Abstract:
The burgeoning development of the market-based institutions of wetland mitigation,
carbon trading, and nutrient trading provides farmers with economic incentives in the
form of payments for credits to change land use practices. Payments are made to the
farmer based on the number of credits generated by environmental benefits gained from
changing to and continually using best management practices and a market-based
determined price of those credits. Using a private client’s farm, this project explores the
feasibility of participating in these institutions based on associated federal and state
policies, eligibility requirements, enrollment processes, and economic costs and benefits.
Codorun Farms (the Farm), a family owned 400-acre farm based in York, Pennsylvania,
has asked for a guide to market-based payment programs that promote conservation
practices. Codorun Farms is interested in understanding non-governmental economic
incentives that can be earned in exchange for switching to and maintaining best
management practices. The Farm would like to understand if it’s possible to make a
profit while at the same time accruing environmental benefits. Questions to be answered
include: what are the requirements for participation, is the Farm eligible, and does it
make sense for the Farm to enter into contracts with these types of programs?
Preliminary conversations with Farm family members have led to an agreement to
investigate the following programs: Wetland Mitigation Banking; Carbon Credit Trading
and Agricultural Offsets; and Nutrient Trading.
Analysis shows that the Farm would benefit from participating in carbon and nutrient
programs but not wetland mitigation banking. Since the Farm is already practicing notill,
it is beneficial to enroll in these two programs as the Farm will receive compensation
for operating its business as usual. However, the results of this case study demonstrate
that payments from carbon trading alone will probably not be enough incentive to change
tilling practices for the small farmer. Participation in nutrient trading alone provides a
higher payment and may be enough of an incentive, however the number of pilot
programs in the US is very small and thus impedes access to these payments.
