Reducing Carbon Emissions While Improving Soil Health

Paying California farmers to suck up the state's excess carbon dioxide

In April, California launched its latest climate change initiative:

In a grand experiment, California switched on a fleet of high-tech greenhouse gas removal machines last month. Funded by the state’s cap-and-trade program, they’re designed to reverse climate change by sucking carbon dioxide out of the atmosphere. These wonderfully complex machines are more high-tech than anything humans have designed. They’re called plants.

The state is paying farmers to grow cover crops with an aim to absorb carbon dioxide from the atmosphere and also improve soil health.

The funding for this program comes from the state’s cap-and-trade program. Through 2017, emissions allowances under the program raised $6.5 billion, which must be spent on programs battling climate change (although that vague standard is obviously subject to political manipulation).

The California Healthy Soils Initiative is the stuff of a marketing consultants’ dreams. Orchard owners have land surrounding their trees that are currently underused. Why not pay them to grow clover and other cover crops to absorb carbon back into the soil? If it works, it’s a win-win: the state finds a way to reduce carbon concentration in the atmosphere while also improving soil health for farmers.

The plan is currently just an experiment; it remains to be seen whether this can create a significant and cost-effective carbon sink. The economic idea behind the plan is that farmers can absorb carbon emissions easier and cheaper than emitters can reduce them. The hope is that relatively slight tweaks to how the state’s ample farmland is used can sequester substantial quantities of greenhouse gases.

Farmers like it because it might improve soil health, but mostly because the state is paying them well to try it. In the initial experiment, 50 farms are paid as much as $50,000 to participate.

The challenge, of course, is measuring the program’s success and ensuring that it is the most cost-effective means to address greenhouse gas emissions. The political process is not a particularly good means of meeting those requirements. In this case, for example, California’s powerful farm lobby would have an incentive to fight to keep the program—as a subsidy for farmers—even if the environmental benefits fall far short of the state’s hopes.

Ultimately, the test for a program like this should be the market. If the initial returns to the experiment are positive, the state should turn it over to emitters and farmers to work out contracts themselves. If farmers can sell offsets for emissions based on these cover crops for less than emitters can avoid emissions or mitigate them in other ways, the market will encourage more farmers to participate. But if the program fails to achieve it’s sequestration aims or is more costly than alternative means, the price farmers obtain for planting these crops will fall and emitters will move to more effective alternatives.

Creative destruction is a better means of identifying successful and cost-effective conservation measures than relying on the political process. Therefore, the true test for politically devised programs like this is whether they can compete in an open market pitting different environmental measures against each other.

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