The Farm Foundation recently hosted a forum to examine the potential value and benefits of an ecosystem marketplace that could enable and encourage farmers and ranchers to adopt and sustain conservation management practices.
It included an evaluation of a study — commissioned by the Ecosystem Services Market Consortium — to assess the value and potential of conservation practices on private agricultural land and the potential demand for carbon and water-quality credits.
The initiative to establish an ecosystem marketplace began in 2017 with the Noble Research Institute, which started working on developing protocols to verify carbon sequestration and improved water quality, said Joseph Somers, vice president of IHS Markit — formerly Informa Agribusiness Consulting, which performed the study.
“The goal is to have farmers and ranchers use conservation management practices and be paid for those environmental impacts they achieve,” he said.
Verification protocols will also add value on the demand side for companies and organizations that want to buy the credits, he said.
The demand for credits comes from the need to be in compliance and companies’ and organizations’ own environmental goals, he said.
The study estimated the combined demand for carbon and water-quality credits regarding nitrogen and phosphorous would total $13.9 billion — $5.2 billion on the carbon side and $8.7 billion on the water-quality side.
The potential carbon sequestration on agricultural land is almost 190 million metric tons, equivalent to the carbon impact of taking 40.7 million passenger vehicles off the road for one year, he said.
Field crops account for 60% of the potential carbon credit supply with the Corn Belt, Northern Plains and Great Lakes states accounting for two-thirds of that potential, he said.
The study evaluated the potential demand for carbon credits across several sectors and estimated the food and beverage sector would account for 57% of total potential demand, he said.
On the water-quality side, supply and demand of credits would need to be within the same watershed. Matching that supply and demand indicates potential credits of 1.58 million pounds of nitrogen and 800 million pounds of phosphorous, he said.
The study found publicly owned water-treatment plants are the main source of nutrient discharges into waterways, accounting for approximately 63% of nitrogen discharges and 94% of phosphorous discharges, he said.
The goal is to launch the market in 2022, he said.
The consortium has 14 founding members, including ADM, Cargill, Danone, General Mills, Land O’ Lakes, McDonald’s and Nestle. It also has a host of partners including other agribusiness — such as Bayer and Tyson Foods — and farm, commodity and conservation groups.
The great thing about establishing a market for credits is that producers know what they can receive for delivering a credit, said Kris Johnson, associate director for science and planning at The Nature Conservancy, which is a founding member of the consortium.
“The producer, knowing his or her operation, is going to respond and look around and see what opportunities are available and use those practices that make sense on their operation to deliver those credits,” he said.