Why farmers hesitate on carbon market

By Scout Nelson

South Dakota State University (SDSU) researchers, led by Tong Wang and Hailong Jin from the Ness School of Management and Economics, have delved into why only a small percentage of farmers are willing to join carbon sequestration programs.

Their study, aimed at understanding the financial hesitations related to these programs, surveyed farmers across Minnesota, Nebraska, North Dakota, and South Dakota.

The survey, gathering over 1,100 responses, revealed that farmers are generally hesitant to adopt new, climate-smart practices unless the financial incentives are significantly increased. At current rates, ranging from $15 to $30 per metric ton of sequestered carbon, only a minority of farmers showed interest.

Wang stated, "Most farmers did not have incentives to enroll in carbon programs at currently offered price levels." The willingness to adopt these practices saw an uptick only when hypothetical prices reached $40, $50, or $70 per metric ton.

The reluctance, according to the researchers, stems from a lack of clear information on the costs and benefits of adopting such practices and the amount of carbon that can actually be captured.

This uncertainty, combined with the high costs of new equipment and the complexities involved in verifying carbon reductions, poses significant barriers.

The study highlights the importance of increasing the visibility and understanding of the co-benefits associated with these practices, not just for carbon sequestration but also for soil health and crop yields.

"These could help them gain a better understanding of the co-benefits of carbon program enrollment," Wang explained, suggesting that more educational programs could bridge this gap.

While the concept of carbon markets is promising as a strategy to combat climate change, SDSU’s research indicates that substantial adjustments in pricing and better information dissemination are crucial to encourage wider farmer participation.

As Wang aptly put it, "Our results indicate that increasing carbon prices from $20 to $50 will enhance the carbon program participation rates from 4% to nearly 40%." This study is a crucial step towards aligning economic incentives with environmental goals in the agriculture sector.

Photo Credit -south-dakota-state-university