opportunity to continue to advance transparent, outcomes-oriented climate solutions.
The USDA’s Partnerships for Climate-Smart Commodities is a recent development that will provide more than $3 billion to initiatives that encourage multi-sector partnerships to create additional market opportunities for climate-smart agricultural commodities. Transparency will be a key element of many of the awarded projects, including a number of initiatives featuring members of the Agricultural Climate Markets Collaborative like the Soil and Water Outcomes Fund. We look forward to ensuring that these principles are applied as broadly as possible to reduce confusion among farmers and buyers looking to participate in these new efforts.
Market-driven, outcomes-based approaches inherently incorporate robust measurement and reporting of climate impact, which, alongside transparency, enables all parties to quickly learn what practices provide the best results.
And these approaches often enable growers to produce multiple benefits resulting from conservation agriculture practices – including greenhouse gas emission reduction and removals, water quality and quantity improvements, and biodiversity gains – providing valuable new opportunities to advance conservation agriculture practice adoption. To take one example, the Soil and Water Outcomes Fund contracts with growers to produce both greenhouse gas emission reductions and removals and water quality outcomes.
We welcome input from other organizations and companies on these ideas and the Principles for Transparency in Agricultural Climate Markets as we move forward. A rapidly evolving marketplace requires that we iteratively and transparently update principles and best practices to market-based approaches for agricultural climate change mitigation.
The numerous variables at play in any given crop year – and the sheer number of potential practice changes, fields, growers, advisors, programs, and companies involved in agricultural climate markets – make flexibility an important tenet, though that need not come at the expense of transparency.
The more we can do to develop agreed-upon, measurable, and transparent approaches to agricultural climate markets, the more it engenders trust, enables growth at scale, and will improve the outcomes for people and planet.
Sarah Alexander is Vice President of Programs for the Keystone Policy Center.
Adam Kiel is Managing Director of the Soil and Water Outcomes Fund.
Jonathan Geurts is Senior Project Manager for the Keystone Policy Center.More information about the Agricultural Climate Markets Collaborative and the Principles for Transparency in Agricultural Climate Markets is available at https://www.keystone.org/agclimatemarkets.
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