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Ag and Carbon Markets — Everybody’s Winning Here, Right?

September 12, 2022 | Letters

Author: Nicole Olynk Widmar, Associate Head and Professor, Purdue University, Department of Agricultural Economics, and Carson Reeling, Associate Professor, Purdue University, Department of Agricultural Economics

In our last three letters, we tackled why carbon markets are not exactly markets, the non-regulatory nature of carbon markets and the challenges of agriculture specifically participating in carbon offset programs (or, if you still wish, markets). It seems like we’ve raised challenge after challenge, but given the massive public interest, many of us are left asking, if everyone who is participating wants to participate, then what’s the harm?

It seems like everybody is winning, right? Farmers get paid, carbon programs are getting paid, it seems, probably, that there is carbon embodied in these offsets. The buyers are happy with this, and so are the producers. So why not just jump in and ride this out as it is right now? Why are we worried about the functionality and underlying incentives beneath these carbon abatement programs?

Well, there is a lot at stake here. Farmers, on the whole, have made massive strides in doing good things for the environment while growing more and more food using less and less inputs; yet, relationships remain tense, especially surrounding environmental issues. Agriculture has very limited opportunities to participate in visible programs and get rewarded for doing the right things. Participating in well-regulated, highly visible programs like carbon offsets can bolster the food industry’s reputation, but it has to be done right.

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