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What to ask about carbon market programs

Do you know what questions to ask when evaluating new carbon programs and how they may fit into your operation?

At a Peoples Company event, experts discussed the big issues in land management that landowners and operators are facing today, including conservation and carbon.

“There are many programs that are emerging with carbon or ecosystem services programs,” says Adam Kiel, executive vice president of AgOutcomes. “It’s important to understand what you may be missing out on and which programs are farmer-friendly.”

Listen: It’s More Than Carbon

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Kiel lists several example questions to add to your decision-making process:

  • Can I enroll fields with existing conservation practices? Or do I have to enroll fields with new conservation practices?
  • Can I enroll in other public or private conservation programs at the same time on the same field?
  • What data do I need to provide to enroll?
  • Do I have to own the fields to enroll? Or can I enroll rented fields?
  • What are the contract payment terms?
  • What ecosystem services are being transferred via the contract? Am I being paid for all ecosystem services? If so, how much?
  • Do I pay for monitoring or verification?
  • What are the data sharing and privacy policies?

Listen: Collecting Carbon Data

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Kiel administers the Soil and Water Outcomes Fund through AgOutcomes, which is a subsidiary of the Iowa Soybean Association.

The fund is a carbon and water quality ecosystem service program with one-year renewable contracts. “We work with farmers and landowners to achieve outcomes related to greenhouse gas and water quality. By including the water component, we’re able to offer a higher payment for farmers than just carbon programs are offering.”

The fund is open to farmers in the Chesapeake Bay Watershed, Illinois, Iowa, Ohio, and will expand to more states in 2022.

Kristine Tidgren, director for the Center for Agricultural Law and Taxation at Iowa State University also shares questions to ask before entering into a contractual obligation with any program.

Tidgren says, “The private carbon credit market is an uncertain, evolving space and companies are all doing things a little bit differently. So, the key things you need to understand are what you’re selling, obligating yourself to, and what your rights and risks are.”

The following are Tidgren’s questions and considerations to keep in mind:

  • When looking into any contracts at this point in the landscape of carbon markets, consider future opportunity costs that could be lost. For example, the ability to enter into a contract with a different program in a future year. Am I limited by contract length?
  • Do I gain anything by being in on the ground floor?
  • Consult legal counsel before signing a contract so there are no surprises in the end.
  • What periodic reporting requirements exist?
  • What happens to any interest conveyed or retired at the close of the agreement term? Can I enter into an agreement with another program?
  • How would an agreement impact a future land sale? Does my agricultural lender care?

Tidgren’s ultimate advice is to investigate all of the options and get really informed before taking action.

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