Opinion: Transparency is the foundation for greater agri-climate market acceptance and better economic and environmental outcomes

Climate markets are incredibly important to the future of agriculture – for producers, communities and companies connected to agriculture – and play a significant role in the sustainability of our climate, global food supply and our planet. Although carbon markets have received the main attention, they are part of a set of ecosystem markets – such as water quality, water quantity and biodiversity – available to producers.

Currently, climate markets are fragmented, lack consistency and have opaque standards that hold back wider adoption and lead to the “wild west” descriptor used by many in the agricultural sector. To enable climate markets to operate to their highest and best use, we need to ensure transparency.

Clear standards, definitions and benchmarking of programs will build trust between all participants and ensure that there is a reliable common framework for evaluating costs, performance, practices and environmental outcomes.

The Soil and Water Outcomes Fund is one of 15 companies and organizations that make up the Agricultural Climate Markets Collaborative, a voluntary group facilitated by the Keystone Policy Center to codify a set of pro-competitive actions that can create greater transparency and strengthen market trust. This will ultimately contribute to the creation of more robust agri-climate and ecosystem markets that can scale towards greater impact.

The Collaborative recently came out 11 basic principles of transparency of agricultural climate markets which, if widely adopted, will enable market-based climate solutions for agriculture to thrive by ensuring that program developers provide clear, concise and easily accessible information to producers and buyers about how they are dealing with the following:

1. Eligibility of farms and organizations to participate in the programs
2. Contractual Obligations for Program Participants
3. Asset types created by the program
4. Standards used by the program developer
5. Information required from program participants
6. Models used to create loans
7. Ownership and transferability of received loans
8. Financial obligations and payments of program participants
9. Data ownership and privacy
10. Contractual consequences of non-compliance and natural disasters
11. A relationship between the program developer and the participant is required

The association and its members work to promote and develop these principles, adopting them in our organizations and engaging with stakeholders throughout the agricultural supply chain to continuously improve the elements. At the Sustainable Agriculture Summit on November 16, our organizations will participate in a session that builds on this dialogue with producers, program developers, corporations with sustainable supply chain programs, government and related organizations.

As it moves forward, the Joint Organization will address topics related to climate market accounting standards, additionality and sustainability of environmental outcomes, and program participation. All these areas require further cooperation and participation of producers, agricultural communities, trade organizations, companies and all levels of government.

Along with the efforts of groups such as the Agricultural Climate Markets Collaborative, the USDA continues to play an important role in promoting market-based approaches to climate in the agricultural sector. And the 2023 farm bill provides a significant opportunity to continue advancing transparent, results-driven climate solutions.

US Department of Agriculture Partnership for Climate Smart Goods is a recent development that will provide more than $3 billion for initiatives that encourage cross-sector partnerships to create additional market opportunities for climate-smart agricultural commodities. Transparency will be a key element of many award-winning projects, including a number of initiatives involving members of the Agricultural Climate Markets Collaborative, such as the Soil and Water Outcomes Fund. We look forward to seeing these principles applied as widely as possible to reduce confusion among farmers and buyers who wish to participate in this new effort.

At their core, results-based market approaches involve reliable measurement and reporting of climate impacts, which, along with transparency, allows all parties to quickly learn which methods are delivering the best results.

And these approaches often allow producers to reap many of the benefits of conservation agriculture – including reduced greenhouse gas emissions and removals, improved water quality and quantity, and increased biodiversity – providing valuable new opportunities to advance conservation agriculture. For example, the Soil and Water Results Fund contracts with producers to obtain both reductions in greenhouse gas emissions and costs, as well as water quality.

We welcome input from other organizations and companies on these ideas and the Principles for Transparency in Agricultural Climate Markets as we move forward. A rapidly evolving market requires us to periodically and transparently update principles and best practices in line with market-based approaches to climate change mitigation in agriculture.

The many variables at play in any given crop year – and the vast number of potential changes in practices, fields, growers, consultants, programs and companies involved in agri-climate markets – make flexibility an important principle, although this should not come at the expense of transparency.

The more we can do to develop coherent, measurable and transparent approaches to agri-climate markets, the more it will engender trust, enable scale-up and improve outcomes for people and the planet.

Sarah Alexander is Vice President of Programs at the Keystone Policy Center.

Adam Kiel is the Managing Director of the Soil and Water Results Foundation.

Jonathan Guerts is a senior project manager at the Keystone Policy Center.

More information on the Agricultural Climate Markets Cooperation and the Agricultural Climate Markets Transparency Principles is available at https://www.keystone.org/agclimatemarkets.

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