USDA Identifies Agriculture, Forestry Potential in Carbon Markets

Tractor on large-scale wheat farm

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by | Oct 25, 2023

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A recent U.S. Department of Agriculture (USDA) report revealed the role of farmers and forest landowners in generating carbon credits to supplement their revenue streams and help companies achieve emissions reduction goals.

The report identifies how farmers and forest landowners may take part in climate change solutions while also achieving financial benefits, potentially fostering investment in rural communities. Carbon markets allow companies and organizations to purchase certified carbon credits to offset their emissions, therefore allowing them to meet emissions reduction goals.

Farmers and forest landowners may supply such credits by adopting practices that reduce emissions, such as regenerative agricultural practices, carbon sequestration in soil, or land conservation, to name a few.

The deliverable was released under the Growing Climate Solutions Act, legislation that helps farmers and forest landowners generate and sell carbon credits by setting up a third-party certification process through the U.S. Department of Agriculture.

According to the USDA report, carbon credits attached to forestry accounted for over half of issued credits, but agricultural credits lagged behind at about 3% credit volume between 2013 and 2022.

Barriers to Agricultural Sector’s Participation, Fostering Participation in Carbon Markets

The agriculture industry has faced a number of challenges in the carbon market, including limited returns on investment due to high transaction costs.

Costs involve quantifying greenhouse gas, verifying carbon credits, and reporting carbon emissions avoided, all of which have been identified as crucial to carbon market success. According to the report, studies have shown some carbon credit projects failed to meet claimed carbon reductions, so concerns over credit quality have led to demand for increased reporting measures.

With these challenges identified, the USDA is reportedly working to foster confidence and landowner participation in carbon markets. Earlier this year, the USDA revealed plans to invest $300 million to improve measurement, monitoring, reporting, and verification of emissions and carbon sequestration for agriculture and forestry.

The USDA’s Forest Service also recently announced that it will provide $150 million to help small-acreage forest landowners connect to voluntary climate markets. Since many small-acreage landowners lack the resources needed to properly manage their forests and reap the many environmental benefits of conserving them, this financial incentive may help landowners support more resilient forests and provide credible carbon offsets.

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