Logan Yonavjak

Want Healthier Food? Pay Farmers to Manage Nutrient Flows: The movement toward “ecosystem services” compensation

Do you think farmers should be paid to control water flow or sequester carbon dioxide on their property? What do these practices have to do with producing more nutrient-rich food?

In my last Changemakers post, I discussed the importance of paying farmers to holistically manage these and other nutrient cycles that go into making food and fiber products. In the past, many of the “ecosystem services” that farmers provide to the public have been taken for granted and considered “free.”

I want to provide a few concrete examples of what some emerging compensation approaches look like.

Many governments, including that of the U.S., already provide cost-share funding to financially compensate (and educate) farmers to implement practices that control soil erosion and nutrient runoff.

These existing initiatives need to be expanded and leveraged. But even more capital is needed if we want to help avoid widespread land conversion to development (the U.S. loses more than one acre of farmland per minute), and also make it cost effective to farm in a way that avoids major environmental consequences, like marine dead zones in the Gulf of Mexico.

Paying farmers for these additional services also makes sense from a business perspective, if smaller, more nutrient management-focused enterprises are going to compete with large-scale, industrial and increasingly global agriculture models. Industrial food models typically focus on higher yields, not more nutrient-rich food.

“We need a new way of thinking about the farming business model – paying farmers not only for specific products, but for the range of ecosystem benefits, like carbon sequestration, that their lands provide,” explains David Aylward, co-founder of the Nutrient Economy Initiative at Ashoka.

Expanding Payments for Ecosystem Services

Various market-based “payments for ecosystem services” (PES) approaches continue to gain traction as a means to get more capital flowing into the conservation and restoration of ecosystems that will result in more effective nutrient retention (meaning more will go into our food)– and hopefully more robust farm businesses.

On the demand side, buyers in PES approaches include corporations, governments, non-profit organizations and individuals that have various voluntary and regulatory reasons to invest in conserving and/or restoring nutrient flows, like meeting greenhouse gas reduction goals. The suppliers of these services are landowners and land managers.

One type of PES approach is Payments for Watershed Services (PWS). PWS are a type of economic incentive where landowners or land managers are typically paid by downstream beneficiaries to sustainably manage or restore land—specifically to provide one or more watershed-related ecosystem services (quantity, quality or flow).

Another approach is making payments for carbon. A carbon offset is a metric ton of carbon dioxide equivalent (CO2e), the emission of which is avoided or newly sequestered and is purchased by greenhouse gas emitters as a cost-control mechanism to compensate for emissions occurring elsewhere.

A couple of case studies can help illustrate how landowners are beginning to capture value from these approaches.

Billion Dollar Savings and Clean Water for New York City

We can look to New York City for an example of one of the most famous regulatory-driven PWS transactions that minimizes the cost of meeting a water quality regulation, or offsetting future development impacts.

New York City has been drawing its drinking water from the Catskill Mountains (about 100 miles to the north) for almost a century. In 2007, the Environmental Protection Agency (EPA) announced the results of a several-year review of the city’s ongoing program to maintain clean drinking water supplies with forest and open space conservation in the Catskills, rather than constructing filtration plants.

The EPA concluded that as long as the city agreed to set aside $300 million over the next 10 years to acquire land and restrain upstate development that causes runoff and pollution, the agency would exempt New York from having to build an $8 billion filtration plant.

Payments for Carbon and Shade Grown Coffee

Coffee Beans, Ashoka Changemakers, NextBillion Health CareThe Scolel Té program in Chiapas, Mexico, aims to create a voluntary market for positive externalities associated with shade-grown coffee plantations. Farmers under this arrangement agree to implement responsible farming and reforestation practices in exchange for payments for carbon offsets.

Here’s how it works. Farmers submit their reforestation plans to Ambio (the NGO that manages the program), which judges their financial benefits and the amount of carbon sequestration associated with each plan. The farmers then receive payments from a fund managed by Ambio. Capital for the fund comes from the sale of Voluntary Emissions Reductions (VERs) to private groups at a current price of $13 per ton of carbon sequestered.

Left: coffee beans (photo courtesy of Ashoka Changemakers)

For now, many landowners will probably find that the income from payments for watershed services and carbon credits are insufficient, from a financial standpoint, to completely outcompete real estate development or industrial farming models.

However, income from these services might be sufficient in some instances—depending on landowner management goals and circumstances—to help pay the incremental costs of implementing some best management practices, receiving organic certification or paying property taxes.

“We’re gaining traction, but there are still a number of challenges associated with the development of many of these [PES] approaches,” explains Craig Hanson, Director of the People and Ecosystems program at the World Resources Institute.

“For instance, to really get to scale there need to be more effective ways to capture and engage a range of private and public sector buyers to build out market demand.”

Eventually, the hope is that PES revenue can help landowners to create cost-competitive business models that earn them additional income beyond the sale of traditional products (e.g. corn and cotton). And it’s worth it, not only for more nutrient-rich food. These approaches can help incentivize farmers to provide important ecosystem services, like clean water, that we all depend on.

For more information on PES, visit Ecosystem Marketplace.

Editor’s note: this post was published on both NextBillion Health Care and Ashoka Changemakers, as part of our collaboration on their Nutrients for All campaign.

Agriculture, Environment, Health Care
nutrition, public health