Bridging the Gap between Finance and Action for Sustainable Soils
This post is written by Sadie Shelton, communications officer and a research assistant for the CCAFS Low-Emissions Development.
Soil is where most food begins. But every year, more soil is lost under expanding cities or degraded until it is unsuitable to grow food. The shrinking area and health of soil are two of the biggest threats to future global food security. Soil is not a renewable resource that can be recovered in one or even ten human lifetimes; it can take 1,000 years to produce 1 cm of soil.
In addition to being the foundation of the terrestrial food chain, soils combat and help the Earth adapt to climate change by playing a significant role in the carbon cycle by storing carbon (carbon sequestration). Sustainably managed soils increase soil health and, thus, store more carbon and remove more greenhouse gas (GHG) emissions from the atmosphere than conventional agriculture and forestry practices. Healthy soils have the largest storage capacity for carbon on land. Sustainable soil management could produce up to 58% more food.
An elusive solution
Enhancing soil health can improve agricultural productivity and soil organic carbon (SOC) sequestration. Technical options and practices currently available for agriculture that reduce emissions are inadequate to mitigate the one gigaton of carbon dioxide equivalents per year necessary in the agriculture sector alone to meet the Paris Agreement's 2 degrees Celsius target. There is a need for transformational technologies and widespread scaling up of mitigation practices.
Sequestering carbon in our forests, oceans and soil can contribute a substantial portion of the mitigation needed in the agriculture sector. Soil carbon alone can have equal or larger impacts on mitigation than all current practices. However, the amount of carbon soil can store is dependent on the overall health of the soil, and over a third of our soil is unhealthy.
Improving soil health improves agricultural productivity as well as its potential to sequester soil carbon. However, despite broad international attention, a substantial gap remains between the potential of soil carbon sequestration and on the ground practice implementation. The investment community is actively looking for opportunities to increase its climate impact, and many organizations are now asking how best to support practice implementation.
Opportunities for public and private finance exist and are emerging. However, a major limitation to investing is the lack of methods to account for changes in soil carbon stocks that fit the needs of investors, scientists and implementers (e.g., farmers). There is no single transparent, accurate, consistent and comparable method that works everywhere or for everyone. Promising approaches combine practical, user-friendly tools with site-specific modeling used in tandem with geospatial data sources and blockchain technology.
Taking the lead to transform soil health investment
In September 2020, the World Bank (WB), The Nature Conservancy (TNC), the 4 per 1000 executive secretariat, the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) and the Meridian Institute held a soil carbon and finance webinar and hackathon, where a group of experts discussed how soil carbon accounting methods could be improved to support investment-oriented actions promoting soil health and carbon storage. Participants examined actionable opportunities using emerging methods and frontier technologies that enable connecting technical practices with finance and policy for accurate and cost-efficient SOC accounting.
Investors want an approach to soil carbon accounting that is not only standardized, accurate, low-cost and attractive to future investors — already not an easy task — but it also must be able to evolve to climate market methodologies as data, modeling and sophistication of measurement, verification and reporting (MRV) systems improve.
For the finance experts, it is vital that an MRV system should provide what investors want, while soothing their fears. Investors, like researchers, desire a methodology that promotes best practices and yields robust results. However, innovation, uniqueness, positive outcome stories and high value for money are more important to investors than to researchers who may value quality and accuracy more. What investors dread is also different from the fears of measurement scientists and researchers; investors worry about a lack of project delivery or risks to their reputation as a climate investor from accusations of greenwashing or criticism from stakeholders. Researchers, on the other hand, fear funding cuts and risks to their reputation, but from criticism of the robustness or integrity of their work.
Accounting methods that compromise to address the needs and fears of all stakeholders are necessary to advance investment-oriented actions that promote soil health and carbon storage.
Innovations for SOC accounting in agriculture:
- Soil sensors improve the capacity to measure SOC and key variables like SOC concentration and bulk density at lower costs. Soil sensors could be used in key areas to monitor SOC stocks and improve monitoring methods and model calibration.
- Remote sensing can collect activity data on land cover and agricultural practices at landscape levels at a low cost. It can be used in tandem with local models to significantly reduce the cost of monitoring and verifying emission reduction estimates.
- Land aggregation is a procedure where farmers or projects are grouped or bundled into a single project. This reduces monitoring and verification costs through economies of scale. Aggregation allows individual sites with small emission reductions to achieve sufficient volume to offset project and monitoring costs.
Bypassing barriers to implementation
Carbon-credit markets can be a strong incentive and can expand an economy, but they are a tricky business. They require third-party verification of results using standardized protocols needed to ensure credible outcomes. However, there are other ways to incentivize farmer practice changes that require less accurate or sophisticated MRV systems. Practice-based loans or incentives and performance-based payments can be used as stepping-stones to a carbon-credit market.
Improving accounting accuracy requires reducing uncertainties in the system over time, which necessitates overcoming the barriers of cost of collecting data, accessibility to models and existing data and the feasibility of including smallholders.
Actions to overcome barriers could include:
- Using data from peer-reviewed scientific literature to fill data gaps.
- Utilizing existing activities like extension, farm management record-keeping or reporting requirements of buyers to collect data for MRV purposes.
- Using remote sensing data to reduce the costs of data collection.
- Improving the technical ability of projects to use models and make them more accessible to project experts.
- Encouraging collaboration between projects and external groups.
- Using C-credit discounts to make transactions viable for smallholders.
- Using proxy indicators for SOC stock changes.
The way forward
There is an urgent need for a standardized, low-cost, fit-for-purpose approach to SOC accounting that encourages investment and adapts to the climate market while being scientifically robust and accurate. Adopting a hybrid approach may be the most efficient route that considers the need of all stakeholders.
Increasing soil carbon stocks on land and even in our oceans would greatly benefit healthy food production and mitigate climate change. It is a crucial step along the path to a sustainable future. Achieving ambitious results will require ambitious action, and there is no better time to start than the present.
It is time to take action to secure our planet’s future. Recognizing the critical role soil plays in all life is essential to transforming our food systems. Soil is a non-renewable resource fundamental to future food security and combating climate change. The well-being of all life on Earth and a healthy environment are undeniably intertwined.
The webinar and hackathon were hosted by CCAFS and partners from the 4 per 1000 Initiative, The Nature Conservancy and World Bank and facilitated by the Meridian Institute.