Is Carbon Farming Worthwhile

For farmers, profitability and land stewardship often go hand in hand. With carbon farming, landowners can get paid for improving soil health while contributing to climate goals. But is it worth the effort? While carbon credit programs can promise financial incentives, understanding how they work and whether they fit into a farm’s operation is key.

How Carbon Credits Work

Carbon credits function as a tradeable asset, representing one ton of carbon dioxide (CO2) removed from the atmosphere or prevented from being released. Companies looking to offset their emissions purchase these credits, creating a market where farmers can get paid for carbon sequestration efforts.

There are two main types of carbon markets: regulated (compliance) markets and voluntary markets. Regulated markets, such as California’s Cap-and-Trade program and the Regional Greenhouse Gas Initiative (RGGI), require certain industries to reduce emissions or purchase credits to comply with government mandates. Voluntary markets, on the other hand, are driven by corporate sustainability goals and offer farmers opportunities to sell credits to businesses looking to offset their environmental impact.

The primary way farmers earn these credits is by adopting conservation practices that enhance soil carbon storage. Practices such as no-till farming, cover cropping and rotational grazing are recognized for their ability to pull carbon from the air and store it underground. Some programs also compensate for methane reduction strategies, including improved manure management.

Once enrolled in a carbon program, farmers undergo verification processes to ensure that their practices are capturing carbon effectively. After meeting these requirements, they can sell their carbon credits in voluntary or compliance-based markets.

How Much Can Farmers Earn?

The amount farmers can earn depends on the program, region, and soil type. Carbon credit prices fluctuate based on market demand, verification costs and the amount of carbon sequestration achieved.

According to recent reports, most agricultural carbon credits trade between $15 and $30 per credit, with payments ranging from $1 to $34 per acre depending on the program structure. However, farmers should be aware that earnings may not always cover the costs of implementation and verification.

Farmers exploring these programs should plan for a structured process that ensures long-term benefits. Verification is an ongoing process rather than a one-time event, with some programs requiring continuous monitoring and third-party verification for the duration of the contract, which can often extend beyond ten years. Programs often include baseline soil sampling and periodic testing, offering valuable insights into soil health. Some contracts extend for 10 or more years and can potentially provide stability and ongoing financial opportunities for those committed to sustainable practices. However, for most farms, carbon credits should be seen as a supplemental income stream rather than a primary source of revenue.

Top Carbon Payment Programs for Farmers

Several programs offer payment options for farmers willing to adopt climate-smart practices. These fall into private carbon marketplaces and state-based programs.

Private Carbon Marketplaces

Private companies connect farmers with corporations seeking to purchase carbon credits. These programs require verification and typically involve long-term contracts.

• Indigo Carbon (Indigo Ag): Pays farmers per verified ton of CO2 stored, requiring soil data collection.
• Nori: Offers a one-time payment per ton of carbon sequestered.
• Bayer Carbon Program: Provides financial incentives for adopting conservation practices but does not guarantee carbon credit sales.
• Truterra (Land O’Lakes): Assists farmers in evaluating conservation practices but does not directly facilitate carbon credit transactions.
• Ecosystem Services Market Consortium (ESMC): Works with farmers and ranchers to provide environmental credits for carbon sequestration and water quality.
• Soil and Water Outcomes Fund: Pays farmers for implementing conservation practices that generate carbon and water quality improvements.
• Regen Network: Focuses on regenerative farming practices and offers carbon credit opportunities for farmers.

These programs are best suited for farmers prepared to commit to ongoing monitoring and third-party verification.

State-Level Carbon Payment Programs

California is currently the only state with a dedicated carbon payment program for agriculture. The California Healthy Soils Program offers grants to farmers implementing carbon-sequestering farm practices, such as cover cropping, compost application and reduced tillage.

While other states may offer conservation incentives through broader sustainability programs, they do not currently have standalone carbon credit initiatives. Farmers should check with their state’s agricultural and environmental agencies to stay informed about emerging opportunities.

5 Steps to Get Paid for Carbon Farming

Evaluate Your Land’s Carbon Potential

Check if your current practices align with carbon credit requirements. Some programs only pay for new conservation practices, so farmers already using no-till may not qualify.

Compare Programs and Contract Terms

Avoid long-term commitments without reviewing market risks. Some contracts require 10 or more years of practice verification before full payments are made.

Get Verified (Soil Testing and Data Collection)

Many programs require baseline soil sampling to measure carbon levels. This step can take months to years before credits are issued.

Implement Climate-Smart Practices

Adopt cover cropping, rotational grazing or no-till as required by your chosen program. Keep detailed records of planting, fertilizer use and soil health improvements.

Sell Your Carbon Credits

Once verified, your credits enter the market, where companies purchase them. Payments depend on carbon pricing trends and buyer demand.

Where to Learn More

For farmers interested in exploring carbon markets further, there are several resources that provide valuable guidance and up-to-date information:

• USDA Climate-Smart Agriculture & Forestry Initiative: Offers insights into government-supported programs.
• Ecosystem Services Market Consortium: Provides information on environmental credit markets.
• American Farmland Trust: Publishes reports and guides on agricultural carbon markets.
• Carbon Market Learning Hub by Iowa State University: Offers educational materials for farmers navigating carbon markets.

Farmers are also encouraged to consult with advisors, agricultural extension offices or conservation organizations before committing to a program.

Carbon Markets Are Evolving, Proceed with Awareness

Carbon farming offers an opportunity to earn additional income while improving long-term soil health. Before signing up, farmers should carefully review program structures, assess the financial implications and seek expert guidance to ensure that participation aligns with their long-term business goals.