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Financial schemes and payments for ecological services

A common financial scheme aimed to improve agriculture's affect on climate change is through carbon payments and the carbon market which, simply put is the buying and selling of the rights to emit greenhouse gases. As a large contributor to GHG emissions, agriculture has the potential to play a large role in these markets.

Another strategy for improving agriculture is the The United Nations Collaborative Programme on Reduced Emissions from Deforestation and forest Degradation (REDD) which is a collaboration between FAO, UNDP and UNEP. A multi-donor trust fund was established in July 2008 that allows donors to pool resources and provides funding to activities towards this programme.

A third category of payments for ecological services includes wetland mitgation and conservation banking. Conservation banks generally protect threatened and endangered species habitat. In exchange for permanently protecting the land, the bank operator is allowed to sell habitat credits to developers who need to satisfy legal requirements for compensating environmental impacts of development projects.

Finally, biodiversity banking and biobanking are similar financial schemes in which credits are generated then sold by landowners who commit to enhance and protect biodiversity values on their land.

Agricultural practices 

Increasing productivity of existing agricultural land and restoring the productivity of degraded land are two approaches of adapting agricultural practices to reduce greenhouse gas emissions.

Increasing Productivity of Existing Agricultural Land: Incentives could be used to make investments needed to increase yields on lands currently in production more attractive to Agriculture operations. The most straightforward means would be in the form of a direct subsidy or investment. Such investments might allow agriculture operators the purchase of improved equipment; improved inputs, such as seeds and fertilizer; training regarding farm management, and the use of soil enhancers, such as lime and biochar. It is assumed that agricultural operators currently see value in such improvements but the structure of the investment is not financially viable, or that they simply do not have access to the capital required to make such investments. 

Restoring Productivity to Degraded Land: Incentives could be used to influence agriculture operators to restore degraded lands, rather than deforest for production. A set of financial incentives could be utilized such that the magnitude and timing of cash flows from restoring degraded lands is similar to that of simply using cleared forestland. Given that it is often easier to acquire clear rights to forestland, and timber sales would provide significant early revenues, and organic matter left after burning would improve soil health, it will be necessary to provide the agricultural operator with land acquisition aid, early economic incentives, and/or a guarantee of increased returns. Governments might pre-designate sites for restoration in order to avoid tenure issues, subsidize up-front costs at a magnitude commensurate with would-be timber sales, and/or guarantee premium pricing for products produced on the degraded land, possibly through a certification scheme. 
 

Techniques and technologies

There are a number of specific agricultural techniques and technologies, such as using biochar or cover crops, that have been proposed to help combat climate change, and move it from a source to a mitigating factor.

Biochar
Composting
Cover crops (to help hold soil in place and build organic material)
Organic Agriculture
Low/No Till
Biofuels
Palm Oil Production
Permaculture  

Vertical Farming 

Alternative Crops 

Water Management 

Legal mechanisms

Policy makers can use a variety of legal mechanisms to reduce the green house gas emissions of the agricultural industry including stricter regulation schemes or a legal moratorium on a particularly detrimental product or practice. These legal mechanisms can be effective or ineffective depending on the level of government enforcement. Many agricultural or conservation laws already exist all over the world that go largely unenforced due to a lack of resources in combination with the difficulty of monitoring vast regions.

For example, Indonesia put in place a log export ban in 2001, but this moratorium did not prevent logging of the threatened merbau. Exporters evaded the ban by falsely labeling this valuable wood as originating in Malaysia when exported to China, or labeling it as sawnwood when exported to other countries in violation of the ban (Greenpeace 2007).² A crackdown by the Indonesian government in enforcing the ban led to prices more than doubling between 2004 and 2006, and there was a steep drop in imports to China of logs purported to be from Malaysia, showing that legal mechanisms require significant enforcement in order to have an appropriate effect. ³(Greenpeace 2007).

Binding agreements such as export bans are usually relatively simple to understand and have a good level of awareness among producers. However, these bans often involve a cumbersome political process and tend to be drug out by well funded lobbying for the affected industry.

Voluntary mechanisms

Sustainability roundtables are generally made up of a broad groups of stakeholders - including producers, consumers, researchers, and parties interested in the environmental, social and economic sustainability of the focal resource – who come together to develop sustainability standards or best practices and generally also certification schemes. The best practices can be focused on a single commodity or focused on a category of products. They also develop verification systems for their sustainability standards, so that operations meeting the standards can be certified, and the certification claim or label can be controlled. The exact meaning of “sustainable practices” is defined by the standards themselves, and on how they are verified and enforced.

Key roundtable initiatives are profiled below along with observations of their approaches, mechanisms, achievements and challenges – including a discussion of how each is addressing deforestation/land conversion. Key examples of previous roundtables:

Footnotes

1. New South Wales Government Department of Environment of Climate Change. http://www.environment.nsw.gov.au/biobanking/

2. Greenpeace 2007b. Merbau’s Last Stand. How Industrial Logging Is Driving the Destruction of the Paradise Forests of Asia Pacific. Available online at: www.greenpeace.org/international/news/merbau-s-last-stand

3. Greenpeace 2007b. Merbau’s Last Stand. How Industrial Logging Is Driving the Destruction of the Paradise Forests of Asia Pacific. Available online at: www.greenpeace.org/international/news/merbau-s-last-stand