Fighting Climate Change Through Farmland
There are no mincing words: the 2021 IPCC report is dire. Climate change is here, it is getting worse, and we have a limited amount of time to address the climate emergency before many of the problems associated with global warming are irreversible.
The silver lining - leading innovators in business, technology, government, and the financial sector have answered the call of the climate emergency with a range of inspiring solutions, from powering the grid with renewables, to electric vehicles and more.
But, when it comes to sequestering and storing carbon to mitigate the effects of climate change - or even reverse them - perhaps no sector of our economy represents a bigger opportunity than agriculture.
Agricultural Production is Threatened
Agriculture is under threat from climate change. Rising global temperatures threaten to stunt crop yields. Farmland is vulnerable to floods and droughts, which are devastating to agricultural production, and are becoming less predictable and more frequent. When combined with volatile commodity prices and a shifting global trade landscape, climate change amounts to a pervasive and multi-faceted risk for farmers of all sizes.
Compounding the complexity of this situation, the agricultural sector isn’t just a victim of climate change, it’s also a leading contributor. By some calculations, agriculture, forestry, and land use account for approximately 24% of the world’s carbon emissions. While essential for maintaining current levels of crop production, the application of synthetic nitrogen fertilizer releases nitrous oxide, a particularly potent greenhouse gas, into the atmosphere. Livestock farming and manure management is responsible for another large portion of agriculture’s carbon footprint through methane emissions. Additionally, rice cultivation, crop residue burning, tillage, erosion, forest clearing, overgrazing, and the use of mechanized farm implements like tractors and combines all contribute to the release of carbon into the air.
Farmland as a Carbon Sink
The good news - while agriculture is currently a major carbon emitter, it is also being reconsidered as a critical tool of carbon sequestration. Through the advent of climate-smart agriculture, carbon markets, and the recent boom in regenerative agricultural practices, the agricultural sector is moving quickly to offset much of its climate impact.
“Carbon farming” is the process of extracting carbon from the atmosphere through a plant’s natural ability to photosynthesize. To power their own growth, plants absorb carbon dioxide from the atmosphere and water from the soil and synthesize glucose, a simple carbohydrate that the plant then digests and uses as a source of energy. Most of the carbon originally stored in these glucose molecules remains a part of the plant, meaning that after crops are harvested, the ‘residue’ of the crop plant - the stalk, roots, and leaves left behind in the field - represent a large store of carbon that can be reincorporated into the soil itself.
Conventional farming techniques often involve a soil preparation method called tillage, in which the farmer prepares the soil for the next crop’s planting by using a plow to turn the soil over in rows. This helps prepare seed beds and does incorporate the previous crop’s residue into the topsoil, but over the long run, it makes the soil much more susceptible to erosion by wind and water, and also leads to the loss of lots of the carbon stored in crop residues from prior harvests. Instead, farmers practicing climate-smart or “carbon farming” techniques can minimize their tillage or even avoid it altogether, in order to ensure that more carbon is stored, or sequestered, in the soil by leaving the plant residue in place and planting their next crop directly into the undisturbed soil. This practice ensures that more carbon is stored in the soil than lost through cultivation.
The Uncertainties of Carbon Capture
It is important to note that while carbon farming does promote certain beneficial ecosystem services, the science of carbon accounting is still being fleshed out. Exact rates of sequestration are not easy or straightforward to calculate and, as a result, scientific carbon capture models vary widely. Additionally, a warming climate increases the rate of carbon release from soils, but at varying rates throughout soil depths and at different global latitudes. These combined factors make the task of measuring any one farm’s rate of soil carbon sequestration challenging.
Despite the challenges and uncertainties, there is still reason for optimism: agronomists are quickly working to refine techniques and technologies that improve both the tools of soil carbon measurement as well as the rate and methods of on-farm carbon sequestration. For example, in one novel approach, researchers are working to develop plants with longer root systems, so that their post-harvest carbon residue is deposited deeper into the soil with the hope that the carbon stays in the ground longer. While the science is rapidly evolving, key institutions and companies remain optimistic that carbon farming techniques are beneficial for both farmers and the climate.
Improved Yields and Reduced Risk
Carbon farming techniques benefit farms in numerous ways. Various studies have shown that climate-smart agricultural practices offer long-term benefits to on-farm soil organic matter and crop productivity. Often, these kinds of climate-smart farming practices are referred to as “regenerative farming,” because beyond sequestering carbon, these practices have been shown to promote the restoration of farm ecosystems. Soil becomes spongier, porous, and more absorbent. Improved porosity helps the land become less prone to both flooding and drought damage, which is critical for the future, as these two types of natural disasters are made more frequent and severe by climate change. Farmers also report improved bird and insect biodiversity, soil microbial communities, and earthworm populations. Crop roots are able to grow deeper into the soil, which makes crops more resilient to drought as they can better reach for water and nutrients.
In general, regenerative farms are resilient farms, and farms that assist in sequestering carbon are also able to better withstand the negative effects of the climate crisis.
Earning Income from Carbon Credits
With climate-smart farming practices improving long-term productivity, investors and financiers are noticing. While there are business costs associated with implementing regenerative farming practices that are barriers to entry for many would-be carbon farmers, it is estimated that implementing a wide-scale adoption of sustainable, climate-smart farming practices have the potential to remove up to 170 gigatons of carbon from the atmosphere and generate a $10 trillion in financial return.
The private sector has recently seen a boom in so-called “carbon markets,” a financial incentive for farmers to utilize climate-smart farming practices. Corporations can offset their carbon emissions by purchasing these carbon credits from companies that link these corporations with regenerative farms utilizing carbon capture farming methods such as no-till farming, crop rotation, cover cropping, and the planting of buffer strips. This provides a voluntary mechanism to financially incentivize farmers to utilize regenerative, climate-smart practices. Because this is a new market, some farmers report that carbon credit prices are not yet high enough to cover associated expenses with a transition to regenerative practices, so additional research into costs and practices is needed to ensure economic viability for farmers. Additionally, each carbon market has different requirements for farmers, so it is important for farmers to understand the different costs and practices associated with each third-party carbon program.
Trade associations are urging the federal government to bolster the private sector’s efforts in the creation of robust carbon markets. Current policy recommendations include additional financial incentives for regenerative farmers, increased funding for research and development of farmland carbon sequestration, and the creation of a consumer-facing branding and packaging to create a market for products grown with climate-smart practices. This will help ensure a consumer-driven market for high-quality carbon credits.
The Climate Is At A Pivotal Point
The climate is at a pivotal point, and we have a monumental responsibility to combat the climate emergency quickly, effectively, and with every means available. Climate-smart farmland management provides consumers, trade associations, farmers, and land managers with a critical tool in this battle: on-farm carbon sequestration. While headlines buzz with flashy inventions promising carbon removal decades from now, it is important to remember that the future of carbon capture may already be here: it’s in the dirt under our feet.
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Disclaimer: FarmTogether is not a registered broker-dealer, investment adviser or investment manager. FarmTogether does not provide tax, legal or investment advice. This material has been prepared for informational and educational purposes only. You should consult your own tax, legal and investment advisors before engaging in any transaction.