Ag economist backs paying to aid environment

Ag economist backs paying to aid environment

URBANA – The time is right for the government and private industry to think about paying farmers to help reduce greenhouse gases, says University of Illinois agricultural economist Gerald Nelson.

Nelson said he expects proposals like that to emerge from sessions with United Nations officials meeting this month in Bali, Indonesia, to talk about international climate agreements after the Kyoto Protocol expires in 2012.

Nelson said he's optimistic that the United States, which has steadfastly refused to ratify the Kyoto pact, will step up to the plate when the next agreement is forged.

"Even President Bush is talking about global warming now," he said. "I suspect we'll buy into the next one. There's more public enthusiasm about the issue now. The evidence of global warming gets stronger every day and the potential costs get larger."

As the meeting began in Bali, Australia's new leadership signed an agreement to comply with the Kyoto Protocol, leaving the United States as the only major industrialized nation not committed to it.

One proposal emerging at Bali early last week: the idea of paying developing countries to agree not to cut down forests that help reduce greenhouse gas by sequestering carbon.

Nelson, who just finished a United Nations Food and Agricultural Organization report about environmental services, recommends farm community contributions that go far beyond familiar programs like the Conservation Reserve Program and others sanctioned by farm bills, and paid for by the government, for years.

"It's not a new idea," Nelson said. "We've had set-aside for water quality and biodiversity for years, and people have known about sequestering carbon for a long time, but they usually think about planting trees."

He said markets in Europe now pay for practices that capture carbon in the soil – and those markets are likely to grow. They operate as the Bali proposal to pay countries not to cut trees would operate: Those who reduce pollution get credits they can sell on a carbon credit market to industries that can't reduce emissions enough to comply with requirements.

Nelson said farmers can take three different actions to increase their environmental contributions – change production practices, change land use or crops to provide more environmental services like carbon sequestration, or choose not to do something that would have negative impacts like converting land to annual row crop production.

One scenario would have farmers switching to crops like switchgrass and miscanthus, which have potential as feedstocks for ethanol production that also hold a lot of carbon in the soil.

"We'd need a mechanism to test for additional carbon in the soil. We'd do a baseline measurement and go back in two years to see if the carbon is increased," Nelson said. The increases would earn farmers credits to sell on the market..

"Within 10 years, the carbon market will be bigger than the commodity market," said Dave Miller, director of commodity services for the Iowa Farm Bureau, which is organizing a pilot program to generate carbon credits to sell electronically.

Nelson said industry has also set precedents for payments for environmental protection.

"In Europe, Evian has the bubbling water source," he said. "Evian started finding more chemicals in it; they identified the farmers whose operations were creating that pollution and they paid them to change their methods of farming."

Nelson said label-conscious consumers also play a role, paying companies premiums to market products like dolphin-safe tuna and shade-grown coffee, gourmet coffee grown under trees instead of in bare plots to enhance habitat for migrating birds.

"Hundreds of payment programs for environmental services are currently implemented around the world," he said. "But relatively few of them have targeted farmers and agricultural lands."

Monticello area farmer John Caveny wants to get in on the ground floor of the carbon credit market. Caveny has grown miscanthus, a tall grass crop, for several years, and he's planning to expand his acreage.

"That's the crop that cleans the air," he said. "We're saying if we want renewable energy, make it out of grass. It's quick to grow and half the carbon dioxide it takes out of the atmosphere stays in the soil. We're putting the genie back in the bottle."

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