Can the Voluntary Carbon Market finance the regenerative agriculture transition?
A look at why the regenerative agriculture transition needs funding, and how a Voluntary Carbon Market that demands more rigor from its sellers and more exigence from its buyers, can provide that
Soil, a word often used interchangeably with dirt, is an element of the landscape everyone deigns to look at. Intensified agrarian landscapes, where most exposed bare soil is found outside of arid regions, are not particularly sought after, unless these are the rolling vinicultural hills of a place like Tuscany. Often dull-looking, over-exposed to wind, dusty in the summer, muddy in the winter, agricultural areas deprived of trees and other cover vegetation are not popular spots for a reason, not even in a time of pandemic.
Excessive tilling and other unsustainable land management practices exposing the topsoil are common currency worldwide and lead to soil erosion, biodiversity and fertility loss, deregulation of biogeochemical cycles, and ultimately exacerbation of the climate emergency.
We do not want to pretend we know the job of farming better than farmers themselves, far from that. Some of us can barely even keep our apartment plants alive. However, there is growing empirical evidence coming from farmers themselves that regenerative agricultural practices can revert the environmental damages of status-quo agriculture, namely that of frequent tilling, over use of chemical fertilizers and pesticides application, amongst others.
The image of the farmer’s profession has long been tarnished by daunting statistics on high rates of farmers living below the poverty line, crushed by debt. For new farmers, the problem lies in the barriers to entry: soaring land prices and the rarefication of agricultural infrastructure and support systems. No wonder our parents, even those who grew up on farms, have not tried to convince us to become farmers.
Yet, farmers are at the frontline of the fight against climate change and land degradation, and act as the custodians of soil health. It is therefore only logical that we should incentivize them to move towards proven environmentally respectful practices, but also compensate them in doing so. This global agricultural transition towards regenerative agriculture is a long-term prospect that will require a significant financial investment to lower the barrier to entry and accompany farmers in a transitory period that may include trial-and-error and uncertainty over yield.
The light at the end of the tunnel is promising, but the road in the tunnel is unpaved, so let’s pave it for them through the Voluntary Carbon Markets! The final report of the Taskforce on Scaling Voluntary Carbon Markets define the Voluntary Carbon Market (VCM) in the following way:
“Voluntary markets allow individuals, companies or governments to purchase greenhouse gas or carbon credits to mitigate or offset their own emissions by financing the avoidance or reduction of emissions from other sources, or the removal of greenhouse gases from the atmosphere. Voluntary markets involve credits used for voluntary purposes, as opposed to credits used to meet compliance obligations in jurisdictions with regulated carbon market schemes.”
In the case of agricultural soil carbon credits, the channeled finance serves, in part, to pay the farmer to implement sustainable and greenhouse gas-sequestering land management practices, thus yielding both positive social and environmental returns. Think about the societal benefits of restoring the prestige of the (regenerative) farming profession through decent financial compensation, all the while regenerating soil health and building resilient environmental ecosystems! Nature will return it to us in ways of innumerable ecosystem services: cleaner water, soil and above-ground biomass carbon sequestration from the atmosphere and drought resistance, to name a few. Financial returns will also follow down the line as environmental restoration leads to more economic prosperity and the (re)building of more resilient rural communities.
SoilWatch identified two gaping knowledge holes that prevent the VCM from supporting the regenerative agricultural transition, and more generally speaking global landscapes restoration, from going ahead:
- The magnitude and distribution of the climatic and environmental impacts of land degradation is not well quantified. Global and regional climatological and agro-ecological studies profuse, and although they clearly highlight the emergency of the situation, they are not conducive to action due to their low level of granularity. We need higher-resolution baselines on the state of the world’s soils in croplands and grasslands.
- Monitoring, Reporting and Verification (MRV) methodologies designed to measure the effectiveness of environmental restoration efforts are not rigorous enough, thus negatively impacting the confidence of potential investors. Current MRV requirements imposed by some standards organizations are too lax, which leaves room for environmental projects to “cut corners” and fall short of reaching their actual climate impact. We need to integrate continuous monitoring protocols into MRV methodologies that provide information at a finer temporal scale throughout the entire project duration.
The Voluntary Carbon Market (VCM), a financial instrument for the transition
The VCM seems to be, at least on paper, the perfect way of allowing private sector finance to flow towards farmers and other rural actors to implement regenerative agriculture practices. Willing entities (“carbon credit buyers”) invest for the common good by investing in projects that mitigate climate change through environmental restoration and carbon emission offset and/or removal. However, the market is riddled with pitfalls, which Compensate’s recent white paper summarizes much better than we ever could. In short, these are their major findings, which seem to confirm our experience of the VCM to date:
- Current modus operandi creates perverse incentives for companies to buy carbon credits while continuing to emit and self-promote through greenwashing or PR stunts.
- Quality assurance provided by current international standards do not guarantee climate impact of carbon offsetting projects, which misses the point. This leaves the door open for low quality carbon credits which do no better than business-as-usual, or even have adverse social or climate impacts.
- Lack of transparency in carbon credit pricing is eroding buyer trust.
- Somebody’s emissions are another’s profit, which may disincentivize the offset providers from advocating for their customers’ emission reduction.
SoilWatch believes that the buyer’s genuine interest and understanding of the specific carbon credits they are buying is a necessary condition to ensure accountability and transparency of the issued credits. Bids to commodify and scale up the VCM through retailing carbon credits in the form of futures, for instance, may be counter-productive and further disconnect buyers from the projects they are investing in, unless MRV requirements for credit issuance are reinforced across the board.
It is not all negative however and we recognize that the VCM, although clearly leaving room for improvement, is the most elaborate and scalable mechanism we have for private sector offsetting efforts. Its ends are noble, so fixing it is of public interest.
SoilWatch’s humble, yet ambitious, mission is to contribute to a trusted open, transparent, sustainable model for natural capital and ecosystem accounting that creates real socio-economic incentives to restore the environment and reverse climate change. A good start to tackle this is to build on the existing, and to fix the VCM. Current MRV methodologies do not rely on fine-grained spatio-temporal data, in other words satellite imagery, to monitor implemented Nature-based Climate Solutions and other carbon-sequestering projects, making cost-effective, scalable and reliable monitoring an oxymoron today. SoilWatch is building a solid knowledge base for the scoping, implementation and monitoring of Nature-based Climate Solutions aiming to restore soil health, biodiversity and reverse land degradation, using global remote sensing datasets. We all sit on a gold mine of open-source satellite images and tools to process them, yet technological progress on the front of Earth Observation (EO) has not really trickled into MRV practices for the VCM, especially in terms of baseline assessment and continuous monitoring of land management practices.
On the other hand, we want to raise the bar of buyers’ expectations of the market by providing them with more frequent and transparent reporting on the projects they invested in or consider investing in. They should expect nothing less than projects including a thoroughly measured baseline, a monitoring plan and scientific evidence of potential socio-economic and environmental impact.
More concretely speaking, the first step we took to build that knowledge base was to come up with a way of estimating the extent of global land under (un)sustainable management, as well as identifying trends of cropland and grasslands/rangelands degradation. Adequate scoping of potential areas for restoration is the necessary start to a successful environmental project.
We developed a Google Earth Engine (GEE) App to put information about the state of erosion of the world’s soils in the hands of the many. We felt this was important for the following reasons:
- To highlight the need for fine-grained information (10m resolution Sentinel-2 imagery represents the backbone of the App) to support field-level project piloting and monitoring.
- To promote the transparency of MRV methodologies and tools by publishing it open-source, and encouraging project developers and MRV actors in the VCM to play with open cards to educate and build trust with buyers.
@Tom Hengl, a pioneer of soil digital mapping, published a recent paper (Hengl et al., 2021) confirming that fine-grained environmental datasets such as Sentinel-2 mosaics (10m) and AW3D digital elevation data (30m) are amongst the most important covariates for mapping soil properties and nutrients, and most specifically for mapping soil organic carbon changes.
The developed App deploys the Revised Universal Soil Loss Equation (RUSLE), an empirical model originally coined by Wischmeier & Smith, 1978, and adapted/revised multiple times thereafter, to quantify the annual soil loss rate in ton/hectare/year. Although it does not measure soil organic carbon loss directly, it already provides useful field-scale information about the rate of soil erosion, which in turn inevitably leads to soil organic carbon loss.
Applying RUSLE in a globally meaningful way is challenging to say the least, as it is normally typically applied at watershed level. Borrelli et al., 2017 stated that:
“Global modelling makes sense as long as the scale of the input data employed is congruent with the scale used for the estimation of the modelling factors”.
In fact, Sentinel-2 is even more congruent with the scale used to empirically estimate modelling factors than coarser environmental datasets. We are beating the granularity of historical soil erosion modelling efforts at large scale by manifolds with the introduction of Sentinel-2 and high-resolution digital elevation models!
RUSLE depends on stable erosion factors such as slope, rainfall patterns, soil constitution and structure. Once those are pinned down, short-term variability in soil erosion is mostly governed by vegetation cover management (e.g. cover crops, crop residue, trees in field) and support practices management(e.g. hedgerows, contour farming). The high-temporal frequency of Sentinel-2’s revisit allow for a monthly characterization of the soil’s cover management, and ultimately a more accurate soil loss estimation. At the end of the day, whether it is cropland, grasslands/rangelands or abandoned land, the overarching concept remains the same: the more often a surface is green, the better, and should, if possible, be green year-round. It’s a blunt and over-generalized statement, and does not hold in semi-arid zones with low water availability, but it remains undeniable that the main erosion-controlling mechanism is to ensure the soil is always covered with living or dead biomass, whilst avoiding the disturbance of the soil as much as possible (i.e. by avoiding conventional tilling). And what better way to measure this than with Sentinel-2 time series!
As the great late George Box once said:
“Essentially all models are wrong, but some are useful”.
By no means do we claim our modelling attempt is perfect, but we firmly believe in its usefulness, building on the plethora of regional and global soil erosion modelling efforts (exhaustively summarized by Borrelli et al. 2021), and through the aggregation of state-of-the-art open-source environmental and soil covariates, including the latest 30m Africa Soil and Agronomy Data Cube.
The applications of temporally continuous EO products is not limited to soil loss, but also opens up possibilities for monitoring changes in soil properties such as soil organic carbon changes (Hengl et al., 2021), especially since open satellite missions are expected to continue well into the coming decades.
For more information on how we went about modelling soil erosion with Sentinel-2 time series, check out this blog post, and the App’s github repository.
Further reading:
- Reforming the voluntary carbon market — Compensate
- Soil Erosion Watch App Github Repository — SoilWatch
- Methodological clarifications of global RUSLE — SoilWatch
- Beyond the VCM — the Ecosystem Accounting Concept — UN SEEA
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