One of the major challenges related to carbon sequestration on rangelands is the establishment of the baseline. Often the measurement and verification of actual soil carbon stocks is cost prohibitive, so markets rely on models to estimate carbon sequestration, which add uncertainty for buyers of carbon credits on rangelands – which can impact the price they are willing to pay.  Further, carbon credits accrue to the landowner, not the manager, so coordination and cooperation are important.  As agricultural land ownership changes—think the rise of farmland investment companies—this will become increasingly important. This also means that any carbon sequestration that occurs on federal lands returns to the federal treasurer, not the permitee. 

Another challenge is scalability. While rangelands have the potential to store large amounts of carbon worldwide, often the per-acre storage potential is relatively low, therefore these projects often use an aggregator to pool enough credits together to meet individual buyer demands. These aggregation services add additional cost to credit development and can limit the individual marketing potential as all pooled credits are sold collectively.  These aggregators also often require contractual agreements to ensure they have a reliable stream of credits they can bring to the marketplace. 

Finally, carbon prices can be volatile, and market timing can be very important for those considering enrolling in a carbon market – again often an aggregator oversees market timing, not the individual producer.  Further, most markets sell credits based on the year they were generated, so carbon stored in 2023 may have a different price than carbon stored in 2018 – this can be important if not all credits are sold in the year they were generated.

Carbon Markets Outlook

There is hope that soon livestock producers will also be able to sell credits based on decreases in emission of methane—a potent greenhouse gas with 28 times the warming potential of CO₂.  We are currently working to establish the baseline for these markets and verify emission reductions attributable to various interventions across the supply chain. In order to meet market demands of additionality, these estimates will likely need to be place-based – meaning we need to understand both the baseline emissions and potential to reduce these emissions across sectors (e.g. cow/calf versus feedlot), location, climate, and feeds. One challenge that these markets will face is to determine the CO₂ equivalent of methane. Carbon markets have the potential to efficiently curb greenhouse gas emissions while supplementing incomes for producers. However, there are significant barriers to the widespread acceptance of agricultural carbon markets. Overcoming these barriers will be key to their success.