CONSERVATION'S FUTURE

Voluntary Ecosystem Services Markets: A Fresh Approach to Free-Market Climate-Smart Policy

Publishers Note: This article written by David Crow originally appeared in the January 2022 issue of The Cattleman, a Texas & Southwestern Cattle Raisers Association publication.

The number of Fortune 500 companies committing to bold climate goals increased by 75% since 2019. It marked a major strategy shift for major corporations around the country, whose investments pivoted toward climate-focused programs. A number of solutions emerged with intentions of addressing these environmental challenges by leveraging agriculture. But few of these solutions offered any promising change — until now.

Voluntary ecosystem service markets present an encouraging solution. These markets focus on private, working lands, generating credits from the many nature-based benefits found on farms and ranches. For the first time, private land is recognized for its ability to store carbon, replenish water resources, provide habitat to fish and wildlife, and more.

Despite this potential, there is industry concern, and with good reason. Historic approaches to climate discussions were compliance or regulation focused, using strict guidelines to meet legal requirements related to greenhouse gas emissions.

Cap and trade, a system designed to reduce greenhouse gas emissions by marketing a limited number of credits to corporations, meant regulation limiting a landowner’s freedom to operate. Carbon taxes added financial burdens to already high production costs for cattle producers and had no promises of returned environmental outcomes. These types of approaches threatened the viability of many operations.

This is why a voluntary, market-driven approach is exciting for the industry. Rather than focusing merely on the use of resources, they focus on outcomes driven by incentives. It models price premium programs like USDA Certified Organic or Certified Angus Beef, paying producers for practices known to benefit the environment with measurable outcomes.

Pricing models for these programs operate on supply and demand. Unlike cap and trade, these markets are not artificially manipulated. 

Change is dependent on dollars invested, and pricing is scaled based on willingness to participate. Momentum from climate discussions
​reflect the potential for landowners. Willing buyers are coming forward, making investments in these climate-focused industries. This brings a great deal of promise for the agricultural community.

One important component of these marketplaces is the ability to commoditize more than just carbon. In addition, producers can capitalize from management decisions influencing water quality, water quantity and biodiversity. The greatest challenge is making these markets work for a variety of land uses. Relatively few ecosystem services markets serve the grazing lands community, most focus on row crops. Research and innovation are changing this.

Recently, the National Cattlemen’s Beef Association released a report reviewing carbon markets available to cattle producers. The report identified practices benefiting carbon sequestration, including prescribed grazing, stocking rates, brush management, improved wildlife habitats and more. It also explored five carbon markets applicable to grazing operations, observing similarities and differences and providing considerations for producers preparing to explore these markets.

National Cattlemen’s Beef Association isn’t the only group exploring the potential for these markets. The Texas Agricultural Land Trust, of which Texas & Southwestern Cattle Raisers Association is a founding member, is at the front of this charge right here in Texas. The trust formed an ecosystem services market committee chaired by former Congressman Mike Conaway. The committee is tasked with supporting the development of markets in Texas. It’s exploring opportunities to pilot these markets across varying regions in the state, and supporting research that will help inform valuation of various ecosystem services.
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This is merely the beginning. We are just uncovering the potential of this free-market approach to conservation. As more research emerges that contributes to the values provided from grazing lands, we can anticipate more interest in ecosystem services markets for the cattle ranching sector. It may very well fundamentally change approaches to conservation across the county. I’m proud to be a part of the industry that will serve as an important pillar in that solution.