Enhancing Agricultural Soil Carbon Sequestration: A Review with Some Research Needs

Abstract

The US rejoined the Paris Agreement in 2021 with a targeted 50–52% reduction in net GHG emissions in 2030 relative to 2005. Within the US’s nationally determined contributions, several land-based mitigation options were submitted, targeting the removal of 0.4–1.3 GtCO₂ yr⁻¹ in 2030 compared to the net flux in 2010. Acknowledging disagreement has existed on both technological and economic feasibility levels of soil C sequestration adoption and practices, this review explores and evaluates the research findings and needs for six concepts: (1) permanence; (2) additionality; (3) leakage; (4) uncertainty; (5) transaction costs; and (6) heat-trapping ability of different gases. These concepts are crucial for the effective implementation of soil C sequestration projects since they help establish robust and integrated methodologies for measurement, verification, and issuance of carbon credits. In turn, they help ensure that environmental, social, and economic benefits are accurately assessed and credibly reported, enhancing the integrity of carbon markets and contributing to global climate mitigation efforts. This review also evaluates the existing and potential market opportunities for agricultural production with C sequestration and “climate- smart” farming practices. Current barriers to, research needs for, and policy considerations regarding soil C sequestration strategies are also stated.

1. Agriculture and GHGs

Rural agriculture, forestry, and other land use (AFOLU) are significant sources of greenhouse gas emissions. On a global basis, from year 2007 to 2016, AFOLU contributed an estimated 23% of current anthropogenic carbon dioxide equivalent (CO₂e) emissions [1]. AFOLU also results in C sequestration. Friedlingstein et al. [2] estimate that during 2010–2019, lands sequestered 2.5–3.4 gigatons of C per year (GtC yr⁻¹), and the land CO₂ sink during the 2013–2022 decade was 2.5–4.1 GtC yr⁻¹, which took up 31% of the total CO₂ emissions [3]. Some actions can increase the C held in land. The 2021 US Nationally Determined Contribution (USNDC) submission under the Paris Agreement [4] states that US lands have the technical and economic potential to sequester 800 million metric tonnes of CO₂e—an amount approximately equaling 12% of current US emissions. The USNDC identifies climate-smart sequestration-enhancing actions to achieve this, mentioning reforestation, grazing, nutrient management practices, increasing lands in the Conservation Reserve Program (CRP) and improving agricultural management. The agricultural management category includes (1) increased conservation tillage—decreasing/minimizing soil disturbance by reducing tillage intensity through adopting low-till or no-till practices or establishing perennial crops; (2) altered crop management—employing different planting schedules/rotations, abandoning the practice of fallowing, using cover crops or planting double crops; (3) better management of livestock grazing; and (4) application of crop residues, compost, or biochar to increase C.

In the US, the Inflation Reduction Act of 2022 [5] provides about USD 18 billion in climate-related financial support for the agricultural sector, part of which will be used in soil carbon-related programs designed to mitigate climate change. Similar financial support can be provided by other programs. One question that has been raised is how financial support should be allocated to reduce carbon emissions most effectively. In the paper, we will first discuss the characteristics of soil carbon and sequestration strategies. We then discuss the existing discourse on both technological and economic feasibility levels of soil C sequestration adoption. Last, we explore and evaluate findings and research needs for six practice incentive-related concepts, (1) permanence; (2) additionality; (3) leakage; (4) uncertainty; (5) transaction costs; and (6) heat-trapping ability of different gases, all of which are relevant to soil-C-related project incentive design.

2. Soil C, GHGs, the C Cycle, and Enhancements

GHG (including carbon dioxide (CO₂), methane, and nitrous oxide) exchanges between the land and atmosphere are mainly driven by the balance between plant respiration and photosynthesis, and microbial decomposition of soil organic matter (SOM) along with fertilization and irrigation conditions. Plants capture atmospheric CO₂ and convert it into organic C in soils or the plant body through photosynthesis. Hence, processes lending to agricultural soil C sequestration have benefits in at least two dimensions. The first is contributing to terrestrial net primary productivity and providing food for humans and other organisms. The second is reducing atmospheric CO₂ concentration. The IPCC [1] estimates that globally AFOLU contributed 23% (12.0 $\pm$ 2.9 Gt CO_2e yr⁻¹) of total anthropogenic GHG emissions during 2007–2016, including 13% of CO₂, 44% of CH₄, and 81% of N₂O. Their estimates also show that 25% of global cropland, with the application of cover crops, can potentially sequester 0.44 $\pm$ 0.11 GtCO₂ per year [6]. Moore et al. [7] evaluated six cropland management practices (1) cover crops, (2) conservation tillage, (3) nutrient management via replacing a portion of synthetic nitrogen with manure, (4) conservation crop rotation, (5) mulching, and (6) strip cropping) and estimated that the adoption of such conservation management practices on 133.5 million hectares (Mha) of cropland would reduce CO₂e by 134.2 million metric tons (MMT) per year. This would be an important contribution to climate change mitigation.

The increase in C sequestered in soils results from reversing monoculture farming and intensive tillage practices that have generally depleted SOM stocks that were accumulated under native perennial vegetation. Perennial crops, including but not limited to perennial bioenergy crops (e.g., switchgrass, miscanthus, and poplar), pasture, vineyards, and orchards, play a significant role in net ecosystem CO₂ exchange and carbon budgeting due to their unique biological and management characteristics. Some studies show perennial crops can act as moderate carbon sinks with inter-annual variability notably affected by environmental conditions [8,9]. With the C sequestration rates ranging from 0.6 to 3.0 MgC ha⁻¹ yr⁻¹, the bioenergy crops have the potential to sequester approximately 318 TgC yr⁻¹ in the United States (about 60 million hectares of land available for bioenergy crops) and 1631 TgC yr⁻¹ worldwide (757 million hectares) [10]. Multiple factors influence soil C sequestration potential and its variation, including prior and current management practices, soil characteristics, climate, environmental conditions, resource and nutrient availability, and microbial decomposition [11,12,13]. Some studies discussed the potential mechanisms affecting soil C storage in terms of biotic [14] and abiotic [15] effects. For example, Li et al. [14] compared ammoniated and conventional straw incorporation. They found that ammoniated straw incorporation (abiotic factor) increases wheat yield, yield stability, soil organic C, and soil total nitrogen content. Luo et al. [16] found nitrogen loading enhances phosphorus limitation in terrestrial ecosystems. Plant and soil micro-organisms develop a range of P-acquisition strategies, which directly and indirectly affect soil C cycling and can reduce soil organic C sequestration. Most studies estimate site-specific C sequestration potential given its heterogeneity [17,18,19,20]. Soil management approaches identified by long-term studies that have the potential to increase C sequestered, such approaches include but are not limited to adopting conservation agriculture, reducing tillage frequency, adopting no-tillage, replacing conventional tillage practices, improving rotations to increase the biomass and organic material inputs into soils, and increasing the diversity of cropping systems. The efficacy of the many potential approaches is highly context-specific, and some practices even show the opposite effect under differing conditions [21,22,23].

Existing measurements related to the impact of climate-smart agriculture (CSA) management practices (e.g., biochar application, cover crops, and conservation tillage) on C sequestration vary significantly and are strongly influenced by factors such as experiment designs and site-specific conditions, including climate and soil properties [22,24,25,26,27]. A few studies have found negative outcomes associated with CSA management practices on C sequestration, as indicated by research conducted by Liang et al. [21] and Tian et al. [23]. The existence of such negative results complicates the process of anticipating the effects of adopting CSA management [25]. As a result, there are substantial uncertainties when quantifying the agricultural sector’s potential to contribute to climate change mitigation.

2.1. Conservation Tillage

Tillage involving mechanical soil manipulation is a field management practice used to incorporate crop residue, aerate soils, control weeds, modify soil conditions, and prepare land for planting [28,29]. Since the 1930s Dust Bowl, USDA conservation programs have encouraged conservation tillage often in conjunction with soil cover improvements such as terracing, contour plowing, and cover crops to reduce erosion and conserve moisture [29,30,31]. The USDA NRCS Soil Tillage Intensity Rating (STIR) reflects soil disturbance and classifies tillage types, ranging from 0–200 as an index, with the higher values referring to more soil disturbance [29]. Conservation tillage practices include mulch-till (MT) and no-till (NT), where MT disturbs a majority of the soil surface and uniformly spreads residue on the soil surface [32] and exhibits a STIR value under 80. NT involves planting crops without tilling where seeds are planted through the previous crop residues by planters or drills that cut a V-slot (seed furrow), place the seeds, and close the furrow [33].

According to the Agricultural Resource Management Survey, conservation tillage has been increasingly adopted for wheat, corn, soybeans, and cotton [29]. However, the adoption rate for conservation tillage practices widely varies across crops and the US region [29]. The increase in the adoption of no-till (NT) practices for wheat and soybeans was initially observed from 2000 to 2009. Claassen et al. [29] find a slower rate of increase for wheat and a potential decrease in the adoption of NT practices for soybeans. NT adoption in corn is more prevalent in drier regions to conserve soil moisture [34,35] and in warmer regions to ensure timely planting without the need to facilitate soil warming. NT for soybeans is very likely in warm regions and the north with higher rainfall and erosion risk [35,36].

Thus, NT-based C potential varies substantially due to the following factors: region, land use/tillage history, climate, soil properties, and other ecological conditions [21,22,24,25,27]. Knowing historical practices and geographic influences allows for the development of tailored conservation farming strategies that are best suited to the regional conditions and challenges. Recognizing regional variations enables adaptation of tillage strategies to address challenges posed by ongoing climate change. Additionally, different regions may have unique agricultural traditions, community structures, and socio-economic factors. Understanding the existing variations facilitates better engagement with local stakeholders (farmers, mediators, governments, etc.), considering their specific needs and incorporating local knowledge into conservation initiatives. Policymakers need to be aware of the regional nuances in conservation farming practices to formulate realistic, impactful, and effective policies.

In USDA’s most recent report on climate-smart agriculture [28], GHG reductions are identified as a benefit of transitioning tillage practices. In that report, three tillage practice transitions are identified as the most significant in corn-belt regions. Specifically, estimates are presented that indicate in the corn belt transitioning from CT to NT (CT-NT) increases sequestration by 0.73 Metric tons CO₂e (MtCO₂e) per acre, 0.56 for MT-NT, and 0.23 for CT-MT. The report also indicates limited impacts of conservation practices on GHG emission reductions occur in the mountain regions, and those were used to create a lower boundary for emission reduction (0.24, 0.17, and 0.09 MT CO₂e acre for CT-NT, MT-NT, and CT-MT, respectively).

2.2. Cover Crop

Grasses, legumes, and forbs planted in the late summer or fall (around harvest) and terminated in the spring can benefit GHG emissions when used as seasonal vegetative cover crops (defined by NRCS [37]). In particular, incorporating cover crops in a rotation can reduce nitrogen (N) fertilizer applications and decrease N₂O emissions while also enhancing sequestration [38]. According to USDA Sustainable Agriculture Research and Education program surveys [39], over 50% of 2019 cover crop acres were mixes of two or more species, and about half contained a legume. Currently, rye is the most common cover crop either as a single species or as part of a mix. Estimation of the GHG impacts of cover crop rotations depends upon species-specific growth rates, soil C accumulation, and impacts on N and N₂O emissions, as well as the following crop’s demands for N in the soil and the consequences for its yield [28]. The changes in machinery-related CO₂ emissions from added management practices (e.g., seeding and cover crop termination) and the indirect factors, which include but are not limited to yield impacts, emission changes in replacing lost production (leakage), and emissions caused by altered needs for fertilizer and its application, should also be counted.

Jones and O’Hara [40] found cash crop rotations with legume and nonlegume cover crops can reduce net emissions by 0.05–0.92 MtCO₂e and 0.04–0.66 MtCO₂e per acre, respectively. The impact of the cover crop rotations also has high regional heterogeneity, with effects ranging from 0.05 to 0.72 MtCO₂e per acre. Such differences raise the need for regionally nuanced and tailored C sequestration strategies. Similarly, Eash et al. [41] found that cover crops increase soil carbon stocks and reduce the net GHG emissions based on the DayCent model simulation. They also found cover crops increase N₂O emissions at a relatively small magnitude but greatly increase the uncertainty of total GHG emission reduction.

Average CO₂ emissions from using diesel fuel for seeding and termination (e.g., herbicides and winter kill) were estimated in recent surveys and several studies. Across various seeding methods (wheel-track planting, till planting, grain drilling, etc.), Jones and O’Hara [40] computed the average fuel consumption at 0.62 gallons (2.35 L) of diesel fuel per acre. Chemical cover crop termination used 0.3 gallons (1.14 L) of this, and winter kill was assumed to terminate the cover crop without additional fuel in many regions [28]. They estimate CO₂ fossil fuel-based emissions using the US Environmental Protection Agency (EPA) emission factor of 0.04 MtCO₂e per gallon of diesel fuel times the fuel usage [42].

2.3. Prescribed Grazing

Instead of grazing a parcel continuously, prescribed grazing limits grazing intensity, frequency, and duration in an effort to improve ecological health (pasture, soil, and animal), increase sequestration, and enhance economic and management objectives [43]. USDA uses COMET data under the Conservation Practice Standard (CPS) 528 [43] to estimate the sequestration potential when transitioning from continuous to prescribed grazing (including intensive and basic rotational grazing as a subset). The Northern Mountain region is estimated to have a GHG reduction from prescribed grazing implementation at 0.007 MtCO₂e per acre while implementation in the Delta States is substantially larger (0.7 MtCO₂e per acre) [29].

2.4. Biochar Amendment

Biochar is a charcoal-like, C-rich substance. Biochar is generated from the pyrolysis of biomass (e.g., plant residues, manure, nutshells, hulls, and other agricultural waste products) under low oxygen and high temperatures and is stable when applied to soils [44,45]. In agriculture, biochar is used as a soil amendment to promote soil C sequestration, enhance nutrient use efficiency, hold water, raise soil pH, improve soil health, remediate polluted soils, and improve agricultural yields [46].

Dokoohaki et al. [47] did a meta-analysis of 40 biochar studies and summarized application costs, yield impacts, and C sequestration. On average, the direct sequestration is 0.24 MtCO₂e per acre with application rates of 15 Metric tons per hectare [28,47]. Additionally, this did not include estimates of GHG changes in other inputs induced by applying the biochar (such as potentially reduced fertilizer and irrigation-related emissions) [48,49]. The biochar application sequestration potential is characterized by high uncertainty because of limited data from large-scale and long-term applications.

3. Soil C in Markets

Voluntary C markets that allow soil have been established or are under consideration within the European Union (EU), Australia, Canada, Brazil, Chile, Colombia, and in select areas of the US among other places. However, in functioning markets, the soil-related participation has not been large with the US Chicago Climate Exchange discontinuing operations [50]. Several reasons have contributed to the limited participation: (1) the absence of a regulatory mandate and regulatory pressure resulted in companies not prioritizing voluntary C offsetting; (2) voluntary markets can be more susceptible to uncertainty and speculation, lowering investor confidence in the stability and the long-term viability; (3) the complexity of measurement, reporting, and verification processes, as well as other associated operation expenses added administrative costs; (4) shifting economic focus and changing business priorities led some companies to shift to other alternative sustainability initiatives or mechanisms more aligned with their goals; (5) some distrust of soil prospects arising due to concerns about permanence, reversibility, and uncertainty [51,52].

Recently, the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) estimated that climate change initiatives, regulations, and information could increase demand for C credits by 15 folds or more by 2030 and up to 100 folds by 2050 [53]. They identified six aspects of the C credit value chain that could facilitate the scaling up of the voluntary C market: (1) establish shared principles to define and verify C credits including features of quality and price-affecting attributes; (2) create and develop reference contracts for trading with additional attributes priced separately; (3) establish resilient and flexible trading and post-trade infrastructure—clearinghouses and meta-registries—to promote data, prospect, and price transparency; (4) forge consensus on the proper use of C credits to reduce skepticism of environmentally sound credits [54]; (5) implement mechanisms and safeguard the integrity of C markets by introducing features that handle heterogeneity of C credits and improve price transparency plus reveal errors and avoid fraud; (6) convey clear demand signals with shared guidelines for offsetting programs, widely accepted standards, and developed infrastructure [53]. Specifically, attention should be paid to the protocol used to measure the initial soil carbon stock and the changes in stocks to improve the reliability of the soil carbon credit. Omitting situ soil analysis can lead to an overestimation of soil carbon stock by 2.5 times [55].

4. Non-C Benefits of Soil C

Soil C sequestration has value beyond stabilizing and reducing atmospheric CO₂e. In particular, there are: (1) environmental benefits, (2) social benefits, and (3) expanded economic opportunities [17,56]. Soil C sequestration can: (a) reduce soil erosion, (b) restore degraded soils, (c) improve soil health, (d) enhance resilience against droughts and heavy rainfall, (e) increase irrigation efficiency, (f) improve soil structure and stability, (g) help prevent nutrient runoff and enhance nutrient availability, and (h) eventually improve agricultural productivity [57]. Socially it can enhance food security, expand employment, and contribute to poverty reduction while economically it can improve incomes, land values, and rural economies [58].

Prokopy et al. [59] have shown that farmers’ adoption of soil C sequestration practices is not only motivated by stewardship but also positively associated with non-financial and self-disciplined motivations, such as farmers that seek to improve environmental quality, develop conservation farming skills and knowledge, improve formal education and acquire useful information, pursue marketing arrangements that have positive yield impacts and reduce input needs (for example lowering tillage related fuel demands).

5. Soil C Sequestration and Dynamics

While agricultural soil C sequestration is an often-mentioned agricultural sector strategy to mitigate GHGs, disagreements have arisen on the universality of its impact [60], levels of adoption, and practical amounts of sequestration [17,61,62]. In this section, we will discuss the characteristics of soil C sequestration that cause diverse impacts and differing estimates of effectiveness.

5.1. Approach to a New Equilibrium

Soil C stocks can be enhanced by: (a) increasing C inputs to soils, (b) reducing disturbances to expose less C to oxygen, (c) using cover crops, (d) leaving more residue, (e) leaving larger amounts of roots, (f) adding organic amendments, (g) using more perennials, and (h) moving land to grass or forest [63]. However, with an increase in C also comes increases in forces that decrease C in soils, such as microbial activity, erosion, oxidation, wet-dry cycles, freeze-thaw cycles, and possible tillage [64,65]. Eventually, C inputs and outputs tend to come into equilibrium, and so soil C first accumulates at a declining rate and eventually equilibrates at a new level where the rate of C addition and decomposition become equal. In addition, West and Six [18] indicate that soil can become saturated with C over time. Both of these forces limit the eventual amount of C that can be sequestered and the duration of time that soil uptakes C under practice before it hits a new equilibrium [66]. West and Post [20] assembled field-experiment-based evidence on uptake rates of soil C sequestration associated with varying tillage intensity and increased rotation complexity. They observed that transitioning from CT to NT, C sequestration rates are likely to peak within 5 to 10 years, with soil organic C stabilizing at a new equilibrium and sequestration ceasing within 15 to 20 years. When introducing enhancements in rotation complexity, the equilibrium is expected to be achieved in approximately 40 to 60 years.

5.2. Rapid Reversibility

The basic idea of soil C is that soil C has been depleted from historical levels through land conversion to crops, soil disturbing tillage, bare fallow, and low organic matter inputs. Furthermore, reversing these can increase soil C back, moving it toward historical levels [67]. Reicosky et al. [68] indicate that when practices are reversed the loss of C is swift as does. Kim and McCarl [69,70] indicate the possibility of losing soil C by reversing practices in the future reduces an offset purchaser’s willingness to pay. For example, when a farmer switches tillage on a field from a C-enhancing system to a conventional one, then the previously stored C will quickly be released, and a purchaser must replace that C, reducing the value of the initial sequestration [70]. Consequently, practices such as no-till soybeans rotated with conventionally tilled corn do not increase in C sequestration. Thus, practices, once begun, generally must be kept up to maintain C stocks with extra cost.

The reversibility of soil C coupled with the approach to equilibrium raises the important issue of how we incentivize the maintenance of stocks for the long run after accumulation rates fall as equilibrium is approached. This is especially true for systems that need the returns from the sequestration to economically dominate conventional but less sequestering possibilities [71]. Such an issue has been widely discussed in the context of deforestation, where the goal is to preserve the stock and many argue the best payment approach is to compensate the landholder for the stock on hand at the end of the contracted period [72,73,74,75,76,77]. These contracts are tied to the preservation of forests or standing trees, which are relatively observable. To maintain the C stocks some form of maintenance payments may be needed and this reduces the value to a purchaser [70].

5.3. Uncertainty

The C capacity of soils is a function of numerous drivers, including climate, vegetation [78], topography, parent soil material, soil depth [79,80], wet–dry cycle, freeze–thaw cycle, microbial activity, time, and history of disturbance [81,82]. As a consequence, the effects of changing practices on soil C and sequestration are heterogeneous across space and time [83]. Even within fields, variations arise in soil characteristics, topography, wetness, and plant cover [84,85]. Regional variation arises with disturbance history, climate, cropping, pasture and forest incidence, water bodies, soil characteristics, and broad management regimes [86].

Such uncertainty means localized strategies are needed. In a study comparing crop modeling results on crop yields versus soil C increments, Kim and McCarl [87] found that in a year the amount of C sequestered was highly correlated with that year’s crop yield. Furthermore, yield is well known to vary from year to year due to climate and other factors. Therefore, the soil C sequestered will vary and be uncertain which will lead to purchasers assigning a lower value [87]. These characteristics, coupled with potential practice and thus sequestration reversibility, have caused many to view soil C increments and stocks as uncertain, relatively volatile, and impermanent and thus a discounted value. There have also been suggestions that C sequestration trading should occur in terms of an amount discounted for uncertainty [88].

Finally, when the amount is established by sampling, there will be year-to-year and spatial variability as it is effectively impossible to sample exhaustively. Coupled with the sensitivity and accuracy allowed by the sampling regime, no significant changes in soil C can be detected within 5 years unless there are great changes in soil C (over 20%) or a massive sample is drawn [89]. Mooney et al. [90] also supported the idea that the uncertainty in soil C can be controlled with a fairly modest sample size. On the other hand, a mixture of crop modeling, sampling, and remote sensing may yield an acceptable measurement, but Kim and McCarl [87] argue that this will need to be done in multiple places over the years to reduce mean estimate variability. The credible and reliable measurement/monitoring, reporting, and verification (MRV) platform, integrated short-term and long-term experiments, models, spatial soil sampling, remote sensing, and data analysis, can be used to improve the accuracy in soil C measurement [91].

Additionally, climate change may reduce sequestered C since higher temperatures would increase microbial activity and soil respiration, which can reduce the C sequestered [92,93,94,95,96,97,98]. On the other hand, enhanced atmospheric CO₂ can stimulate plant growth [6] and enhance C additions to the soil and thus sequestration. Attavanich and McCarl concluded that under certain assumptions up to 60% of the recent (1990–2007) terrestrial C sink increase can be attributed to increasing atmospheric CO₂ concentration and this may limit future increases as C mitigation efforts proceed [99].

5.4. Tradeoffs with Other Gases

CO₂ is not the only GHG involved with agricultural soil management and efforts to increase soil C can alter emissions of the other gasses. In particular, N₂O and CH₄ are also involved and exhibit much higher heat-trapping potential (global warming potential) [100]. Sequestration-enhancing practices also influence CO₂ and other GHG emissions through (1) emissions from fossil fuels used in agricultural machines (irrigation pumps, tractors, harvesters, etc.); (2) emissions from fossil fuels used to produce, transport, and apply agricultural inputs, including that for fertilizer and pesticides; (3) emissions of N₂O from nitrogen fertilizer application, legumes, and certain cover crops; and (4) CH₄ emissions from rice paddies, flooded agricultural lands, residue burning and wetlands. There is a need to do a life cycle assessment (LCA) [101] on total GHG implications to ensure that radiative forcing is truly reduced. For example, Schlesinger [102] indicates that fertilizer, lime, and irrigation, which all increase sequestration, also increase other GHG emissions, and those can more than offset the sequestration benefits. The accounted impacts of land use and agricultural land management changes on GHG emissions vary by the chosen LCA methodology [103]. Various LCA methods are suggested based on user expertise, methodological certainties, and data quality [103,104].

6. Economic Viability and Funding Effectiveness

While capped GHG emitting interests like power plants may desire to buy CO₂e credits based on sequestration enhancements, they do not directly control the extent to which producers adopt practices and their results, rather, farmers and ranchers do. Additionally, under a policy like cap and trade, the price for soil-C-based credits likely depends on the characteristics of soil C, and how claimable they are within the cap-and-trade program rules. Thus, it is worthwhile to consider the producer cost for soil C-enhancing practices and the value of any resultant credits to C-credit buyers. There are also costs accruing to market intermediaries and associated program transaction costs.

6.1. Farmer/Rancher Supply

Since farmers and ranchers control what practices are employed, soil C supply depends on their costs and received prices. One must realize that since we are trying to get new practices adopted, those practices are generally somehow economically inferior compared to what farmers are now using [71], and/or are ones with which farmers are unfamiliar [105]. Building on McCarl et al.’s [106] list of considerations involved in farmer choices, relevant items are: (1) practice profitability including effects on price, yield, and cost; (2) change in yield and cost risk when employing the practice; (3) resources required to use the practice and the timing of demands; (4) information, training, and learning needed to employ the practice; (5) practice timing requirements and management demands that are required for adoption; (6) new equipment investment and operation needs to carry out the practice coupled with the age and salvage value of displaced equipment; (7) attitude toward environmental stewardship and the environmental attributes of practice; (8) applicable government and/or market participation regulations; (9) market or government program determined prices, subsidies and GHG amounts for practice adoption; and (10) crop insurance, sequestration shortfall insurance, investment subsidies, and training programs. All of these forces will generally cause the cost of practice adoption and the resultant cost of C sequestered to differ from the amount arising from pure profit-based accounting. Albrecht [107] pointed out that there are hidden costs to implementing soil organic matter increasing policy on croplands, grazing lands, forestlands, and even urban soils. He also found the reason farmers are reluctant to change tillage practice permanently is that prevailing policies deplete soil resources rather than replenish them, so continuing such practice for an extended period will lead to a further decline in crop yields. Another possible challenge to reach policy goals is the participators’ belief about climate change. Some farmers do not believe in climate change, and they would need financial incentives to adopt mitigation management [108].

Long-Term Liability

The approach to equilibrium of soil C coupled with the desire for a permanent offset, when people are paying for avoided atmospheric GHGs, leads to an issue with the long-term liability of farmers adopting practices that increase sequestration. Namely, given the desire for an offset to persist once paid for, this has led to suggestions that practices one begun may be required for use for the extended period. For example, Pannell, Crawford, and Thamo [109,110] discuss a 100-year obligation to adopt a practice that was considered in Australia. This could limit the options of future landowners. As a consequence, farmers generally prefer leasing with a limited obligation to maintain the practice [111]. In particular, McCarl et al. [112] summarize farmers’ concerns from Bennett [113] about (1) potential increases in cost particularly for weed and insect control; (2) the need to acquire new expensive equipment; (3) critical reliance on the efficacy of chemical weed control compounds and the need for continued efficacy into the future (one concern involves what seems to be a growing degree of weed resistance to herbicides [114]); (4) learning time to effectively employ the practice; (5) willingness on behalf of farmers to switch practices; and (6) potential yield variability increases due to factors such as slower warming of residue-coverage, untilled soils during cool spring planting seasons and accompanying later crop germination times.

6.2. Value to a Buyer

Beyond considering practice desirability from a farmer/rancher perspective, there are also both considerations arising with respect to C offset buyers [53] and social damages from or attitudes toward reduced atmospheric CO₂ [54].

6.2.1. Buyer Concerns about Entry into Markets

The marketplace value of C sequestration to a buyer is likely to be affected by several items which has been widely discussed in the C trading policy discussion. Namely, concepts that are likely to influence the value of sequestered C include (1) permanence; (2) additionality; (3) leakage; (4) uncertainty; (5) transaction costs; and (6) heat-trapping ability of different gases involved (commonly called global warming potential). Previous work has addressed these and introduced the concept of a price discount or grading standard that adjusts for these characteristics as they relate to sequestered C [70,87,115,116].

For permanence, buyers under cap and trade need to obtain a GHG offset that permanently removes GHGs from the atmosphere like occurs when capturing and burning methane. On the practice side, while soil C sequestration removes CO₂ from the atmosphere it is then stored in the soil in a potentially volatile form that can be released by practice reversal. As a consequence, that sequestered C is worth less than a permanent reduction. Kim et al. [70] develop a formula for a price discount that arises due to fixed duration leases, the need for a possible maintenance cost, and a pattern of C uptake that ends when the C approaches equilibrium in the soil. LCA approaches for long time horizons can also be used to assess the impermanent mitigation strategies for climate change [117].

For uncertainty, buyers would have a desire to obtain a certain amount of GHG offset that they cannot be later confronted with penalties for a shortfall. For example, the GHG offset is certain when a metered amount of methane is captured and burned. However, under uncertainty, the buyers are exposed to the risk of having offsets less than those they report under a program. In such cases, penalties can be severe. The US ozone program had a penalty for overestimating control levels that were several times the market price and aided in compliance [118], for soil C, the regional heterogeneity of sequestered amounts, differential responses to practices, and year-to-year variation impose a burden on the buyer of documenting what was offset [119]. Kim and McCarl [87] examined this and derived a price discount plus showed uncertainty can be reduced by a portfolio of GHG offsets that are spread across time and space.

For additionality, buyers or program administrators have the desire to obtain a GHG offset that would not have happened unless they paid for it. Following Murray et al. [120] additionality maintains that an offset credit should be granted only to the extent that the associated amount sequestered within the project boundaries is beyond that which would occur without the project or under business as usual (under no-project conditions). Additionality requires a future project baseline describing future land use and land management with and without a project.

For leakage, buyers would like to acquire offsets that do not stimulate emissions elsewhere outside of the sequestration practice they are paying for. derived price discounting formulae that show the leakage amount depends on the production diverted from the market when the practice is implemented. show this can be large in the case of forest preservation programs, while Deines et al. [121] summarize evidence that production declines happen with cover crops and that in a modeling study, this stimulates emissions elsewhere [122].

6.2.2. The Social Cost of Carbon

Estimate of the societal benefits from increasing soil C and otherwise reducing GHG net emissions involves estimates of how much society benefits from reduced atmospheric concentrations and resultant climate change. The value of a metric tonne less of emissions has been estimated and, in the literature, is called the social cost of CO₂. Rennert et al. [123] provide recent estimates of that value, equaling about USD 185 per tonne of CO₂e in 2020 US dollars under a discount rate of 2%. That estimate is 3–4 times higher than previous ones. In September 2022, the EPA proposed using a social cost ranging from USD 120 to USD 340 per MtCO₂e in 2020 US dollars, depending on the discount rate [124]. This provides substantial potential value that could apply to C sequestration activities.

6.2.3. Transaction Costs for Farmers and Intermediaries

Another consideration involves transaction costs associated with farmers entering markets and fees to intermediaries involved in the market for C sequestration [105]. For farmers, there will be costs of assembling proof of activities, developing C content samples, seeking out buyers, and otherwise participating in the market.

For intermediaries there generally will be agents or government offices that will: (1) deliver periodic payments to farmers; (2) assemble groups of farmers/ranchers to provide a salable quantity of C or qualifying practices; (3) help construct C quantity estimates through sampling or other means; (4) monitoring practice use; (5) implement mechanisms to keep the farmer/rancher group together and possibly replace those who drop out; (6) provide services such as training, practice information, and shortfall insurance and (7) establish and implement procedures for managing the risk/liability for sequestration shortfall, safety margins, and project noncompliance.

Carrying out such activities costs money and will likely result in the intermediaries keeping part of the money or otherwise requiring supplemental funding. Following the evidence reviewed by Fei and McCarl (2023) [125] and Kim (2011) [126], these amounts can be sizable. For example, in the case of crop insurance, when farmers pay for the insurance, about 30% is retained by the local agent. Similarly, Alston and Hurd (1990) [127] estimate that the transaction costs of administering the farm program ranged from 25 to 50 cents per USD distributed. In a soil C context, if one uses an average C sequestration rate based on West and Post [20] of around 1/4 of a metric ton per acre and an average US farm size of 640 acres, then production of 1 million metric tons of sequestration would need to involve about 6,250 average sized US farms and a lot more for smaller operations as exist in developing countries [20,67,128]. Furthermore, McCann and Easter (2000) [129] estimated transaction costs of a phosphorous-related program addressing farm operations would be 38% of total expenses or over 50% above the direct payments.

This implies that the cost of administering the program, which involves payments to intermediaries or government offices, may be as much as 50% above the amount of money that finds its way to producers. This has implications for the cost of achieving soil C sequestration offsets.

6.2.4. Valuing Co-Benefits

The activities involved in increasing soil C have, in many cases, been supported by US conservation programs [7,59]. These have been justified based on avoiding land degradation, increasing soil fertility, decreasing soil erosion, retaining nutrients, decreasing runoff, increasing water quality, enhancing biodiversity, and increasing water holding capacity among many other co-benefits [1,28]. Cook and Ma [130] argue the value of these items may exceed the value of the added soil C. However, to the extent that soil C sequestration serves as an alternative or substitute for other emission control and/or C sequestration approaches, Elbakidze and McCarl [131] argue that the co-benefits of soil C might also be considered in light of the forgone co-benefits that would arise when emissions reductions are generated elsewhere in the economy for example by reducing carbon and other pollutant emissions from power plants.

6.2.5. Misleading Cost Estimates

A final issue that is advanced in McCarl and Schneider [132] involves the single strategy marginal abatement cost estimates that are being developed for soil C and other practices. In particular, a lot of effort has gone into estimating marginal abatement cost curves (MACCs) for GHG net emissions reduction. However, such cost estimates often are based on technical estimation of only pursuing increasing amounts of soil C sequestration and do not consider the effect of using other strategies like grassland establishment, bioenergy feedstock production, or afforestation [28,132]. The MACCs often ignore land and water resource availability and the resource-competitive relationship of practices [132], where for example soil C from tillage changes, growing bioenergy feedstocks, grassland conversion, or afforestation compete for a common land base.

7. Research Needs/Policy Considerations and Outlook

7.1. OneSize Does Not Fit All

Regional soil and weather conditions, along with other forces, cause agricultural practices to have varying effects on sequestered soil C. Climate also impacts soil respiration, microbial activity, and erosion. Overall, this means producers, buyers policy makers, and other stakeholders need to realize that practices will not have uniform implications and one-size-fits-all pronouncements need to be avoided.

For example, as one of the nation’s top states for agricultural production, Texas is a geographically diverse state, so climatic conditions are highly variable as is expected C sequestration consequences of practices [133]. More generally, soil tends to hold less C at higher temperatures [134]. Thus, regional differences in climate and biophysical conditions can alter rates of soil C storage. Additionally, divergent climate characteristics have already resulted in different current adoption of tillage practices and land management. Thus, practice potential C sequestration varies widely in the state. Research and policy considerations plus substantial estimate localization are needed to reduce C sequestration amount uncertainty

7.2. Embrace Imperfections and Grading Standards

Ideally, a holistic view of the CO₂-credit value chain would recognize that the localized and practice-dependent characteristics of C sequestration additions influence their value. Soil C and associated GHG credits typically are impermanent, can induce leakage, are uncertain, may not be additional, and can cause substantial transaction costs. Additionally, the quantification of sequestered carbon based on the results of simulation models can cause bias and uncertainty in amounts estimated [135]. All of this influences soil C value and makes them imperfect relative to a number of other offsets that have different characteristics. However, some advocate ignoring such imperfections and argue that full market prices should uniformly apply to soil C enhancements. We don’t feel this is defensible as the value proposition is not generally the same. Imperfections (e.g., impermanency, uncertainty) render soil C enhancements to be worth less than some other emission reduction alternatives. Implementation of some form of a grading standard could enhance consistency among C credits sequestered from agricultural soils and elsewhere and possibly enhance the willingness to pay by buyers. This would introduce fungibility between different opportunities [116].

Additionally, reference contracts need to be created, developed, and shared [53]. Furthermore, agreement on regional, national, and even global protocols for measurement, reporting, and verification (MRV) is needed that address issues of permanence, additionality, leakage, uncertainty, transaction cost, and global warming potential while yielding different or even nonequivalent appraisal methods [136].

7.3. Mainstreaming

Soil C policy likely needs to be integrated into general agricultural policy in a manner called mainstreaming [137]. Shukla et al. [1,6] argue that the integration of biophysical, socioeconomic, policy, and other enabling factors is required to assess and implement land-related actions. The recent US Inflation Reduction Act [5] does this as it integrates climate-smart practices into existing USDA conservation programs. Agricultural carbon markets with their potential to motivate producers to adopt more sustainable farming practices, have been regarded by the Biden administration as one significant component in the set of approaches to tackle climate change in the agricultural sector. Various federal programs already exist to encourage farmers to adopt climate-friendly practices. Expanding these programs can effectively mitigate GHG emissions while enhancing farm resilience to a shifting climate. Developing a more integrated suite of policies for the agricultural sector will optimize GHG emissions reductions and ensure that farmers become beneficiaries of adopting the agricultural soil carbon sequestration practices.

7.4. Research Needs

Agricultural soil is one significant C reservoir, but one with a finite capacity of sequestering C. Results are needed on the C sequestration of a wide array of novel and regionally differentiated cropping/grazing strategies and sustainable management practices. This would involve a mix of laboratory experiments and field evidence [138]. Further studies are also required to better define the existing and potential market opportunities for agricultural commodities labeled as being produced with C sequestration and “climate-smart” farming practices. Work is also needed on creating implementable grading standards for differentiating value and for communicating the GHG effect of climate-smart practices.

One limitation of this review is that our scope is predominantly focused on the United States, which may limit the generalizability of its findings to other geographic contexts with different climatic and soil conditions. Second, our review is limited by the availability and depth of current research, so the long-term impacts of specific soil management practices and the interaction of soil carbon sequestration with other environmental factors require further exploration.

7.5. Crediting Calls for Regional Consistency & Integrity

Publicly available protocols for measurement, reporting, and verification are needed to enhance transparency in voluntary and mandated GHG trading markets. Nevertheless, the lack of such protocols and associated grading standards can pose the risk of creating C credits that are not equivalent and that would undermine confidence in market integrity. Coordination among engaged stakeholders across a diverse array of administrative organizations and various regional management practices is needed but is not without challenges and limitations. However, with the significant momentum for agricultural soil C sequestration, a more consistent (unified) framework for crediting sequestered C could foster confidence in C integrity on the way to strengthening the mitigation of climate change [136,139].

8. Conclusions

Agricultural soil C sequestration is one opportunity for agricultural sector participation in climate change mitigation. However, disagreement on C sequestration amounts, and in many cases, a lack of market acceptance, limits feasibility and practical levels of contribution from C sequestration. Concepts of (1) permanence, (2) additionality, (3) leakage, (4) uncertainty, (5) transaction costs, and (6) multi-gas accounting across different gases have arisen and are likely to differentially characterize the value of sequestration prospects. Furthermore, market intermediaries are likely to play a significant intermediate role in credit definition and transfer, introducing transaction costs. A high degree of transaction costs may greatly limit participation in carbon markets. Future research working on the value of sequestration and its credibility in the marketplace should include and quantify the influence of each of these six concepts on market value, deriving an appropriate discount or premium based on the level of attributes of the C sequestered under a specific project.