Non-Permanence of Conservation Practices and Carbon Markets
The following is an excerpt from a paper written by Alejandro Plastina, the current Farm Foundation Agricultural Economics Fellow. Dr. Plastina is an Associate Professor/Extension Economist in the Department of Economics at Iowa State University.
Emerging voluntary carbon markets are being touted as the new cash crop in U.S. agriculture. In essence, large companies would purchase carbon credits from multiple sources, including agriculture, to achieve their net zero-emission goals. Farmers and ranchers would implement conservation practices following protocols from a carbon program to sequester carbon from the atmosphere into the soil or avoid greenhouse gas emissions in exchange for compensation. The carbon program would connect purchasing entities with farmers, and direct the flow of payments, data, methods, and carbon credits throughout the system (Plastina 2021).
Agricultural conservation practices must be additional and permanent to generate carbon credits (Plastina and Wongpiyabovorn 2021). Additional practices are different from baseline practices. Evaluating the additionality of a practice requires judgement on whether it would have been implemented in the absence of the carbon program. Permanence refers to the length of time that a specific practice sequesters carbon from the atmosphere.
Annual conservation practices can be adopted with certain annual patterns in mind that would make them hard to qualify as permanent practices. For example, cover cropping could be highly desirable for some farmers before corn in a corn-soybean rotation, but less desirable in every single year. In the former case, carbon sequestration would take longer to occur than in the latter case. When annual practices are temporarily discontinued due to factors external to the farm, most carbon programs include penalties associated with skipping payments for the discontinued practices until reinstated (Plastina and Wongpiyabovorn 2021).
Even if annual conservation practices are adopted with the intention to implement them every single year, there could be agronomic or economic reasons that would justify a temporary discontinuation. For example, the adoption of a no-till system requires a long-term commitment because it requires new implements and a different timing of certain practices. However, if weed resistance builds up to a point where chemicals become ineffective, then vertical tillage could be used as a weed management strategy one year before returning to no-till. When tilling a soil that has been in a no-till system for multiple years, the sequestered carbon from previous years leaves the soil and returns to the atmosphere. Some carbon programs address the risk of “reversal” through a voluntary carbon reserve, which consists of carbon credits generated by agricultural practices that are kept untraded (outside the carbon market) for 10 years or more. (Plastina and Wongpiyabovorn 2021).
In an attempt to shed light on regional patterns of adoption and disadoption of conservation practices, Plastina and Sawadgo (2021) evaluated changes in acres on cover crops and no-till in Illinois, Indiana, and Iowa between the last two Censuses of Agriculture 2012 and 2017.
In 2017, cover crops were planted in 2,617,335 acres in the I-States, equivalent to 4.12% of their total cropland area. An analysis of changes in adoption rates by county indicates that 199 counties out of the 289 counties in the I-states for which there is complete data (69%) increased their rates of adoption by at least 1 percentage point between 2012 and 2017, while 59 counties (20%) kept it relatively stable (change between 0 and 1 percentage points), and 31 counties (11%) experienced declines in their rates of adoption, or disadoption (see figure 1). The biggest gain in cover cropped area (20,001 acres) occurred in Keokuk County, Iowa, and the largest drop (-6,374 acres) was observed in Orange County, Indiana.
In Indiana, twenty counties experienced a total decline in cover crop area of 40,616 acres, equivalent to 22.7% of their 2012 cover cropped area. In Illinois, seven counties reduced their cover cropped area by 5,603 acres, equivalent to 28.0% of their 2012 levels. In Iowa, four counties experienced a total decline of 8,572 acres, equivalent to 42.5% of their 2012 levels.
In 2017, no-tillage systems were implemented on 19,571,098 acres in the I-States, equivalent to 30.84% of their total cropland area. An analysis of changes in adoption rates by county indicates that 175 counties out of the 291 counties in the I-states for which there is complete data (61%) increased their rates of adoption by at least 1 percentage point between 2012 and 2017, while 20 counties (7%) kept it relatively stable (change between 0 and 1 percentage points), and 96 counties (33%) experienced disadoption (see figure 2). The biggest gain in no-till area (62,616 acres) occurred in Plymouth County, Iowa, and the largest drop (-35,435 acres) was observed in Jasper County, Indiana.
In Indiana, forty-six counties experienced a total decline in no-till area of 369,247 acres, equivalent to 14.6% of their 2012 cover cropped area. In Illinois, thirty-nine counties reduced their no-till area by 292,086 acres, equivalent to 12.1% of their 2012 levels. In Iowa, eleven counties experienced a total decline of 95,457 acres, equivalent to 11.1% of their 2012 levels.
Disadoption and Carbon Programs
Plastina and Sawadgo (2021) highlight the non-permanence of two annual conservation practices between 2012 and 2017 in the I-States: 11% and 33% of the counties in the region disadopted cover crops and no-till, respectively, reducing their areas in those conservation practices by 25% and 13% with respect to 2012 levels. If these percentages are indicative of the probability that farmers participating in voluntary carbon programs could temporarily discontinue contracted practices and trigger penalties from carbon programs, their findings suggest that farmers planting cover crops and using no-till would face non-trivial probabilities of being penalized over the life of a multi-year carbon contract.
For more information
Plastina, A. 2021. “How do Data and Payments Flow through Ag Carbon Programs?” Iowa State University Extension and Outreach. Ag Decision Maker File A1-77. Available at https://www.extension.iastate.edu/agdm/crops/html/a1-76.html.
Plastina, A., and O. Wongpiyabovorn. 2021. “How to Grow and Sell Carbon Credits in US Agriculture.” Iowa State University Extension and Outreach. Ag Decision Maker File A1-76. Available at https://www.extension.iastate.edu/agdm/crops/html/a1-77.html.
Plastina, A. and W. Sawadgo. 2021. “Cover Crops and No-till in the I-States: Non-Permanence and Carbon Markets.” Agricultural Policy Review, Fall 2021. Center for Agricultural and Rural Development, Iowa State University. Available at www.card.iastate.edu/ag_policy_review/article/?a=133.