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Farmers’ role in emissions trading seen hindered

The reliance on the voluntary involvement of farmers is seen as a drawback in Canada's emission market, observes the George Morris Centre. Despite farmers' apparent willingness to work with polluting companies to increase carbon sequestration from their land, there are unresolved issues that may act as disincentives for farmers.

May 14, 2008  By

May 13, 2008

While the success of a
domestic emissions market in
Canada may depend on farmer involvement,
"unresolved issues" in the development of such a market may keep
farmers from getting involved.

That's the observation in a
new George Morris Centre report on emissions trading in Canadian agriculture,
released Tuesday by the Guelph ag think tank.


Cher Brethour and Maria
Klimas, the paper's authors, note that agriculture is expected to play a significant
role in providing "carbon sinks" to help offset Canadian greenhouse
gas production. An emissions market allows polluting companies to pay farmers
for practices that help sequester excessive atmospheric carbon in their fields.

"However, since
agricultural producer participation in domestic offset markets will be
voluntary, the success of emissions trading in
Canada is heavily dependent on the level
of agricultural producer participation," the researchers wrote.

Despite farmers' apparent
willingness to take part in a Canadian market, "the speculation is that
participation by agricultural producers in emissions trading will be limited
due to unresolved issues, creating disincentives for producers. These issues
include lengthy liability periods that impose uncertainty, high costs of supply
relative to trading prices, and, potentially, high transaction costs."

Based on reviews of pilot
projects and systems elsewhere, Brethour and Klimas urge the developers of a
domestic market to consider allowing shorter contract periods for farmers,
reducing the length of liability.

Observers of such proposals
have noted some farmers may balk at a contract that curtails what they can do
with their land going forward — for example, if a contract presumes that a set
amount of carbon will remain in a contracted field's soil indefinitely. A
contract may also require a farmer to purchase carbon credits to cover any
shortfall in the amount of carbon sequestered by his or her project.

Buyers want longer terms

"Although temporary
offsets attempt to address this issue in part, it is not clear whether buyers
of offsets will purchase temporary credits, as it has been suggested that
buyers want more stable and long-term credits," the report noted.

Another barrier for farmers
will be the high cost of implementing appropriate practices, relative to
trading prices. Investment in technological innovation would greatly reduce
that barrier, although such innovations may not be available in the near term,
the researchers wrote.

Lastly, "although
transaction costs are not currently an obvious deterrent to emissions trading,
they contribute to the overall cost of supply faced by producers. Therefore,
their reduction is a tangible and more immediate step to encouraging a successful
emissions trading market."

Brethour already outlined
the report's points before its release, in a presentation last month at the
Agriculture and Emissions Trading Summit in
Queensland, Australia.


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