Published March 2022 in Partnership With:
The United States is losing agricultural lands at an unsustainable rate. Our greatest hope for protecting these landscapes is responsible land stewardship by farmers and ranchers.
Farmers and ranchers implement land management strategies that may improve soil health, strengthen plant communities that sequester soil carbon, improve water quality and quantity, increase biodiversity, and more. Companies are paying landowners for these services in exchange for credits that demonstrate the companies’ role in offsetting their carbon emissions, protecting ecosystems and supporting a healthy climate. Today, the most prevalent credits relate to soil carbon, with multiple entities offering payments per metric ton of carbon sequestered.
The commitment of your carbon or other ecosystem service requires careful consideration and the right partner-purchaser. Because contracts may extend for many years and may impact your agricultural operations, selecting a partner-purchaser requires the same level of consideration as acquiring or leasing new acreage. It is recommended that you consult an attorney with experience with carbon contracts before entering such agreements.
How do you select the right company to partner with? This guide provides useful questions to assist landowners in identifying partners and contract terms that best align with their personal and operational goals.
Consider the length and scope of the soil carbon storage contract. Landowners must determine if these obligations fit their operation.
One of the greatest challenges facing carbon markets today is pricing. This is due in part to the relatively new nature of these carbon markets and lack of understanding of the demand for and value of carbon in the industry. Landowners should consider how markets will price carbon and how this pricing may compare to future price discoveries.
Landowners should weigh compensation from soil carbon storage against all potential costs.
An important element of the contract is how carbon storage will be quantified. This factor may contribute to what entities will purchase credits from the market. Science-based, reputable protocols will attract more buyers, providing added certainty to landowners for payments down the road.
Some carbon markets may specify prohibited practices or restrict your ability to participate in government or other programs. Landowners should carefully review any restrictions to ensure that they will not have a negative impact on current or future operations on the property.
Like any written contract, carbon contracts will generally dictate how the parties will handle disputes and allocate liability.
Soil carbon is one ecosystem service derived from working lands, but there are many more. Landowners may see new markets that leverage water, biodiversity, and other ecosystem services as consumer values emerge. Just like carbon storage markets, landowners must weigh the commitments, costs, restrictions, and other factors to determine how these markets align with their individual operation