The Achilles Heels of Carbon Farming: Operational Constraints on the Next Cash Crop

Abstract

Urgent calls for actions to slow climate change have stimulated new interest in actions to harness the potential for carbon sequestration on agricultural lands. The private sector has established corporate goals for reducing contributions to climate change and there has been much decentralized market activity to develop voluntary markets for agricultural soil carbon sequestration to meet this demand from companies and consumers wishing to offset emissions. This brief conducts a critical assessment of the nature of the market opportunity today for farmers and for those who would benefit from the opportunity to incentivize real increases in net carbon sequestered in agricultural lands of the U.S. We discuss how the potential success of these markets is currently limited by important factors related to contract design and land tenure, with suggestions for how to address the challenges and unlock the opportunities.

Keywords: carbon sequestration, agriculture, climate change, offsets, markets, land tenure

JEL Classification: Q15, Q54