Title: Improving Lives, Communities and the Environment
1Helping People Help the Land.
Challenges of Accounting for Soil Organic Matter
in the Environmental Offsets Market
Improving Lives, Communities and the
Environment Through Natural Resources Conservation
Dr. Carolyn Olson WRI Workshop April 29, 2009
2- High Quality, Productive Soils
- Clean Abundant Water
- Healthy Plant Animal Communities
- Clean Air
- Adequate Energy Supply
- Working Farm Ranch Lands
NRCS mission goals
3- Natural Resources Conservation Service (NRCS)
- Provides local assistance to help private
non-federal land-owners conserve soil, water, air
and other natural resources - Works with partners to develop and refine
planning tools for use by land owners, field
personnel and others - Helps translate basic research into useable
technologies for our field personnel and clients - Develops conservation plans
- Access to technical expertise and cost- share
opportunities for land-owners
What we do
4Mitigation of Greenhouse Gases and other
Environmental Issues through Agricultural Soil
Management Practices
5USDA-NRCSOpportunities for Managing GHG and
Carbon Sequestration
- Conservation Practices
- Targeted Incentives
- Cost-share Programs
- EQIP, CIG grants
- CSP
- Wildlife Habitat Incentive
- Wetlands Reserve
- Grasslands Reserve
- Healthy Forests Reserve
http//nrcs.usda.gov/feature/outlook/Carbon.pdf
6NRCS Assistance
- EQIP - Financial assistance for Practices
- - To reduce agricultural impacts on air quality
- - Improve animal waste management
- - Irrigation systems to produce energy savings
- - Residue and tillage management
- EQIP CIG (Conservation Innovation Grants) New
and innovative technologies related to air
quality, climate change and energy
7NRCS Assistance
- WHIP (Wildlife Habitat Incentive Program
- Implementation of vegetative practices
- CSP (Conservation Stewardship Program)
- Enhance or implement new practices in priority
air quality nonattainment areas - Soil quality enhancements
- Energy conservation concerns
- renewable fuel use, energy generation, recycling
of oil products, energy audits
8Options for Reducing GHG in the Agriculture
Sectors
- Existing policies
- Conservation programs (EQIP, CSP, CRP)
- Renewable fuels standard
- Encouraging private sector action
- Potential policies
- Expand current policies
- Regulation
- Incentives (financed by an allowance auction or
carbon tax) - GHG offsets (under a federal cap-and-trade)
- Federal lands
9Stressors on USA Policies Related to GHGs
- International
- UNFCCC Bali Roadmap new negotiations for a post
2012 agreement - Upcoming International Meetings - COP 15
- Federal
- New initiatives
- 2007 Energy Independence and Security Act (EISA)
- 2008 Farm Bill
- Potential Agency Regulations (External)
- EPA Rulemaking for GHGs
- United States Congress
- Bills to be considered by the 111th Congress in
2009
10State and Private Sector Initiatives
- States in the USA
- Western Climate Initiative (WCI)
- Northeastern States Regional Greenhouse Gas
Initiative (RGGI) - Private Sector Registries
- Chicago Climate Exchange (CCX)
- Numerous Voluntary Activities and Transactions
- Actions by Companies and Retailers
- Demand for carbon neutral goods
11Options for Environmental Regulation
- Traditional Command and Control
- Regulatory agency sets standards
- Specific technologies (scrubbers)
- Performance (tons, tons/unit output)
- Cap and Trade
- Regulatory agency sets overall objective (total
allowable emissions) - Allocates or auctions emission allowances
- Firms must obtain allowances in order to emit a
pollutant - Firms can receive allowances, purchase
allowances, or reduce emissions - Cap and Trade with Offsets
- Unregulated firms can receive credits for
reducing emissions - Regulated firms can purchase offset credits to
meet regulatory requirements (offsetting
emissions)
12Offset Markets Issues
- Issue Permanence -- Will the carbon stay out of
the atmosphere? - Potential solutions
- Assign liability, continuous reporting,
- temporary credits, renting credits,
- Discounting
- Verifying the existence of carbon stocks is
easier over time - Cumulative aggregation of carbon is easier to
detect than year-to-year fluctuations
13Offset Markets
- Issue Leakage Will the emissions move
elsewhere? - Potential solutions
- Discount credits,
- Exclude activities,
- Reporting requirements -- document that changes
did not occur elsewhere, - Accept it (adjust national goals)
14Offset Markets
- Issue Uncertainty What if our estimates are
wrong? - Potential solutions
- Exclude categories or pools
- Discount credits using an uncertainty factor,
- One-tailed tests
- Accept it (recognize that uncertainty does not
imply bias laws of large numbers apply)
15Offset Markets
- Issue Additionality Would the action happen
anyway? - Potential solutions
- Limit entry (categorical exclusions)
- Exclude forests (EU)
- Exclude deforestation (CDM)
- Exclude forest management (several US registries)
- Comparison lands (Duke Protocol)
- Document justification,
- Reporting requirements (CCAR)
- Barrier tests
- Discount credits,
- Proportional additionality
- Accept it (adjust national goals)
16Offset Markets
- Issue Baselines What are we measuring benefits
against? - Options
- Historic
- Base year/period carbon stocks
- Base year/period carbon fluxes
- The actions of others (comparison lands)
- Expectations
- Projections of business-as-usual
- Projections of expected improvements
- Projections of expected average business practice.
17Additionality and Baseline Concerns
- Early Adopters begin conservation practice(s)
prior to base year or period - Exclude, limit or
- SOM accumulation just beginning to provide most
valuable per acre carbon offsets - Penalizes the environmentalist/conservationist
- Promotes tendency to change conditions to realize
rewards under new system environmental costs
may be high (unintended consequences)
18Additionality and Baseline Concerns
- New adopters begin conservation practice(s)
during or after base year - May have previously abused their land, plowed out
rangeland or converted pasture, grassland to
cropland - Perverse environmental behavior rewarded
- Per acre carbon sequestration offset value is
years in the future
19SOIL CARBON DYNAMICS IN RESPONSE TO TILLAGE
- SOIL CARBON ( OF ORIGINIAL) IN RESPONSE TO
CULTIVATION
100
PLOWING
SOIL CARBON
50
0
years
20SOIL CARBON DYNAMICS IN RESPONSE TO TILLAGE
- SOIL CARBON ( OF ORIGINIAL) IN RESPONSE TO
CULTIVATION
100
PERENNIAL VEGETATION
PLOWING
CONSERVATION TILLAGE
SOIL CARBON
50
0
years
21Points to Consider
- Additionality and leakage can be addressed at the
project-level or in setting national goals - Increasing transaction costs and discounting
benefits will amplify problems with
additionality - Permanence can be dealt with by assigning
liability - Uncertainty is different than bias unbiased
estimators should provide the best approximation
of expected benefits.
22Implications for Agriculture
- We need to better understand what prompts
landowners to commit to certain agricultural
practices - Emerging GHG markets offer producers and
landowners opportunities and potential risks. - Legislation is being discussed that could shape
how contributions from agriculture are given
credit. - Debates/discussions are occurring at the
international, federal, and state levels.
23(No Transcript)
24US Agricultural GHG Emissions by Source
Inventory of U.S. Greenhouse Gas Emissions and
Sinks 1990 2006. EPA, 2008.
25Why is there interest in Cap-and-Trade?
- Concept Regulators set overall limits on
emissions (or environmental performance). Firms
must have allowances to emit the pollutant.
Allowances can be bought, sold, or transferred - Advantages
- Establishes clear property rights for pollutants
- Taps market forces to efficiently allocate
resources to reduce pollution - Provides incentives to innovate
- Equates costs of environmental control across all
polluters - Concerns
- Makes it difficult to address localized
environmental damage - Could concentrate pollution in lower income areas
- Distribution of allowances creates new assets
and transfers of wealth
26Implications of Discounting to Address
Additionality
/Ton GHG
Offset Price
Discounts
Effective Offset Price
Tons GHG Abated
Offset Quantity
Offset Quantity
27NRCS Global Change Priorities
- Targeted Incentives Implement Conservation
Programs with Carbon Sequestration Greenhouse
Gas Benefits - Climate Change Literacy and Awareness
- Technology Developments for Voluntary GHG
Reporting - Develop Methods to Estimate Agricultural GHG
Sources and Sinks Decision Support Tools - Support Direct Carbon Measurement Techniques
28NRCS Global Change Priorities
- Improve Resource Monitoring, Forecasting, and
Assessment Enhance Soil Survey, National
Resources Inventory NRI, SNOTEL and SCAN - Market-Based Initiatives and Agreements
- International Activities
- Methane to Markets
- Cooperate with State Dept on Bilateral and
Multilateral Agreements
29- The Natural Resources Conservation Service, NRCS,
provides local assistance to help people
voluntarily - Protect soil, water, and related natural
resources - Identify natural resource concerns
- Develop conservation plans
- Access technical expertise and cost- share
opportunities - on private, non-federal lands.
What we do
30NRCS professionals serve every county in the US
serve local people who request assistance,
promote partnership efforts deliver
science-based information and technology,
including decision support models
Our approach
31NRCS technology development Work with partners
to develop and refine planning tools for use by
field personnel and national leadership Help
translate basic research into useable
technologies for our field personnel and
clients Provide technical training for agency
personnel
What we do