With the effects of droughts and depleted topsoils becoming more apparent, the cracks in our agricultural systems are starting to show. Photo courtesy of USDA
By Valerie Brown. Dec. 12, 2019. Most people have stopped denying anthropogenic climate change and many would like to offset their contributions to atmospheric carbon. An increasingly attractive and practical way to do this is to incentivize regenerative agriculture.
Instead of capturing carbon dioxide before it’s emitted, farmers can take already-emitted carbon out of the air by using agricultural practices that rebuild organic matter and restore degraded soil biodiversity. Some believe that paying farmers for this vital ecosystem service, termed “carbon farming”, will provide the necessary impetus.
In 2020, a Seattle company, Nori, will launch what it claims will be an efficient and transparent digital carbon farming market using the newfangled economics of blockchains and cryptocurrency. In principle, the system will make it easy for consumers to buy captured carbon credits — and support farmers committed to regenerative agriculture — with a swipe or click.
Nori’s chief executive officer Paul Gambill says he took on this complex problem because “I was sad to discover that most efforts were about making climate change less bad, and I wanted to make the whole problem be solved and go away.”
Nori is unlikely to totally eliminate the problem, but it could take a big bite out of it, provided its market can overcome some technical difficulties in soil science, as well as the flaws in many of the cap-and-trade systems that have been tried previously and have been plagued by corruption.
The science
On the scientific side, carbon farming is very attractive. Globally, estimates of soil’s potential to absorb carbon range widely, but one common figure is three billion tons per year, or about 10 percent of total fossil fuel carbon dioxide emissions. At the field level, according to Nori’s white paper, certain agricultural practices can capture approximately 0.5 to 3.0 tons of carbon dioxide equivalent per acre per year.
Soils naturally exchange carbon with the atmosphere all the time as plants, fungi and microbes respire, but many agricultural practices — especially plowing — have depleted soil carbon and released major amounts of methane and nitrous oxide, two potent greenhouse gases. An existing approach known as regenerative agriculture helps to reverse the gradient. Its practices include no-till planting, using cover crops between growing seasons, reducing inputs like pesticides and fertilizer, adding compost and other measures.
Even without carbon capture, regenerative agriculture has many benefits: fungal and bacterial networks in soil remain active, topsoil stays in place, soil fertility and crops’ nutritional values increase. Costs go down, yields go up, and biodiversity returns. So farmers already working regeneratively are well placed to make the leap to carbon farming.
There are still some technical challenges to carbon farming, however. The soil’s ability to take up carbon depends on many factors: soil type, chemistry and history; regional ecosystem and climatic conditions; and moisture levels, for example. There is also a limit to how long carbon farming can mitigate climate change. Globally, cultivated soils have lost about half their carbon since agriculture began, and the more degraded the soil, the more carbon it will gobble up. But soils aren’t a bottomless cup. They will take carbon until the atmosphere and soil reach an equilibrium and return to a more balanced rate of carbon exchange.
“You can increase the carbon over decades but you’re not going to keep increasing for centuries,” says David Montgomery, a geomorphologist at the University of Washington and author of Growing a Revolution: Bringing Our Soil Back to Life and Dirt: the Erosion of Civilizations.
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]“Opinions differ over how much carbon you can put in over what time frame.”[/perfectpullquote]
Data entry
In order to create a predictable market, the variables affecting carbon uptake must be quantified. This is already happening to some extent as farmers adopt modern business practices, particularly the use of management software, so tracking the data has become more feasible.
There’s also the hurdle of verification and validation. Just as in certification for organic farming, carbon farmers will have to prove that their practices walk the walk. In addition to management software, there are a few tools that can help farmers make the switch. For example, Nori recommends a free modeling tool called COMET-Farm that was developed at the University of Colorado and supported by the U.S. Department of Agriculture. The tool helps farmers quantify, assess, and improve carbon sequestration, and replaces some of the real-world physical verification by consultants, which is the most expensive phase of the project.
The USDA’s National Resources Conservation Service (NRCS) is already helping farmers estimate the impacts of regenerative agriculture practices on soil carbon levels. Photo courtesy of NRCS
There is also a program underway through conservation districts called “Farmed Smart,” which aims at increasing and certifying sustainability. Ty Meyer, executive director of the Pacific Northwest Direct Seed Association (“direct seed” is the term for sowing a no-till field), works with farmers in Washington’s Palouse region to achieve Farmed Smart certification. The program requires farmers to meet 36 criteria related to conservation of water, soil, and wildlife habitat while increasing efficiency and economic viability. The DSA annual testing protocol will eventually include soil carbon, Meyer says.
So far, so good. Next?
Provided these practices and tools prove effective, farmers should be on solid ground scientifically. That leaves another series of questions about the economic risks of carbon farming. On one hand, farmers tend to be “really risk averse,” says Montgomery. Switching from conventional to regenerative farming can take up to seven years, making the transition “a bit of a challenge,” he adds. So someone just starting that transition might not be able to add carbon farming right away.
The possibility of a new revenue stream could motivate farmers to make the switch, says Carrie Brausieck, a resource planner with the Snohomish Conservation District. Brausieck works mostly with small farmers and believes there’s great interest in regenerative agriculture, and possibly carbon farming, in the community. But with the uncertainties farmers already face — including tariffs, weather, pests and debt — “The incentive [to farm carbon] would have to carry the farmer through that adjustment period,” Brausieck says.
Gambill, though, is confident that farmers will join the project. “There’s massive farmer interest,” he says, including “an incredibly long waitlist to join our market.”
How it plays in the Palouse
Meyer lives in a house built by his great-grandfather on his family’s farm, where his brothers-in-law grow garbanzo beans and wheat using exclusively no-till methods.
“Carbon’s a new game out here in agriculture,” Meyer says.
Asked about potential interest in a program like Nori’s, Meyer says, “Our challenge is measuring how much money can be made. We have to figure out on an annual basis how much carbon is stored in the soil. I’ve heard .5 to 1.5 tons per acre. I think the 1.5 is high for our regions and our soils.”
There is huge potential for carbon farming in Eastern Washington’s Palouse region, which is the largest lentil growing region in the United States. Photo courtesy of NRCS
Farmers are exquisitely sensitive to cost-benefit ratios, so the tons-per-acre calculation is crucial to their decision making, as is a reliable estimate of the value. Estimates of potential revenue from carbon farming vary widely, but an article in Modern Farmer cites a scenario in which a regenerative farmer with 250 acres sequestering two tons of carbon per acre might make about $3,000 per year. Not bad compared to the 2017 median net farm income of about $75,000. But the actual return on investment from participation in Nori’s market won’t be known until it’s been up and running for a while. Meyer’s skeptical estimate is at the low end of Nori’s projection, so refining the data will be important.
Digital pie in a digital sky?
The success of an all-digital carbon farming market relies on the purported advantages of blockchain and cryptocurrency.
Environmentally speaking, there is a glaring and ironic problem with cryptocurrencies like bitcoin, which is the most commonly used cryptocurrency in the world. Because of the enormous amount of computation needed, they use an obscene amount of energy. One analysis found that the open-source blockchain platform Ethereum was hoovering up almost as much electricity as the nation of Austria — about 73 terawatts — in a year. Nori plans to use Ethereum, which claims to be overhauling its software to reduce its energy use to one percent of current levels.
But let’s say this and the other scientific and technical challenges have been overcome. What about the rest of the digital component?
Like other carbon trading setups, Nori will assign one carbon removal credit to each ton of sequestered carbon. These credits change digital hands in the form of tokens, the basic unit of Nori’s own cryptocurrency. (A cryptocurrency is an entirely digital and decentralized form of money.) One ton of carbon would always equal one credit, but the currency itself would “freely float in relation to the dollar” and other currencies, according to Nori’s white paper. This would theoretically attract investors who would make money when the Nori token increased in value.
The trading activity will take place through another digital entity called a blockchain. A blockchain is essentially a ledger showing the history of a series of transactions. Each event in the series is protected by a “block” of encryption, so that in theory nobody is able to change any step in the chain, and fraud can’t be perpetrated via alterations to the evidence. Each buyer and seller has her own private “key” enabling her to participate in the transaction, and each step in the series is visible to all participants.
Enthusiasts claim numerous advantages to blockchains. Primarily, they say, because there’s no central authority managing the market, transaction costs would plummet (Nori would charge a transaction fee). They also claim that nobody can game the system privately because blockchain is simply a piece of software distributed in “the cloud” and is impervious to capture by any one player.
This sounds too good to be true, not least because the digital economy has attracted “a veritable goon squad of charlatans, false prophets and mercenaries,” as the New York Times put it. The most notorious cryptocurrency, bitcoin, has inspired vast bubbles and frauds, and blockchain transactions have been hacked. Last year Wired reported on a crime spree in which numerous accounts were emptied of about $50 million in bitcoins. The thefts occurred in Ethereum.
Gambill counters that these hacks are the equivalent of thefts from “individual people’s bank accounts, but no one has been able to hack the Federal Reserve.” This is cold comfort, however, to those whose individual accounts have been rifled.
Stephen McKeon, associate professor of finance at the University of Oregon, says he is not worried about hackers cracking Ethereum:
“The really important thing in these markets is verification that whatever action is being purchased is validated by somebody,” says McKeon. “[Nori’s proposal] seems very plausible to me.”
High cover charge?
Theoretically, Nori’s program will make farmers’ participation in the market easier than is the case in current carbon trading markets. The latter usually require that for each transaction, the carbon credit buyer and seller must engage in a complex series of steps to ensure trust and to guarantee that carbon is kept out of the air. Aldyen Donnelly, Nori’s director of carbon economics, said on a Future of Agriculture podcast that participants in traditional carbon markets typically pay 40-60 percent of their revenue to accountants, lawyers and registries. In Nori’s system, the farmer’s practices must be validated and verified upfront by an independent third party, eliminating the need for these steps to be completed in each transaction.
There are many “if’s” in Nori’s plan, and as FiveThirtyEight.com says, carbon farming is “still more of a gamble than a clear success story.” But climate change waits for no man. Mitigating it has to happen somehow, and good faith efforts to take advantage of the profit motive might be the way to go.
The farmers Brausieck works with are already experiencing climate change, and much of their interest in regenerative agriculture comes from the hope that their farms can become more resilient to drought, hyper-precipitation, insect invasions, and all the other ills in our future. And they are always looking for more revenue streams. In Brausieck’s view, these stresses make carbon farming worth trying even if it seems dauntingly complex. “We’ve got to get it going,” she says.
Nori’s bedrock premise is that “economic prosperity and stewardship of the earth can work hand in hand.” If Nori’s right, its system will be a major milestone on our path toward addressing the global climate crisis.
