How To Benefit From Agricultural Carbon Markets?
2022
- Department of Economics, Iowa State University
Project Media
A carbon credit is a tradable asset (similar to a certificate or permit) that represents the right to release or emit carbon into the atmosphere. Typically, each credit represents one metric ton (2,204 pounds) of carbon dioxide or an equivalent amount of another greenhouse gas. Carbon credits are created when entities (compared to a set baseline) reduce their carbon emissions or sequester carbon.
A growing number of private initiatives are offering farmers compensation for the generation of agriculture carbon credits as well as other ecosystem services, such as improvements in water quality. Agricultural producers can create carbon credits in a variety of ways: moving from conventional tillage to reduced or no tillage, reducing stocking rates on pastures, planting cover crops or trees, reducing fertilizer rates, or converting marginal cropland to grassland. The result of this is an emerging agriculture carbon credits market that is a mixture of coexisting programs, each with different rules, incentives, and players.